The Bitcoin Network is the first successful implementation of blockchain technology. The term "blockchain technology" typically refers to the transparent, trustless, publicly accessible ledger that allows us to securely transfer the ownership of units of value using public key encryption and proof of work methods. The technology uses decentralized consensus to maintain the network, which means it is not centrally controlled by a bank, corporation, or government. In fact, the larger the network grows and becomes increasingly decentralized, the more secure it becomes. The potential for blockchain technology is not limited to bitcoin. As such, it has gained a lot of attention in a variety of industries including: financial services, charities and nonprofits, the arts, and e-commerce.

Cryptocurrency is a form of payment that can be exchanged online for goods and services. Many companies have issued their own currencies, often called tokens, and these can be traded specifically for the good or service that the company provides. Think of them as you would arcade tokens or casino chips. You’ll need to exchange real currency for the cryptocurrency to access the good or service. Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralised technology spread across many computers that manages and records transactions. Part of the appeal of this technology is its security.

Bitcoin, as well as all other major cryptocurrencies that came after it, is built upon public-key cryptography, a cryptographic system that uses pairs of keys: public keys, which are publicly known and essential for identification, and private keys, which are kept secret and are used for authentication and encryption. Major cryptocurrencies like Bitcoin, Ethereum, and Bitcoin Cash function using three fundamental pieces of information: the address, associated with a balance and used for sending and receiving funds, and the address’ corresponding public and private keys. The generation of a bitcoin address begins with the generation of a private key. From there, its corresponding public key can be derived using a known algorithm. The address, which can then be used in transactions, is a shorter, representative form of the public key.

Every cryptocurrency transaction must be added to the blockchain, the official public ledger of all completed transactions, in order to be considered a successful and valid transfer. The work of validating transactions and adding them to the blockchain is done by miners, which are powerful computers that make up a portion of the network and confirm its transactions. Miners spend vast amounts of computing power and energy doing this for a financial reward: with every block (a collection of transactions) added to the blockchain comes a bounty called a block reward, as well as all fees sent with the transactions that were confirmed and included in the block. For this reason, miners have a financial incentive to prioritise the validation of transactions that include a higher fee. For someone looking to send funds and get a quick confirmation, the appropriate fee to include depends on the cryptocurrency being sent and can vary greatly, depending on a number of factors, such as transaction size and network conditions.

Bitcoin can often refer to two things. First, the Bitcoin network that keeps track of our transactions and balances, and second, the currency that we use as the unit of value when we transact. We'll cover both here. The Bitcoin Network Bitcoin's payment network (also called the bitcoin blockchain) is what makes it possible for us to transact with one another. The network uses distributed consensus to verify and confirm transactions, and consensus is reached via a large global network of high-performance computers (called miners) running the bitcoin software. Whenever someone sends a transaction it is broadcast instantly to the network and verified by the miners. Miners are constantly working to confirm individual transactions and include them in the next block of transactions in the chain. Once a new block is verified, all the transactions within it are permanently recorded on the blockchain. Rewards are paid out in bitcoin to miners who confirm transactions and verify the next block as a way to incentivize productivity on the network. Each party who participates in the mining process has an identical up-to-date copy of the blockchain or public ledger, which is a record of all the transactions in bitcoin history. Each party's copy of the ledger is updated every time a new block is found. The Currency The unit of value that we send and receive on the Bitcoin network is also referred to as bitcoin, or bitcoins. Bitcoin is completely digital, meaning we can't physically hold it in our hand. It's also portable, divisible, fungible, and irreversible.

Bitcoin’s existence began with an academic paper written in 2008 by a developer under the name of Satoshi Nakamoto. The paper described the foundation for what was intended to be a peer-to-peer electronic cash system that was secure, affordable, and efficient far beyond conventional banking standards. The system Satoshi described was developed into open-source software and the first bitcoin transaction (also known as the Genesis Block) was confirmed on January 3, 2009.

cryptocurrencies are created through a process called mining. Anyone can mine for most cryptocurrencies, but it is a difficult and time-consuming process. Mining involves teams of computers solving mathematical problems. When the problem is solved, tokens for whichever cryptocurrency was being worked on are created, for example a bitcoin, and the computer that got the solution gets the new token. Mining is also what gives cryptocurrencies their security. The mathematical problems that are being solved are connected to the blockchain, the record of every single token in a cryptocurrency. The latest mathematical problem doesn’t just create more tokens, it also checks the latest transactions at the same time.

There are many legitimate reasons to use cryptocurrency in place of everyday currencies like British Pounds – it’s secure, cheap and fast and offers genuine technical innovations that many believe will one day replace more traditional forms of exchange. But because of the anonymity of the transactions, they are also frequently used by criminals seeking to avoid detection for unlawful activities. However, people have been increasingly buying cryptocurrencies for the purposes of investment, hoping to make a lot of money quickly. The instability of cryptocurrencies does means that it’s possible to make huge gains with small amounts of investments. But it’s also possible to make huge losses in a relatively short space of time.