Cryptocurrency and Bitcoin: Here’s What to Know – The New York Times

Cryptocurrency and Bitcoin: Here’s What to Know – The New York Times

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A Bitcoin can be divided out to eight decimal places, so you can send someone 0.00000001 Bitcoin. This smallest fraction of a Bitcoin — the penny of the Bitcoin world — is referred to as a Satoshi, named after the pseudonymous creator of Bitcoin.

Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved. Unlike traditional payment networks such as Visa, the Bitcoin network is not run by a single company or person. The system is run by a decentralized network of computers around the world that keep track of all Bitcoin transactions, similar to the way Wikipedia is maintained by a decentralized network of writers and editors.

Bitcoin was introduced in 2008 by a creator who goes by the name Satoshi Nakamoto, who communicated with the rest of the world only by email and social messaging. While several people have been identified as possibly being Satoshi, the identity of the real Satoshi has not been confirmed.

Satoshi created the original rules of the Bitcoin network and then shared the software with the rest of the world in 2009. The inventor largely disappeared from the public two years later. Once Satoshi had released the software, anyone could download and use it. This means Satoshi has no more control over the network now than anyone else.

The computers involved in Bitcoin mining are in a sort of computational race to process new transactions coming onto the network, solving complex math problems that require quintillions of numerical guesses per second. The winner of that race — generally the person with the fastest computers — gets a chunk of new Bitcoins. Since miners can earn rewards but are independent, this process is meant to incentivize participation and maintenance.

There is generally a new winner about every 10 minutes, and this will continue until there are 21 million Bitcoins in the world. At that point, no new Bitcoins will be created. The network is expected to reach that cap in 2140.

Every Bitcoin in existence was created through this method and initially given to a computer helping to maintain the records. In Bitcoin’s early years, a crypto enthusiast could mine coins by running software on a laptop. But as the digital assets have become more popular, the amount of power necessary to win the race and …….

Source: https://www.nytimes.com/explain/2022/cryptocurrency-guide