How does Bitcoin work? What is Bitcoin mining? What is Bitcoin supported by?

 

How does Bitcoin work? What is Bitcoin mining? What is Bitcoin supported by?




So, as we know, Tesla has invested $ 1.5 billion in Bitcoin, and there are many different opinions on this. In fact, this is a completely new discussion because never before has a company trying to move the world to sustainable energy applied an experimental technology whose side effects are so contrary to its mission.



We will be answering questions such as how much electricity does Bitcoin use and why it takes so much energy to run it. Let's talk about the basics of cryptocurrency; blockchain; Bitcoin development and hard forks; miners; the deflationary nature of cryptocurrency; volatility problem; the problem of government and taxation; altcoins like dogecoin; Confirmation of the bet; ether 2.0; and then eventually we will see if we can justify Tesla's investment in bitcoin.


Full Disclosure: The following is by no means investment advice and we do not offer investment advice here on CleanTechnica. Also, I do not currently have Ethereum, SV bitcoins, polkadot, cardano or dogecoin, but I have plans to invest in these cryptocurrencies in the near future. I have approximately 0.00088236 bitcoins (~ $ 50), but I have no plans to sell or buy BTC in the near future.


Bitcoin is a digital encrypted currency that excludes all intermediaries in transactions and works in a way that makes it all completely anonymous, secure and unbreakable (in theory). It is often advertised that trust is built into the system, but beyond marketing this simply means that no one should trust anyone, and this feature is very expensive.


The cryptocurrency was launched in January 2009 at the height of the economic crisis, when the US dollar fell significantly and was considered by many to be close to collapse. It was created by Satoshi Nakamoto, or at least this is the pseudonym he used. Nobody knows who he is, which is both good and bad. Some even speculate that it could have been Elon Musk, which he denies, which is also not very logical if you look at his comment history on this matter. There are more suitable candidates, but no one really knows who he / she is and whether this person is still alive today.


How Bitcoin works


As mentioned earlier, the way a cryptocurrency like Bitcoin works is to keep a register of all transactions. But this is not a sheet of paper or a database, like a bank, all this data is encrypted, and then everyone gets a copy. Anyone with a copy doesn't know that Zach used cryptocurrency to pay for the Impossible Burger at a local restaurant - they just know that something happened. If one of the computers that has a copy of the public book starts claiming (in encrypted form) that Zack actually bought 6 impossible burgers (revealing more details than suggested), then everyone else on the network will start screaming that computer, perhaps informing him that Zach is not a gluttony monster, and then kick the faulty computer off the network. The encrypted code just won't match. How unreadable depends on the cryptocurrency. In many cases, as is the case with Bitcoin, the difficulty often lies in matching the wallet to an individual, rather than encrypting the transaction.


Nutrition Bitcoin


Bitcoin has a huge and ever-growing need for energy. Although the size of the bitcoin network is only a minor niche compared to bank transactions and credit card transfers, it already uses more electricity than my country, the Netherlands. This may not matter much to most people, so I'll give you various examples to put this in perspective. First, even Google, with all of its huge data centers around the world, doesn't consume as much electricity. In fact, if you add together all the electricity used by Google, Amazon, Microsoft, and Facebook, you still get roughly 1/4 of the amount of energy that Bitcoin uses today.


Why Bitcoin is so strong


Let's see why bitcoin needs so much power to get started. The whole reason can be summed up in one word: trust. Although, more precisely, its absence. In a hypothetical ideal world, where there is no malice, greed, deception and hacking, the entire financial system of the world can probably be handled by a single desktop computer. In the real world, no one trusts each other, so by entering into contracts with large financial institutions such as banks and transferring control of the currency to the government, we have created several interconnected centralized systems. While a transaction can go through multiple intermediaries with different costs, which are not the same worldwide, most people can make a digital purchase online or in a store and receive confirmation of the transaction within seconds.