How secure is bitcoin?
Bitcoin uses a "proof-of-work" consensus mechanism to ensure the protocol's durability.
Much like gold, bitcoin requires a mining process that releases new tokens into circulation, which helps to secure the network by making it expensive to participate in. Bitcoin mining is available to anyone, assuming they have the resources to start.
However, unlike gold, you can know exactly how much bitcoin is in circulation, as well as when new coins enter circulation. Despite gold's relative scarcity as compared to dollars, gold miners cannot guarantee predictability or reliability, especially as technology becomes more efficient at producing more gold.
Miners engrave all transactions happening on the blockchain, batched together as "blocks" into the ledger by expending computational power. By providing "proof" that the miner who mined the next block provided sufficient "work" to generate the block, the digitally native bitcoin network actually taps into real-world energy to uphold its integrity. Manipulating the ledger is too costly, as one bad actor's computational efforts are competing with a globally distributed computer network working to prevent manipulation.
With each new block mined, the network becomes stronger and prevents double-spending by the fact that transactions are non-reversible. Anyone can look back in the ledger's history to verify a transaction's validitv. The larger that ledger becomes, the greater the dataset there is to verify its authenticity.
About every 10 minutes, one miner successfully validates the most recent block of transactions and receives newly created bitcoin as a reward. This system removes the need for a central bank since miners handle both creating new bitcoin and processing transactions. Bitcoin's "difficulty adjustment" is a mechanism that automatically adjusts how difficult the mining process is, ensuring new blocks of transactions are added roughly every 10 minutes. The difficulty adjustment is a profound technological breakthrough. Instead of placing the difficulty of mining in physical space, like how gold needs to be uprooted from the ground, the difficulty of bitcoin mining is placed in time. This way, no matter how powerful computers become, no one can
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unfairly outwork someone else to mine new bitcoin. It will always take 10 minutes (on average) to mine new bitcoin.
Every four years, the system cuts the daily issuance of new bitcoin in half; a there are mition ecoln tal, hah shoudes pil around he year
2140. Because fewer and fewer bitcoin are made over time, the currency naturally increases in value (assuming steady demand over time).
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