How does Bitcoin work?

Bitcoin is one of the cryptocurrencies, it is a type of virtual money which present only in the online world. It can be purchased using real money currency such as USD or local currency MYR. It is not controlled by the government or banks and thus it is often referred as “decentralized money”.

It can be used to purchase products and services if the seller accepts it. Not many shops are accepting Bitcoin yet and some countries ban it. It has a private code tied to each coin in which its value lies. When it is transferred online, its transaction will be tracked using a public list – blockchain. Since every transaction is being tracked, it is hard to be copied, and hence hardly any “fake bitcoin”.

The supply of Bitcoin is limited to 21 million coins, and all the coins need to be mined. Once all the 21 million coins have been mined, there will be no more supply. Hence, this is why the value of bitcoin can rise sky high because when the supply is limited while the demand currently is high.

As of end of 2020, around 18.5 million coins have been mined, leaving less than 3 million coins to be mined. Mining process is to complete the “block” of verified transactions of the bitcoin. Each miner doing the verification task might be rewarded with portion of the bitcoin. The reward of bitcoin is only given to the first miner who complete the task, hence not every miner completing the task will get the reward. This is the way to own bitcoin without paying “real” money.

Want to buy bitcoin in Malaysia? Click this link to open a free account from Luno – the first regulated cryto currency platform by Security Commission of Malaysia.

Disclaimer: this is not a recommendation to buy / sell bitcoin. Do your own due diligence before starting. The writer has no liability on the loss incurred due to action taken for investing in Bitcoin.

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