Bitcoins are created through a process called mining.
This involves using advanced technology to solve complex math problems.
These problems are directly related to existing transactions on the ledger, or financial record. The computers working to solve each problem are participating in a validation process to ensure the legitimacy of each transaction. The first computer to solve the problem “wins” a block of Bitcoin as a reward of sorts. There’s no gatekeeper for who can use Bitcoin, and the entire process is secured through cryptography principles.
The value of Bitcoin can be compared to that of precious metals. This is because it has a limited quantity, is difficult to obtain, and is not backed by government authorities. Although it is not impossible to counterfeit a Bitcoin, its reliance on the blockchain makes it incredibly difficult, thus increasing its scarcity. Additionally, because many businesses do not accept Bitcoin as payment, the value of the digital currency can be hard to define.Footnote3
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