First, there is the news about the bankruptcy and hacking of the first Bitcoin bank, Flexcoin, and the suicide of the business executive in Singapore. The question now is how strong is the Bitcoin? As of now, the Bitcoin exchange rate is still high at dollars for every Bitcoin. There were predictions that the value of Bitcoin will drop drastically brought about by the many negative news about Bitcoin, but apparently, the value is still high.
The Bitcoin Price
Bitcoin users do still have faith in the system. They believe that each Bitcoin is safely protected by a cryptographic code that is very difficult to tamper with.
It was in the news lately how the Bitcoins placed in the hot wallet were lost from theft because a hacker successfully transferred funds. Those Bitcoins that were placed in the cold storage were not touched because the cold storage remained off line. Despite the hacking incident, Bitcoin exchange rate is still at its highest and the users are still showing that their faith in the system has not faltered.
Why People Use Bitcoin The use of the digital currency or Bitcoin is becoming very appealing to more and more people. This ledger of past transactions is called the block chain as it is a chain of blocks.
The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere. What is Bitcoin Mining? Bitcoin mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid.
This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function.
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The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a “subsidy” of newly created coins.
This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.