How bitcoin mining works

To cut through some of the confusion surrounding bitcoin, we need to separate it into two components. On the other hand, you have bitcoin-the-protocol, a distributed network that maintains a ledger of how bitcoin mining works of bitcoin-the-token. Both are referred to as “bitcoin.

The system enables payments to be sent between users without passing through a central authority, such as a bank or payment gateway. It is created and held electronically. It was the first example of what we today call cryptocurrencies, a growing asset class that shares some characteristics of traditional currencies, with verification based on cryptography. A pseudonymous software developer going by the name of Satoshi Nakamoto proposed bitcoin in 2008, as an electronic payment system based on mathematical proof. The idea was to produce a means of exchange, independent of any central authority, that could be transferred electronically in a secure, verifiable and immutable way.