Next, let’s take a look at the process of how Bitcoin works. While there are a lot of technical details you need to understand, we’re going to concentrate on an overview so that you can quickly understand the basics and get started. The good news is that with so many people working with bitcoins, a lot of software has been created to make the process easier for those who might not have a lot of technical knowledge.
Bitcoin Blocks and Block Chain
The very first place to start is the Bitcoin block. This is basically one transaction. Once a transaction has spread across the peer to peer network, it becomes part of the Bitcoin Block Chain, which is in chronological order. One of the quickest ways to generate bitcoins without buying them is to verify one of the blocks (transactions) in the chain. When your software completes this task, you’ll be rewarded with bitcoins.
In order to exchange or purchase bitcoins, you’re going to need a Bitcoin Wallet – which is just a software client that interacts with the rest of the distributed Bitcoin network around the world. Early versions also included ways to mine bitcoins, but that functionality has been separated into its own software (and hardware) because it can take up a lot of processing power.
If you want to go further than just the basic of how bitcoins work, we really recommend you check out our complete Bitcoin eBook. Included is all the information you need to know. From the history of Bitcoin to how to make money with the virtual currency to the possibilities for the future of Bitcoin, you’re going to have access to everything related to bitcoins all in one place.