Bitcoin is a cryptocurrency based on decentralization, peer-to-peer network and consensus initiative, open source, and blockchain as the underlying technology. It solves the problem of issuing and circulating digital assets with a constant total amount without a central institution, and creates a decentralized electronic accounting system.
Unlike legal tender, Bitcoin is not controlled or issued by any institution. Its issuance method, rate and scale have been written into the program from the beginning and cannot be changed. Unlike our daily accounting, for example, when we deposit and withdraw money in a bank, the bank keeps accounts, which relies on national credit. Bitcoin provides another way, that is, participants jointly keep accounts and synchronize the ledgers in real time. Since everyone has a ledger, the possibility of transactions being forged is greatly avoided, making transactions more transparent and secure.
In the Bitcoin system, people who maintain the security of the ledger are called miners, and the process of accounting is mining. Miners pack the generated transactions into blocks every 10 minutes on average. In order to encourage miners to keep accounts, Bitcoin has its own set of incentive mechanisms.
It can be understood that Bitcoin is stored in different blocks, and the way to mine blocks is to solve a complex mathematical puzzle. Whoever solves the answer to the puzzle first and broadcasts the news quickly can get the Bitcoin in the block.
Since transactions need to be packaged into blocks by miners and confirmed by the entire network before they can take effect, the transaction initiator will pay a certain fee to the miners. In addition, there is another reason for charging fees, that is, the total amount of Bitcoin is constant, which is 21 million. When all Bitcoins are mined, new blocks will not generate any block rewards. Therefore, the fee is a way to encourage miners to continue to keep accounts.
