As I mentioned earlier this is blockchain for dummies, there are currently over 10,000 nodes running Bitcoin’s code. Each node will need to have the required resources and capacity to download the full blockchain and all its transaction history.
Nodes use their computers (and other high-end hardware) to participate in Bitcoin’s blockchain network as transaction processors and verifiers. When Bitcoin first started, it was designed only to generate a maximum of 21,000,000 bitcoins. At the time of writing there are over 18 million bitcoins already in circulation, leaving just around 2.6 million bitcoins to be released as mining rewards. On average, every 3500 Bitcoin transactions are packaged in one “block” which gets attached at the end of the “block-chain” ledger and a new block is generated every (10) minutes on the Bitcoin blockchain. The mining nodes that verify and validate transactions and blocks get a mining reward. In 2009, the reward for each block in the chain mined was 50 bitcoins. By design, every almost four years, or 210,000 blocks, the reward given to Bitcoin miners for processing transactions is cut in half. After the first halving it was 25, then 12.5 after the second halving, and on May 11, 2020, it became 6.25 bitcoins per block. The halving event is just like saying that the amount of gold mined from the Earth was cut in half every four years. If gold’s value is based on its scarcity, then “halving” the gold output every four years would theoretically drive its price higher. Bitcoin price indeed went dramatically higher after every halving event. Figure (6) below shows this on a chart. Bitcoin Wallets To have or to transfer bitcoins, you need a wallet. Which, as I explained before, is a piece of software containing your keypair (private and public keys). There are several different wallets that you can use. 1) Web Wallets These are online wallets that are connected to the Internet all the time, and you can access them from any online device. You can have one of these wallets through a cryptocurrency exchange website or independent wallet provider. Some of these web wallet providers are Coinbase , Blockchain , Xapo , Kraken , and Binance . Because this is a hot wallet that is connected to the Internet all the time, it is the least secure type of wallet. Most of the crypto experts would advise against leaving your assets in online wallets. 2) Mobile Wallets This type of wallet is greatly beneficial if you want to use your bitcoins on the go to transfer coins or pay for goods. It runs as an app on your Android or Apple smartphone, storing your private keys and allowing you to pay for things directly from your phone. The app is usually connected to one or more trusted nodes to initiate and complete transactions. Unfortunately, convenience often comes with security concerns. Just like web wallets, mobile wallets are online and can be hacked if someone has access to your mobile device. Some of the most known mobile wallets are Freewallet , Edge , Atomic Wallet , Blockchain Wallet , and Mycelium . 3) Desktop Wallets As the name implies, these are wallets that you can download and install on your personal computer. Basically, you’re storing your private keys on your hard drive. By design, because you have your keys on your PC, these wallets are considered to be more secure than the online web and mobile wallets. While you will need to connect the Internet every now and then to make a transaction, you still can take these wallets offline when you are not using them to secure your bitcoins. Some of the well-established desktop wallets are Electrum , Exodus , Atomic Wallet , Bitcoin Core , and Copay . 4) Paper Wallets Yes, you’ve read it right. You can save bitcoins on a piece of paper! A paper wallet is a document that registers your wallet address and private key, usually as a QR code. You can ask anyone to send you bitcoins to the address printed on this document. To spend your coins, however, you will need to use software or an online service to retrieve your coins and use them. Because your wallet is entirely offline, unless you retrieve it using some software, there is no way that a hacker can gain access to your keys - unless he steals the wallet physically, of course. However, think about the possibility of losing this document or forgetting it in your favourite shirt and sending it to the laundry! You can easily create your paper wallet using some websites such as BitAddress or Bitcoinpaperwallet . 5) Hardware Wallets A hardware wallet saves your keys and coins in a protected hardware device. These wallets are considered by many to be the most secure and convenient way to store bitcoins and other digital currencies. Unlike paper wallets, which must be imported using a program at some point, hardware wallets can be used securely and interactively. Most hardware wallets also offer multiple-factor authentication mechanisms to ensure the safety of your assets. Another difference from paper wallets is that you don’t lose your coins if you lose your wallet. All you need is to create a passphrase when you first activate your wallet. If you lose it, you can just buy a new one and restore all your coins using this passphrase. The two most famous hardware wallet providers are Ledger and Trezor . Both are equally good, and they are both safe options to keep your digital currencies in.
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