The Bitcoin network of miners makes money from Bitcoin by successfully validating blocks and being rewarded. Bitcoins are exchangeable for fiat currency via cryptocurrency exchanges and can be used to make purchases from merchants and retailers that accept them. Investors and speculators can make money from buying and selling bitcoins. How does Bitcoin work? Despite the recent downturn and fluctuations in the market, the top 100 cryptocurrencies boast a current market cap of $219 billion, and the majority of Americans — 69 percent — expect the price of cryptocurrencies to rise in the next five years, according to a survey by the Global Blockchain Business Council. That same study showed that 21 percent of people are considering adding bitcoin to their portfolios, but 38 percent of Americans see bitcoin as a bubble that’s ready to pop — so what gives? If you’re considering putting money into bitcoin (or just want to talk intelligently about it at a cocktail party) here’s what you need to know.

Bitcoin mining is a process that adds transactions to the blockchain and mints new Bitcoin. It involves solving complex mathematical problems using powerful, specialized computer hardware. There was a time in history when it was reasonable to mine bitcoin from your own home, but as the computational hardware requirements have grown, most people entering the space will typically join a mining pool, which is a group of miners pooling resources for greater efficiency. What are Cryptocurrencies? Blockchain is designed to make it extremely difficult to hack the system or forge the data stored on it, thereby making it secure and immutable. Each computer in a blockchain network has a copy of the ledger to prevent single points of failure. If one block is changed, then all the other blocks in the distributed ledger must be changed. Blockchain is a decentralized technology, meaning it is not controlled by any one organization. In addition, identifying codes make it difficult to fraudulently produce blocks.