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March 08, 2018 15:11:33 You can buy bitcoins with fiat currencies — legal tender backed by the issuing government, like Australian dollars — through online exchanges, or you can create brand new bitcoins in a process known as mining. The main feature of cryptocurrencies is that they operate on a decentralised peer-to-peer network, with no central authority or government backing.

The underlying technology that makes cryptocurrencies such as bitcoin possible is what is known as the “blockchain”. The blockchain is essentially a public ledger of all the transactions ever made in the currency.

It keeps a record of which user owns what coins. When a transaction is made it is added to the end of the blockchain and confirmed using a series of complex computations by the computers of other users who are on that currency’s network.

Those users are then rewarded with new bitcoins for letting their computers do the work. The most recent transactions made on the network are bundled up into a transaction “block”, which is finalised roughly every 10 minutes.

Once a computer solves the block’s complex equations and finds a valid hash key it is added to the blockchain, verifying bitcoin transactions between users, while at the same time rewarding the miner with new bitcoins. It can take a while for miners to reap rewards, as only the first user to solve the block by finding one of a number of valid hash keys is rewarded with bitcoins. Read more from abc.net.au…

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