I’m going to be revealing where Bitcoin lives and why its residency is the most secure location on earth making your Bitcoin literally safe as houses!
Does Bitcoin have a home?
The question “Where does your Bitcoin live” might seem a strange one considering we know exactly where our money lives inside accounts on servers at the bank who we have to trust. With Bitcoin, it’s a different story and your funds are stored in a database called a “blockchain” which is distributed across multiple locations worldwide on thousands of computers whom it would be impossible to trust.
This notion of your Bitcoin living on a strangers computer may seem at first glance to be insecure – surely the more computers my Bitcoin is stored on the greater the risk of it being stolen?
Stranger’s computers provide an automatic backup for your Bitcoin
In Bitcoin terms the account (called a “Public Key”) which represents the Bitcoin you own and all the transactions associated with it lives inside a database called a “blockchain” along with everyone else’s accounts and transactions. This ledger of all transactions is constantly growing ( 250 GB as at July 2019). Anyone can download it onto their computer and then automatically help to synchronise any changes (transactions) with each other.
Currently there are over 10,000 computers called “Nodes” worldwide that have the Bitcoin blockchain running. If you have a hard drive big enough how about becoming a node and running the Bitcoin blockchain on your computer.
This network of computer nodes provides a solid backup system. Even if 1000 nodes stop working the remaining 9000 will continue to synchronise transactions. Bitcoin has never gone down in its 11 year history whereas Visa and Mastercard have crashed many times in recent years.
Other people’s computers make Bitcoin unhackable and secure
All the 10000 nodes have to agree with each other for the Bitcoin blockchain to work. So if someone decided to falsify a transaction and create some free Bitcoin for themselves they would have to make that change on all the other 9999 computers, an impossible endeavour! In fact as more computers run nodes the more secure Bitcoin becomes.
Bitcoin’s International residency makes your funds very private
It doesn’t matter that the Bitcoin blockchain is on other people’s computers worldwide because all they are doing is synchronising changes with each other. The public key representing your Bitcoin does not give someone permission to spend your Bitcoin, only to see the transactions related to it. For each public key there is a corresponding private key that only you know. As the name suggests its private and functions like your debit card PIN.
When you buy or sell something the distributed ledger updates across all the nodes.
It’s important to note that unlike your bank account which is linked to your name and other personal details; your Bitcoin public key has no connection whatsoever to you as a person so you remain private.
To find out more about Bitcoin’s keys and its privacy check out “demystifying wallets, keys and seeds“
Bitcoin is homeless!
So Bitcoin doesn’t have a permanent home and spends its time wandering from computer to computer as a jet set traveller! All the time keeping your funds safe and private so that you can access it whenever you want with no down time!
I hope this helps address the question of where your Bitcoin lives. I’ve purposely kept this post high level and if you want to dive deeper into Bitcoin and other Cryptocurrencies checkout my website to learn more.
How I can help you?
My background is in technology and training and for over 10 years I have provided IT Support to home and small business users through my IT company ithound.co.uk. In recent years I have added cryptocurrencies to my product offering with cryptohound.me.
Whether you are a business wanting to accept cryptocurrencies or an individual interested in investing in them, I will help you get started and provide training and support to give you confidence using them.
Carl Hughes, The Crypto Hound
Signal Messenger: +447919 562 418
Telegram: @ flowingman