What is a Bitcoin?
Bitcoin is one of the digital currency so called cryptocurrency.
It has been created digitally and distinct from physical currency. It has been created online without any hold of any government or economy, held online, transact online and can’t be encashed into physical form. It has been founded by an unknown person might be Satoshi Nakamoto in 2009.
Bitcoins aren’t printed, like other money i.e dollars or euros – they’re created by tech guys, and increasingly businesses, running high power computers all around the world, using software that interprets complicated mathematical enigmas.
In Bitcoin, Transactions are made with no middle platform means no bank no payment gateway, no hefty transaction fees. Even you need not disclose your real name to transact one amount from one place to another in whole over the world. In recent time it has been most popular and merchants are starting accepting at their stores along with physical medium of transaction.
It’s the first model of a growing category of digital money known as the cryptocurrency.
What is Bitcoin based on?
The regular currency has been based on gold or silver. Theoretically, you knew that if you handed over a dollar at the bank, you could get some gold back (although this didn’t actually work in practice). But Bitcoin isn’t based on gold; it’s based on mathematic calculations.
Around the world, people are using software programs that follow a mathematical formula to produce bitcoins. The mathematical formula is freely available so that anyone can check it. But needs high power computers and analytical knowledge to solve the problems to generate a bitcoin. Which is not easy to create by any normal person without tech knowledge.
Some Technicalities of the Bitcoin,
Balances – block chain
The block chain is a shared public ledger on which the entire Bitcoin network relies. All confirmed transactions are included in the block chain. This way, Bitcoin wallets can calculate their spendable balance and new transactions can be verified to be spending bitcoins that are actually owned by the spender. The integrity and the chronological order of the block chain are enforced with cryptography.
Transactions – private keys
A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet. The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, through a process called mining.
Processing – mining
Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain. It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by the network. These rules prevent previous blocks from being modified because doing so would invalidate all following blocks. Mining also creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the block chain. This way, no individuals can control what is included in the block chain or replace parts of the block chain to roll back their own spends.
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