What is Bitcoin:-
Everyone seems to be talking about Bitcoin these days, and, as it turns 12 years old today, in this article we will be covering what exactly Bitcoin and its key features are.
Hello, Mr. Sameer technical here! In this blog, we will teach you everything you need to know about Bitcoin and cryptocurrencies in general. If you have questions about the content, feel free to leave them in the comments section, and I’ll be sure to write an article about it next time. So, what is Bitcoin? Let’s start with the description …
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| What is Bitcoin – Cryptocurrency |
According to Investopedia, Bitcoin is a digital currency or cryptocurrency, which means it is only available in digital form, and is protected by encryption. It was created in 2008, following the collapse of the housing market, by an individual, or group of people, named Satoshi Nakamoto, who wrote a 9-page white paper entitled: “Bitcoin: A Financial Peer and Interest System”.
The program itself was released as open source software on January 3, 2009, Another way to define Bitcoin is as follows: It is a Distributed, Anonymous, and Decentralized Peer-to-Peer Network, using Blockchain, a Proof- for Work Algorithm, and a collection These Rules of Consensus. But what does all of that mean? Let’s separate. First!
What is a Blockchain: –
Blockchain is one of the technologies Bitcoin uses and, in fact, is a growing list of transaction records, called Blocks, linked to cryptography. Each block has three elements.
First, the hash. A hash is a function that converts input of letters and numbers into encrypted output of a fixed length. Second, previous block hash, and third, transaction data: sender, receiver, and post price. That way, the blocks are connected and if you try to change anything within the Block, for example, the value sent, the hash of the Block will change as well, the next hash of the Block, because each block contains the previous hash block. Therefore, in order to change Block, you will need to change Blockchain. Exactly how Blocks were created we will cover a bit.
Second! Bitcoin is Distributed Meaning that each computer in the Bitcoin network has its own copy of the Blockchain, which, in turn, means that to manage the information stored in the Blockchain, one will have to use every single copy in the Blockchain network. This, apparently, makes the Bitcoin network extremely secure and powerful.
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| What is Bitcoin – Cryptocurrency |
Third! Bitcoin anonymous That means that participants do not have to provide any ID to use this program, however, even if Bitcoin is actually anonymous, everything that is done is permanently stored in Blockchain and can be linked to real owners.
Fourth! Bitcoin is legally classified That means no middle-class business is in charge of processing the transaction or issuing a new BTC stock. There are currently more than 18.5 million Bitcoin distributed and Hard Cap, or the maximum number of units that will ever exist, is 21 million, after which there will be no new purchases, but we will have to wait for that since the last part of BTC will be mined in -2140.
Let me do a little drawing here. There is a difference between Bitcoin and bitcoin. The capitalized “Bitcoin” is used to define the concept of Bitcoin or the whole network itself, however, “bitcoin” without capitalization is used to define bitcoins as a unit of account.
Fifth! Bitcoin is a Peer-to-Peer Network This is one of the most important parts of the Bitcoin protocol. A P2P network is one where two or more computers share files without the need for a separate server. In the Bitcoin protocol, it means that it does not require intermediaries to work because all peers or nodes have a copy of the Blockchain, which stores all the same transactions made on the network. Just the fun fact is, the entire Bitcoin blockchain is over 350 GB in size, and you can download it at betcoin.org.
Sixth! Work Proof Work Proof is, by definition, a piece of data that is difficult to identify but easy to verify. Within the Bitcoin protocol, it is used for the production of Block, that is, to ensure transactions and extend the existing Blockchain with new blocks. Also, it is a Bitcoin solution to the Double Disruption Problem, which we will cover later in this article.
It works as follows: computers or “miners” across the network solve math problems or puzzles to ensure transactions, which are stored within Blocks. This process is also called “Hashing”, and what is a lottery, as miners compete to try to build a hash with a certain number of eggs in front of the hash, and the chances of finding one are very low, so it takes time to come up withThe solution, which is Proof-of-Work. The time required depends on the “hash scale” of the mine, which is the sum of its computing power.
The process of adding a block to Blockchain is called “mining” and the average time required to create a new Block is 10 minutes. However, if the time required to create a new Block depends on total hashrate, what happens if the hashrate is doubled? Does it suddenly take a lot of time to produce a new Block?
The answer is yes, but for a while, we are grateful for something called “Mining Corrections”. Mining weight adjustment makes mines more or less complex, depending on the total hashrate up or down since the last resort. It happens every block of 2016, or almost, every two weeks. With the installation of a new block in Blockchain, the miner who “first guessed” the solution, earns a mine, which is now 6.25 BTC. At the beginning of the Bitcoin Network, mining revenue was 50 bitcoin, but every 210,000 Blocks, or almost, every four years, an event called “The having” took place, which reduced mining revenue by 50%, thereby reducing new market access. by 50%, and with it, inflation, i.e., by the way, is currently, lower than that of gold.
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| What is Bitcoin – Cryptocurrency |
Seventh! Consistency The purpose of the consensus is to bring all the nodes into an agreement in an environment where nodes do not trust each other. Nodes always consider the longest chain as appropriate and will continue to stretch.
One of the most common forms of co-operation is called the 51% attack, which occurs when the attacker receives a full network number, which can give him more computer power, which has led to the creation of a longer chain than the first, which, respectively, by compliance rules, makes it a real blockchain. Although transactions within the Bitcoin Blockchain actually do not change, with 51% attacks, attackers, psychologically, can convert you, but it may require the greatest amount of power and strength, therefore, no 51% effective attack has ever been done on the Bitcoin Blockchain , and as the number of hashates increases, the network becomes more secure.
So, in summary, the Bitcoin protocol can go something like this: consider A and A. A grabbed one BTC from his address and decided to send it to B, who had just opened his address. Each address has its own private and public keys. We will delve deeper into Asymmetric encryption in the latest article, but in short, public keys are used to encrypt transactions, and private keys are used for signing and deleting transcripts.
You can think of them as the keys to a safe, one of them locked and the other unlocked. Back to A! First, you need to copy or scan B’s address and then fill in the required amount to be sent. A then uses B’s Public Key to encrypt the transaction with his private key to sign it. Therefore, what is being done is being built.
Also, it is important to note that public keys, obviously, are public and available to anyone, and, private keys must be kept secret, because the person who controls private keys, owns bitcoin.
Therefore, as the creation is already created, it is sent to the nearest node. After the node receives the transaction, then, it is distributed to the network and verified. Verification ensures that remittances are real and when the transaction is confirmed it is transferred to “Mempool” or “Memory Pool” which is a pool of unconfirmed transactions. A transaction waits for its opportunity to be placed in the next Block. Each block contains two or three thousand transactions. After that the Proof-of-Work algorithm does its thing, the transaction is authenticated and finally integrated into one of the Blockchain Blocks.
After a fair amount of verification, B can enjoy his newly acquired bitcoin. All that said, why would anyone name a cryptocurrency? In today’s world, one needs to rely on third parties, such as banks or payment processors, to operate. In one of his emails, Satoshi wrote: “The common money problem is all the confidence needed to make it work. The central bank must be honest not to waste money, but fiat financial history is full of violations of that hope”.
With that in mind, cryptocurrensets were born, but it was not an easy task. Let’s go back a bit … It was decades before Bitcoinit was, computer scientists and cryptographers trying to create digital money. In the late 80s, the quest to establish a digital currency that would work led to the formation of a group known as the Cypherpunks.
The technical roots of their ideas are traced back to David Chaum, who introduced the concept of digital money in his 1982 book entitled: “Computer Systems Established, Maintained and Trusted In this paper, there is an initial suggestion of the word “blockchain”. Return to The Cypherpunks … Their basic ideas can also be found in “A Manifesto of Cypherpunk”, written by Eric Hughes in 1993, which states: “Privacy is needed in an open society. in the era of technology. We cannot expect governments, corporations, or other large, innocent companies to give us privacy.We must protect our privacy if we expect to have more.Cypherpunks write code.
We know that someone should write software to protect privacy. And if you want me to cover more of the Cypherpunks in the future, let me know in the comments below. The Cypherpunks even started with a mailing list in 1992, which had a lot of authors who wrote about them. Finney’s Reusable Proof-of-Work, Wei Dai’s B Money, Nick Szabo’s BitGold, Adam Back’s Hashcash. However, none of them have solved all the problems digital money can get into.
Both of the two mentioned usage problems, in particular, occur when a malicious user tries to send the same amount to two addresses at the same time. The first solution to this problem was Bitcoin, using a Proof-of-Work algorithm, similar to Hal Finney’s Reusable Proof-of-Work. Let’s go back to Alice and Bob. Let’s say A wants to send one bitcoin to B and just after his performance, he wants to send the same bitcoin to Charlie. If A is able to create both of those transactions, both will end up in an unsecured transaction pool or Mempool and what happens next: next.
Even if both of your transactions are deducted from the pool via the same blockchain verification process, the one receiving the highest verification value will be placed on Blockchain, and the other will be discarded.
Some people believe that it was Hal Finney himself who was behind it, others that it was Nick Szabo, the founder of BitGold, and still others, that it was the FBI. In the meantime, we can only continue to speculate, but I will expose my suspect in this series, so be sure to sign up so you don’t miss out on some trails along the way. Thanks for visiting!