What is Bitcoin?

what is bitcoin

what is bitcoin

Bitcoin (English: Bitcoin) is universal encryption of electronic money and is accessible by users’ autonomous trading tools.

Bitcoin is also a peer to peer network payment system and virtual-denominated instrument, and some people call it digital currency. It was first known by its pseudonym Satoshi in 2009, and the name was given by the developers of this open source software during its launch. As cryptographic techniques are used to control the production and transfer of money, it is also considered to be coin encrypted electronic money (Cryptocurrency). Under normal circumstances, the first letter is capitalized; and “Bitcoin” refers to the technology and networks in use, and the first letter in lowercase “bitcoin” refers to the money itself.

Bitcoin is got through a kind of “mining” process that results in the generation, validation and processing of transactions through the participants to get a record fee of Bitcoins, or obtain a new output of bitcoins. People use electronic wallet software on a PC, mobile device or network to trade in bitcoins. Bitcoin mining via acquisition can also be used to exchange goods, services, and other currencies.

As a billing system, there are no centralized Bitcoin issuers issuing new money or maintaining transactions, the work is done by the network using digital encryption algorithms to ensure the security of transactions. Transaction records are included in all the computers maintained in the network. Before each transaction, the genuineness of coins needs to be established.

As a unit of account, the smallest unit of Bitcoin is 0.00000001, also known as a “clever.” If necessary, you can modify the agreement to break it up into smaller units to ensure ease in circulation. The total quantity of Bitcoin in circulation will always be slightly less than 21 million (provided other parameters remain unchanged).

what is bitcoin

what is bitcoin

Block Chain

There is an important concept known as block chain (Blockchain) in Bitcoin. The concept of Nakamoto of the White Paper, the block chain is a string associated with data block (called a “block”) that is generated using cryptographic methods.

New data is always linked to a block, and the block is the end of the entire chain. The transaction history of the Bitcoin peer network is stored in the “block chain” (Blockchain), so the block chain can be seen as a record of the books of Bitcoin transactions.

Block chain is a group of client nodes that are the participants found in the distributed database, which is a record of all Bitcoin transactions. Nakamoto anticipated that when the amount of data increases, the client would not want all the data stored in its own node.

what is bitcoin block chain

 

To achieve this goal, he introduced the hash function mechanism. Hence, the clients will be able to automatically remove any previous Bitcoin transaction records. Nakamoto created the first block of Bitcoin system which is known as “Creation block” together with the sentence “The Times 03 / Jan / 2009 Chancellor on brink of second bailout for banks”, this appeared on the same day in the Times front-page article as the day’s headlines.

The confirmation process for a transaction is calculated by solving a series of puzzles using a workload proof mechanism to achieve it. Workload proof mechanism requires computing power for a limited value, needs some time to solve the math, which prevents any hacker from rewriting the history of the transaction, unless he has a more powerful computing capability than what the Bitcoin peer network system has, like the high speed block chain.

The difficulty with the proof mechanism is that it cannot automatically adjust to the workload of the system, and a new generation of blocks require an average time of 10 minutes.

The entire Bitcoin P2P peer network nodes will automatically detect the validity of such transactions and block them, and detect any breach of the rules in the trading and blocks, such as the number of blocks that generate an error, or send the same share of the Bitcoin transactions multiple times.

Clients can get involved in the process to block a certain amount of newly issued Bitcoins, and the related transaction fees. In order to get these newly generated bitcoins, the client needs to  spend a lot of time and computing power (professional mining machines can replace computers and other low distribution networks set up by the community), this process is very similar to mining, therefore Nakamoto data handlers called them “miners”, the data processing activity was called “mining.”

These new generation Bitcoins are rewarded through the system of data processing. Through mining, the Bitcoin system has attained global reach as revolutionary currency.

For the same reason, there are other similar coins that work on the same philosophy to deal with inter-end transaction data, by just adjusting the workload mechanisms, such as using the equity proof (Prove of Service) and Script algorithms.

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