How does Bitcoin work? | Introduction to Bitcoin and Blockchain
Introduction
Bitcoin, the world largest digital currency, was launched in 2009 and currently reached a market cap of over 200 billion dollars. But still, most of the people don’t understand how it actually works, so this is why we are here.
Unlike the fiat currencies that we are familiar with, owned or controlled by central banks, Bitcoin has no central authority. But what happens when I don’t have a central authority to verify that everyone is actually doing his job and following the network rules?
How to prevent the double spending without the central group? How to automatically keep tracking of all balances and transactions?
How it works:
Bitcoin as a network runs on a protocol known as the blockchain. Each blockchain is unique to each individual user and his/her personal bitcoin wallet.
To get a digital network we need accounts, balances and to make a transaction. Until now it is easy to understand. One big problem every payment provider needs to solve, its own name, Double Spending.
The same amount spent twice, usually prevented and monitored by a central group, that keeps track on the balances. In a decentralized network, you do not have this group, so everyone who is related to the network has a job to do.
All bitcoin transactions are logged and made available in a public ledger and must be verified by miners on the blockchain, helping ensure their authenticity and preventing fraud; prevent transactions from being duplicated and people from copying bitcoins.
While every Bitcoin records the digital address of every wallet it touches, the bitcoin system does NOT record the names of the individuals who own wallets.
Current status
Satoshi Nakamoto was the first one, not only to answer all of those questions – but actually to make others thoughts into a reality. His system has been proven in achieving consensus without any central group.
The confirmation is a critical concept in the cryptocurrency system. The transaction is known in the whole network almost in the same moment it placed. However, only after a specific time, it will be confirmed.
The only one who can confirm the transactions are the miners, that’s their role in the cryptocurrency-network.
They receive the transactions, verify them and spread them in the whole network. The miners get rewarded with a token of the crypto-network they are involved in, for example with Bitcoins in the Bitcoin network.
New Crypto Course: readbtc.com/courses/
Buy Bitcoin via Credit Card: readbtc.com/start-trading/
Need a Plan? Get an Expert: readbtc.com/expert-zone/
Bitcoin, the world largest digital currency, was launched in 2009 and currently reached a market cap of over 200 billion dollars. But still, most of the people don’t understand how it actually works, so this is why we are here.
Unlike the fiat currencies that we are familiar with, owned or controlled by central banks, Bitcoin has no central authority. But what happens when I don’t have a central authority to verify that everyone is actually doing his job and following the network rules?
How to prevent the double spending without the central group? How to automatically keep tracking of all balances and transactions?
How it works:
Bitcoin as a network runs on a protocol known as the blockchain. Each blockchain is unique to each individual user and his/her personal bitcoin wallet.
To get a digital network we need accounts, balances and to make a transaction. Until now it is easy to understand. One big problem every payment provider needs to solve, its own name, Double Spending.
The same amount spent twice, usually prevented and monitored by a central group, that keeps track on the balances. In a decentralized network, you do not have this group, so everyone who is related to the network has a job to do.
All bitcoin transactions are logged and made available in a public ledger and must be verified by miners on the blockchain, helping ensure their authenticity and preventing fraud; prevent transactions from being duplicated and people from copying bitcoins.
While every Bitcoin records the digital address of every wallet it touches, the bitcoin system does NOT record the names of the individuals who own wallets.
Current status
Satoshi Nakamoto was the first one, not only to answer all of those questions – but actually to make others thoughts into a reality. His system has been proven in achieving consensus without any central group.
The confirmation is a critical concept in the cryptocurrency system. The transaction is known in the whole network almost in the same moment it placed. However, only after a specific time, it will be confirmed.
- It can not be reversed and it becomes officially part of the blockchain.
The only one who can confirm the transactions are the miners, that’s their role in the cryptocurrency-network.
They receive the transactions, verify them and spread them in the whole network. The miners get rewarded with a token of the crypto-network they are involved in, for example with Bitcoins in the Bitcoin network.
New Crypto Course: readbtc.com/courses/
Buy Bitcoin via Credit Card: readbtc.com/start-trading/
Need a Plan? Get an Expert: readbtc.com/expert-zone/
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