How does Bitcoin work?

Cryptocurrency Foundation

From the start, people have traded physical assets for commodities. Today, these currencies are mainly printed banknotes or coins, governed by the central government (like the government) and tracked by financial institutions. But in 2009, Bitcoin founder Satoshi Nakamoto (Satoshi Nakamoto) came up with an idea that would change the way people think about money. What if money was regulated by mathematics and not by government?

Cipher currency is a form of digital currency that runs a whole new system of money that is not subject to the oversight of any central or formal agency. There are many types of cryptocurrencies with different functions. Regardless of each function, each digital currency is supported by a decentralized peer-to-peer network called a blockchain. Blockchain technology ensures that all cryptocurrencies are tracked, whether they are stored in digital wallets or used in transactions.

However, the efficient operation of such a system requires an infrastructure to ensure that the system will not be fraudulent and tampered with. Bitcoin was the first system to come to market and it created a system in which two people (the sender and the recipient of the coin) must sign the payment to create a digital signature. Everyone has a public and private encryption key, which makes it possible. Check the accuracy of each transaction and the system is completely anonymous and transparent. The core of this infrastructure is the general ledger. So let’s see how it works.

Operation and block chain verification

Suppose you want to invest in cryptocurrencies like Bitcoin through a large cryptocurrency exchange. You decide to spend the money after the purchase. What happened now? First, the transaction has not been approved, ie the transaction has not been formally carried out and may be “invincible” until it passes the verification process. . Once approved, the transaction will be part of the historical transaction record placed in the blockchain.

Cryptocurrency miners confirm the transaction and then add it to the public ledger. They use powerful computers to solve complex mathematical problems that are the key to the validation process. Crypto currency mining is open source, so anyone can confirm transactions and add a block to the first miner transaction log that solves the problem. This process is called “System Evidence”.

After adding the classification to the book, miners are rewarded for their efforts depending on the cryptocurrency. For example, Bitcoin initially earned 50 BTC, but this premium was halved at a predetermined time and is now raised to 12.5 BTC.

To the future

The use of major cryptocurrencies will continue to grow in the next few years, so they will play an important role in the future. Bitcoin is currently used in 96 countries / regions and is growing at 12,000 transactions per hour. Learning more about cryptocurrency is the first step, and the second step is testing.

Buy a small amount of cryptocurrency from the exchange where you can convert from btc to idr, try it and then make some transactions. Once you feel the process, you can decide to try drilling. But whichever way you go, you know that the future of cryptocurrency is bright and the list of cryptocurrencies is only growing.

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Ledger: who owns it and how does it work?

The cryptocurrency contains a ledger in which all transactions are announced in order to provide full visibility. Owning a ledger will force everyone to “play fair” and eliminate the risk of doubling expenses.

The general ledger is a list of entries in the database that cannot be changed by a person unless certain conditions are met. No one has a ledger or blockchain for cryptocurrency; on the contrary, it is decentralized in the sense of self-management and autonomy, without interference from external parties.

Indispensable for new users

As a new user, you can start using Bitcoin without knowing the technical details. After installing the Bitcoin wallet on your computer or mobile phone, you will create your first Bitcoin address and you can create more Bitcoin addresses if needed.

You can disclose your address to your friends so that they can pay you, and vice versa. In fact, this is very similar to how email works, except that the Bitcoin address can only be used once.

Scale-Blockchain

The blockchain is a shared public ledger on which the entire Bitcoin network depends. All confirmed transactions are included in the blockchain. Allow Bitcoin wallets to calculate their disposable balances so that new transactions can be verified, ensuring they really belong to consumers. The integrity and temporal sequence of the blockchain is implemented through encryption technology.

Private transaction key

The transaction is the transfer of value between the Bitcoin wallets contained in the blockchain. Bitcoin wallets store secret data called private keys or seeds, which is used to sign transactions and provide mathematical proof of the wallet owner.

The signature can also prevent the transaction from being modified by anyone once it is sent. All transactions are broadcast over the network, and confirmations typically begin within 10-20 minutes with a process called “pull”.

Processing-mining

Mining is a distributed consensus system used to confirm pending transactions by including them in the blockchain. It applies the chronological order of the blockchain, protects network neutrality, and allows different computers to reach consensus on the state of the system. To be sure, the transaction must be packaged in a block that respects very strict encryption rules, which will be verified by the network.

These rules prevent modification of previous blocks, as this invalidates all subsequent blocks. Mining also creates a competitive lottery equivalent, making it difficult for anyone to easily add new blocks to the blockchain continuously. In this way, no group or individual can control the content contained in the blockchain.