Sunday, 23 September 2018

What is Bitcoin?


Bitcoin is the first decentralized digital currency that allows users to transfer money peer to peer without an inter mediator (banks, governments etc.) using Blockchain technology.


Bitcoin is used for online purchases, investments, payments etc.

It was created in 2009 by Satoshi Nakamoto.
Bitcoin helps transferring assets is faster than fiat currencies.
It has low transfer fees.
It is cryptographically secure.
The identity and personal information of sender and receiver is hidden.

Advantages of Bitcoin
  • Fast peer to peer transaction
  • Inability to counterfeit
  • Decentralized process
  • Accessible to public
  • Low fee
What is Block Chain? 
   (click here for Blockchain)


Bitcoin Mining 
    Bitcoin mining is the process of verifying Bitcoin transaction and recording them onto the public ledger (i.e., Blockchain) 
  • Here, any user with mining hardware and internet access can take part.
  • The process is solved based on a difficult mathematical puzzle called proof of work.
  • The miner who first solves the puzzle gets rewarded
In order to understand Bitcoin mining, we need to understand the 3 major concepts of Bitcoin:
  • Distributed public ledger
  • SHA-256
  • Proof of work
Distributed Public ledger :- A distributed ledger is a record of all transactions maintained in the Blockchain network across the globe.
SHA-256 :- Blockchain prevents unauthorized access by using a hash function (SHA-256) to ensure the blocks are kept secure.
   It takes an input string of any size and returns a fixed length (256 bit) of output value.

Proof of work :-In Blockchain, mining is a process to validate transactions by solving a difficult mathematical puzzle called proof of work.
  Determining nonce value is the mathematical puzzle that miners are required to solve. In the Bitcoin network, users trying to solve mathematical puzzle are called as miners. 
  The puzzle is solved by varying a nonce which produces a hash value lower than a predefined condition.
     Miners verify the transactions and add the block to the Blockchain when confirmed.
       Once a block is added to the Blockchain, the Bitcoins associated with the transactions can be spent.




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