How does Bitcoin work

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How does Bitcoin work

As a new user, you can start using Bitcoin without understanding the technical details. When you install a Bitcoin wallet on your computer or phone, your first Bitcoin address will be generated. You can always generate more addresses if you need them. You can reveal your address to friends so they can pay you and vice versa. This is very similar to how e-mails work, except that the Bitcoin address should only be used once.

What is Bitcoin

Bitcoin is a virtual cryptocurrency, created in 2009 by unknown authors, operating under the pseudonym Satoshi Nakamoto. Its existence is based on extremely advanced cryptography and P2P (peer-to-peer) exchange networks, i.e. without intermediaries. Bitcoins can be used to finance various electronic transactions in a simple, fast and fairly secure way.

bitcoin rules
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What is blockchain

In this section we will discuss blockchain technology in detail and show how Bitcoin works.

Each transaction in the Bitcoin network is saved in a block chain called English blockchain. This is a public register (ledger), which is basically a list of all transactions, which is maintained and updated by thousands of miners around the world (more on this in the section below). Each transaction is anonymous, but everyone has access to it because it is publicly available.

Transactions – private keys

A transaction is the transfer of any amount between Bitcoin wallets that is included in the block chain. Bitcoin wallets contain portions of secret data, called private keys or seeds. They are used to sign transactions because they contain mathematical proof that they come from the wallet owner. The signature also prevents third-party transactions from being modified from the moment it is issued. All transactions are distributed among users and usually begin to be confirmed by the network within the next 10 minutes in a process called mining.

What is a bitcoin block

The gathering of all members of the community in one place to confirm one exchange is a form over content. Therefore, the village decided that exchanges could be made once a week. Then everyone will gather on the market and check the correctness of transactions from the last 7 days.

Fortunately, bitcoin exchanges are not limited in time, because the system works 24/7. At this time, however, the transactions are properly organized – divided into blocks. You can think of them as individual pages of a book. However, the card’s capacity is limited – we have a fixed font size, font and card size, so you can save the number of transactions on it.

So when the card reaches its capacity, it is closed and then the transaction correctness is checked. If everything is correct, the card is pasted into the book, i.e. the block is included in … the block chain. Each bitcoin block has a capacity of about 1 MB and holds about 2 thousand. transactions. This is relatively little and that’s why the network is often overloaded.

 

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