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Bitcoin is a form of cryptocurrency that was invented in 2009.
Bitcoin Blockchain is the database of all past bitcoin transactions. Its updated on average roughly every 10 minutes by Bitcoin miners.
To understand how does bitcoin transfer actually work consider the transfer between Alice(pseudonym 01as) and Bob(pseudonym 43js):
Proof of work:
Block chain is maintained by anonymous peers on the network. So bitcoin requires that each block proves that a significant amount of work was invested in its creation to ensure that untrustworthy peers who want to modify past blocks have to work harder than honest peers who only want to add new blocks at the end of block chain. In short, proof of work is a piece of data which is difficult (costly, time consuming) to produce but easy for others to verify and which satisfies certain requirements. Bitcoin uses hash code proof of work system.
Double Spending Problem:
If Alice transfers 10 bitcoins to Bob but before this transaction she secretly tries to send the same amount of money to someone else resulting into Bob not actually receiving any bitcoins. This is called Double Spending.
Solution to Double Spending problem using Bitcoins:
Double Spending problem is solved using bitcoin miners.
Bitcoin miners listen to all ongoing transactions and record it into transaction block. Along with transactions, these miners will also include an extra transaction for themselves as a credit for the work they have done.
Some Interesting facts:
Bitcoin Blockchain is the database of all past bitcoin transactions. Its updated on average roughly every 10 minutes by Bitcoin miners.
To understand how does bitcoin transfer actually work consider the transfer between Alice(pseudonym 01as) and Bob(pseudonym 43js):
- Alice broadcasts her intent to transfer 1 bitcoin (1 BTC) to Bob to the network of bitcoin miners.
- Alice learns Bob's public address(43js) which is similar to learning Bob's email address.
- Alice then creates a transaction from one of her bitcoin address(01as) to one of Bob's bitcoin address(43js)
- Alice signs her transaction with her private key which is similar to password for her public bitcoin address.
- Alice sends the transaction to the bitcoin network.
- A miner processes the transaction confirming her signature is valid and that her private key gives her authority to transfer 1BTC to Bob. This work done by a miner is visible to everyone else.
- Every other node in the network has chance to check the miner's work. If the miner did the work correctly then the miner gets a reward.
Proof of work:
Block chain is maintained by anonymous peers on the network. So bitcoin requires that each block proves that a significant amount of work was invested in its creation to ensure that untrustworthy peers who want to modify past blocks have to work harder than honest peers who only want to add new blocks at the end of block chain. In short, proof of work is a piece of data which is difficult (costly, time consuming) to produce but easy for others to verify and which satisfies certain requirements. Bitcoin uses hash code proof of work system.
Double Spending Problem:
If Alice transfers 10 bitcoins to Bob but before this transaction she secretly tries to send the same amount of money to someone else resulting into Bob not actually receiving any bitcoins. This is called Double Spending.
Solution to Double Spending problem using Bitcoins:
Double Spending problem is solved using bitcoin miners.
Bitcoin miners listen to all ongoing transactions and record it into transaction block. Along with transactions, these miners will also include an extra transaction for themselves as a credit for the work they have done.
Some Interesting facts:
- Bitcoin wallet is a container for private keys corresponding to respective bitcoin address.
- Public key is calculated from private key using elliptic curve multiplication which is irreversible.
- Bitcoin address is derived from public key through the use of one-way cryptographic hashing. The algorithms used are the Secure Hash Algorithm and the RACE Integrity Digest.
- Maximum number of bitcoins that can be generated in 21 million. Once we get close to this limit or reach this limit then the miners do not get a reward. But a transaction fees serves a purpose of incentives for these miners.
- Smallest possible unit in bitcoin is 0.00000001 BTC. This unit is known as Satoshi. This name comes from Satoshi Nakamoto which is a pseudoname for the bitcoin inventor.
- Genesis block is the first block in a transaction block chain.
- Largest chain means the chain which has most amount of work put into it.
- Fork of a chain somehow there is more than one version of the history. Forks are used in fradulant transactions.
nice information on blockchain has given thank you very much.
ReplyDeleteblockchain course in hyderabad
your article on blockchain is very good. keep it up thank you for sharing.
ReplyDeleteblockchain course in hyderabad