What’s the secret behind Bitcoin: How does it work?

//What’s the secret behind Bitcoin: How does it work?

What’s the secret behind Bitcoin: How does it work?

Most people have heard about Bitcoin, the popular cryptocurrency that had an excellent year on the market, but not all of them know how Bitcoin works.

One of the main reasons for that is that any user can start buying and selling Bitcoin without having any technical knowledge of this digital currency. Of course, it would be better if you learn something about the commodity you are trading.

When you install a Bitcoin wallet on a mobile device or a computer, the wallet will create a Bitcoin address, but it is possible to generate more if you need to. Feel free to share the Bitcoin address with your business partners and friends in order to pay or receive funds.

Another thing that every Bitcoin user should know is that all these transactions related to Bitcoin are taking place in the blockchain network. This blockchain represents a shared public ledger that serves as a backbone for the Bitcoin network. Every verified transaction can be found in the blockchain network. With the help of this technology, a Bitcoin wallet can easily calculate the current balance and the wallet can also verify the new transactions whenever you want to spend your bitcoins. The stability of the blockchain network is guaranteed with cryptography.

The abovementioned transactions represent transfers of value between different Bitcoin wallets that are parts of the blockchain network. Every Bitcoin wallet records a private piece of data known as a private key (sometimes called seed). This piece of data is used to sign every transaction and gives mathematical evidence that they were received by the person that owns the wallet. With the help of the signature, you can also keep the transactions safe from intruders. Every transaction made through the network is confirmed in less than ten minutes. This is the process that we know as mining.

Finally, mining is a specially designed independent distribution system. This system is used to confirm pending transactions by integrating them into the blockchain. So, in order to be confirmed, each transaction is packed in a separate block that meets pre-determined cryptographic rules. The rules are set to prevent modification of existing blocks. The individuals involved in the process of mining are obviously called Bitcoin miners and they receive compensation in the form of this cryptocurrency for their work.

Remember that this explanation about how Bitcoin works is simplified.

By | 2018-02-25T01:15:31+00:00 February 24th, 2018|Uncategorized|0 Comments