How does this work

 

 

How Bitcoin works?

 

Okay, this is a question that often causes confusion. Here is a quick explanation!

 

The key for a new user

 

As a new user, you just need to pick a wallet that you install on your computer or on your mobile phone. Once you have installed your wallet, it will create the first Bitcoin address and you can make more whenever you need one. You can uncover one of Bitcoin addresses to your friends so that you can pay or vice versa, you can pay your friends if you give their addresses. In fact, this is quite similar to how email works. So the only thing left to do at this point is to get some bitcoins and keep them safe. To start using Bitcoin, you are not required to understand the technical details.

 

However, if you want to learn more, keep reading!

Blockchain

 

The blockchain is a common public log of transactions for which the entire Bitcoin network based. All confirmed transactions included in blockchain without exception. In this way, new transactions can be verified to waste bitcoins actually owned spends. The integrity and chronology of blockchain imposed by encryption.

 

Transaction

 

A transaction is a transfer of value between Bitcoin addresses that gets included in blockchain. Bitcoin wallets kept a secret piece of data called the private key for each Bitcoin address. The private keys used to sign transactions, providing a mathematical proof from the owner of the address. The signature also prevents the transaction from being altered by the time someone has been issued. All transactions are transmitted between users and confirmed by the network in the next few minutes, through a process called extraction.

 

Mining

 

Mining is a distributed system of consensus used to confirm transactions waiting to be included in blockchain. Imposes a chronological order in blockchain, protect network neutrality, and allows several computers to agree on the state of the system. To confirm, the transactions should be packaged in a block that fits very strict encryption will be controlled by the network. These rules prevent any previous block from being modified, as this will void all sections below. Mining also creates the equivalent of a competitive lottery prevents anyone from adding new blocks sequentially to easily blockchain. This way, people can not control what is included in blockchain or replacing parts of blockchain restore their spends.

 

Going down the rabbit hole

 

This is only a very short and concise summary of the system. If you want to get into details, canread the original paper describing the system design, and to explore the wiki Bitcoin.