Bitcoin is the most popular virtual currencies that is based on Blockchain technology. Blockchain technology is used by many other organizations and applications. But bitcoin’s Blockchain technology helps to improve the payment system to a certain extent that it is the most demanded payment system in the world now.
Bitcoin is a digital currency and not physical money that you can hold in your pocket. Fiat currencies like the Dollar and Euro are regulated by the government. However, the governments or banks cannot issue or determine the value of bitcoin as they have no hold over it. The cryptocurrency is in a completely new form and works only on the online platform.
The inventor of bitcoin kept his identity anonymous under the name of Satoshi Nakamoto. His anonymity only contributed to the popularity of bitcoin. Currently, bitcoin has hold over the market capitalization at largest being the most popular and accepted cryptocurrency.
Understanding Bitcoin’s Blockchain technology:
The technology, that bitcoin is built-in is Blockchain technology. Blockchain is also referred as a distributed database or the public ledger which is spread throughout a computerized network.
To understand Blockchain precisely, we have to go step by step. It is a peer-to-peer network that means transactions are done from users to users directly.
- Suppose a transaction is made, it is stored in a block with a date and time-stamped that no one can change or modify. Thus, every transaction for a specific time is stored in the block.
- The transactions are verified when the mining process is done, that is the addition of a new block to the chain. When a miner verifies the transactions of a block a new block is opened.
- New transactional data are stored in the new blocks along with the old data after the new block is created.
- Thus, a chain of blocks is formed and this is called Blockchain.
Benefits of Bitcoin’s Blockchain technology:
Bitcoin Blockchain technology has enormous benefits or rather you can say it is the main reason for bitcoin’s success.
- A Blockchain network is a decentralized network. No regulatory body is controlling it. So, users have full control of their funds.
- The technology allows peer-to-peer transactions or user-to-user fund transfers without any third-party intermediary.
- The technology used cryptographic encryption that is a protecting shield against scammers.
- Blockchain technology or the peer-to-peer network makes each transaction fast and seamless be it intranational or international.
- The transactions through this network are also economic.
Understanding mining bitcoin:
The procedure through which a miner creates and brings a bitcoin in circulation is called bitcoin mining. This is done by verifying blocks of Blockchain. To be more precise, the stored data of Blockchain gets verified by this process and a new block is added to the chain. Mining is done by solving a complex cryptographic hash puzzle. The whole process includes six components and processes.
Version means the software version by which the mining is done.
This is the time when the block the miner is going to mine was created.
3. Previous block hash:
This part contains the information or data stored in the block along with a hash number after it.
4. Markle root:
All the data are combined together with a hash number and the combined thing is called the Markle root.
5. Difficulty target:
At this level, the main mathematical process of solving the puzzle is done. The level set a 64-digit hexadecimal number which is a difficulty target for the miner. The number consists of several zeroes in the beginning and has the same string length as the largest hash number of the cryptographic algorithm, SHA256. The task here is to come up with a number that is equal to or the closest smaller of the difficulty target. But, at a time so many miners can attempt to solve the puzzle. So, the only number will be considered to be the answer that comes first with all the eligibility criteria. And, the first miner that comes with the correct answer will get a reward of new bitcoins.
Nonce is the level where the miners get the extra chance or a new puzzle to solve if they fail for the first time. They get as many chances as required.
Bitcoin is the first coin that comes with these technologies. And, for these features, it has become the most valued and demanded crypto in the world. Many people are investing in it and the online trading platforms are making it way easier. The Bitcoin Era is such a platform that comes in the form of a hassle-free trading app and is very good for new investors.