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 Crypto Currency

Crypto Currency

How does Bitcoin work?

This is a question that often causes confusion. Here's a brief explanation!

The basics for a new user - See a video enclosed...

Balances - block chain

The block chain is a shared public accounting , which is how the entire Bitcoin network is based upon. each and every confirmed transaction are included in the block chain.

Hence, Bitcoin wallets can configure their spendable balance and the new transactions can be verified to be spending bitcoins that are a under ownership by the spender.

The exact order of timing and integrity of the block chain are enforced with cryptography.

Transactions - private keys

A transaction is when a transfer of value is completed between Bitcoin wallets that are a part of the block chain. Bitcoin wallets keep a highly secretive piece of data, which is called a seed or a private key,, which is used to endorse/sign a transactions, and provide n algorithmic proof that they have come from the owner of the wallet. The signature also stops the transaction from being changed by anybody else once it has been completed and issued. All transactions are announced between the users and are confirmed by the network within minutes, via the 'mining' process.

Processing - mining

Mining is an agreed upon system that is used to confirm pending transactions by augmenting them in the block chain. It enforces a' first come first serve' like order within the block chain, facilitates the neutrality of the network, and permits different computers to agree on the integrity of the system. For a transaction to be confirmed, it must adhere to the proper protocol that allows it to be packed in a block that follows the stringent cryptographic rules that will be verified via the network.



These rules disallow previous blocks from being altered because it would invalidate all of the following blocks. Additionally, mining creates a competitive lottery that prevents any individual from adding new blocks consecutively in the block chain- thus giving them an unfair advantage. Because of this, no one can control what is included in the block chain or retroactively replace parts of the block chain to their own spends.
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