Many people wonder as to what is bitcoin? Do you? Usually this is a term people nowadays get to hear and are mostly unaware of. The news of bitcoins is most often heard and seen in the newspapers and media. But what does actually Bitcoin mean? Well! that’s not a difficult thing or a concept to understand.
It is a new kind of money and an innovative network of payment. It has no Central Bank or authority. Its design is public, open source. Everyone can take part in it as it is owned or controlled by nobody.
Cryptocurrency is a form of electronic cash. Bitcoins usually are created as a reward for a process called mining. These can be exchanged for other currencies, products and services.
The technology used by the Bitcoin is peer-to-peer to operate with no Central Bank or authority and hence managing the transactions and also issuing of bitcoins is collectively carried out by the network.
Bitcoin has many unique features that has allowed the users with exciting uses which was not possible with any of the previous payment systems.
The Block chain
Bitcoin transactions are verified by network nodes through cryptography which are recorded in a public distributed ledger, which is known as blockchain. It is implemented as a chain of blocks with each block containing a hash with the previous block up to the Genesis block of the chain.
The transactions are validated by the network nodes and add them to the network copy of the ledger and then broadcast these ledger additions to the other nodes. Each network node stores a copy of its own blockchain in order to attain independent verification of the chain of ownership.
A new group of accepted transactions which is called a block, is created and added to the blockchain and also publishes quickly to all nodes without the requirement of Central insight, which happens in about every 10 minutes. This allows the software of the Bitcoin to know when a particular Bitcoin was spent which is important and needed to check or prevent double spending.