Bitcoin cryptocurrency explained– core invention of Blockchain technology
Bitcoin cryptocurrency (an invention of blockchain technology) explained as a peer to peer system for online payments that do not require a trusted central authority or you can say Bitcoin is divorced from governments and central banks.
If we understand it in simple terms than Bitcoin cryptocurrency explained as digital and global (money system) currency. It allows people to send or receive money across the internet, even to someone they don’t know or don’t trust.
Money can be exchanged without being linked to a real identity, and the mathematical field of cryptography is the core field which keeps Bitcoin secure.
Bitcoin was invented in 2008 by Satoshi Nakamoto that’s why the unit of Bitcoin is named after him as Satoshi.
It is organized through a network known as blockchain, which is an online ledger that keeps a secure record of every transaction to a commonplace.
Every time any transaction occurs, i.e., anyone buys or sell Bitcoin, the swap gets lodged.
Several hundreds of transaction make up a block.
Most unusual part is that no one controls these blocks because block chains are decentralized across every computer that has a Bitcoin wallet.
( If we understand Bitcoin wallet in traditional terms then )
A bitcoin wallet is like your personal Bank account number where you store fiat money.
( altcoin is also a cryptocurrency which works on the blockchain technology other than Bitcoin )
Bitcoin (cryptocurrency) is more reliable, quicker, and cheaper form of payment currency in comparison to money tied to individual countries.
Cryptocurrencies are the only form of payment currency that user can mine at home by using powerful Bitcoin mining hardware devices.
Even your home PC can mine for you if it has a powerful graphics card with high-end CPU configuration.
Blockchain technology –
For complete understanding of Bitcoin cryptocurrency first, you have to understand Blockchain technology
Let me first explain it in common analogy to make it simple for you. The blockchain is like a full history of banking transaction, Bitcoin currency transactions occurred or stored in a ‘block.’ (BLOCK is the collection of transactions occur on a Bitcoin network at a set period) and a countless number of blocks are connected to each other in linear and chronological order inside blockchain.
Currently, most people use a trusted intermediary such as a bank to make a transaction. But blockchain technology allows consumers and suppliers to connect directly, removing the need for a third party.
And to keep exchange secure Blockchain technology provides a decentralized database of transactions that everyone on the network can see. This network is the chain of computers that must approve a transaction before it is verified and recorded.
Now let me explain blockchain in technological analogy
Blockchain described as a type of “distributed ledger” or decentralized database that keeps a record of Bitcoin transaction, and the technology prevents the same Bitcoin from using more than once.
As the block is the current part of blockchain which records all the recent transactions and when one block gets completed it stored in blockchain as a permanent database.
After completion of a block, a new block is generated which has a hash of the previous block now they are connected to each other in linear, chronological order inside the blockchain.
Hence blockchain is the connection of a countless number of blocks in linear and chronological order where every block containing a hash of the previous block and are stored as permanent database inside it(blockchain).
The blockchain database is shared by all nodes (a node is a person who has a file of a transaction on the network) participating in a system. The full copy of blockchain contains every Bitcoin transaction ever occurred.
So it can provide an insight of any Bitcoin cryptocurrency transaction took place at any time in past and thus can reveal how much Bitcoins belonged to a particular Bitcoin address.
This is how Wikipedia defines Blockchain technology
"A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block, a timestamp and transaction data.
By design, a blockchain is inherently resistant to modification of the data. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way".
For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.
Blockchain technology was invented by Satoshi Nakamoto in 2008 for use in the Bitcoin cryptocurrency or any cryptocurrency. Bitcoin, as its public transaction ledger.
The invention of the blockchain technology for bitcoin made it the first digital currency to solve the double spending problem without the need of a trusted authority or central server."
What makes Bitcoin cryptocurrency so special?
One of the main difference between Bitcoin cryptocurrency and regular money is that Bitcoin can be sent or received from any identity whether it is a real-world identity or not.
Unless someone chooses to link his or her name with Bitcoin address, it will be difficult to tell who owns the address.
Bitcoin doesn’t keep track of users it keeps track of addresses where money is.
To understand how it is possible? Let me explain.
Each address has two important pieces of cryptographic information one is a public key, and another one is a private key.
A public key is like your email address it is open to everyone, and anyone can send bitcoins to it. It is termed as public Bitcoin address.
A private key is like your email address password which is only with the owner and only owner can send Bitcoin with it. That’s why it is called private address, and it is kept secret.
To send bitcoins from a Bitcoin address, you prove to the network that you own the private key that belongs to the address, without revealing the private key.
It is done with the mathematical field of cryptography. That’s why it is not important to keep track of user it is only important to keep track of address, and your Bitcoins will always be secure.
The core innovation that makes Bitcoin cryptocurrency so unique is that it uses consensus in a massive peer-to-peer network to verify transactions. It results in a system where payment is non-reversible.
Hence, accounts can’t be frozen.
Each Bitcoin has a complicated ID, known as hexadecimal code. That is many times harder to steal than someone credit card.
And since there is a finite number to be accounted for, there is less of a chance Bitcoin or fraction of Bitcoin will go missing.
Hence, nobody can steal your Cryptocurrency (Bitcoin) and cryptocurrencies transactions are far quicker than the traditional transactions complementing with a low trading fee.
Bitcoin cryptocurrency Future
Bitcoin future looks bright, and it is assumed as it will hit $500000 mark by 2030 and catching even a fraction of a Bitcoin starts to look a lot more enticing.
Stats of 2017 support this claim. The overall annual growth of Bitcoin cryptocurrency was staggering was over 4000% (unreal ha!)
Bitcoin is unique that there only 21 million of them. Founder of Bitcoin arrived at that number by assuming people would discover, or “mine Bitcoin,” a set number of blocks of transactions daily.
Every four years, the number of Bitcoins released relative to the previous cycle gets cut in half, as does the reward to miners for discovering new blocks.
As a result, the number of Bitcoin in circulation will approach 21 million but never hit it.
It only means Bitcoin will never experience inflation, Unlike US dollars whose buying power can be diluted, but merely there won’t be more Bitcoin cryptocurrency available in the future.
Bitcoin had made people millionaires and it is very unlikely that its growth can be halted anytime soon and same applies to other top trading cryptocurrencies that also work on blockchain technology with same or updated features.