Bitcoin is a Peer-to-Peer electronic transfer system that was launched in 2009 following a white paper published by a mysterious person(s) called Satoshi Nakamoto (The true identity is yet to be established). Unlike traditional currencies that are subject to regulations by monetary policies, Bitcoin is operated by a decentralized system making. Bitcoin is ideally the creator of Blockchain technology, which is the incorruptible worldwide ledger used as a proof of all the transactions on the Bitcoin platform.
As of December 2016, the total value of the cryptocurrency was at $14 Billion US. Bitcoin end-users own the governing computing power and participate in the Bitcoin platform are known as miners. They can be regarded as the decentralized authority which enforces the credibility of the Bitcoin Network, and are motivated by the release of new Bitcoins (rewards). New Bitcoin is released to miners following a fixed but periodically declining rate. Financial analysts’ projection of the number of Bitcoins that would have been mined by January of 2018 to be as high as 80% of all 21 million Bitcoins available.
In order for the Bitcoin ecosystem to implement a distributed timestamp server on a peer-to-peer basis, the network implements a proof-of-work algorithm. This involves the scanning of values that can be hashed, to begin with a number of zero bits. Such can be seen in the SHA-256 scheme. The average work required is determined by the number of zero bits required and are verifiable by executing a single hash. For the timestamp network, the proof-of-work scheme is implemented by incrementing a nonce in the block. This is done until a value is found giving the block’s hash the required zero bits.
Every time someone makes the first transaction in a block the creator of the block then has launched a new coin as a special coin. The network nodes will then work up an effective model for the circulation of the new coin within the network. Circulation is fueled by the nodes since the Bitcoin network does not have a centralized power to issue the coin.
In the Bitcoin network, it is possible to verify a payment without running a full network node. This means that the user only needs to obtain a copy of the block headers by querying the network nodes until they are convinced that they have the longest chain and thereby obtaining the Merkle branch which can link the transaction to its respective block by timestamp. Despite the necessity to announce each transaction publicly, Bitcoin the flow of information to maintain user privacy by keeping public keys anonymous.
What is Bitcoin blockchain? Pros and cons: