Bitcoin is the brainchild of a person or group of people known under the alias Satoshi Nakamoto. Bitcoin is a Cryptocurrency/Digital money, which uses Blockchain Technology.
Bitcoin is a worldwide payment system, which is the first decentralized digital currency. It is a peer-to-peer transaction system, which occurs between two users, without any intermediary. The transactions are recorded on a distributed ledger known as Blockchain. These transactions are verified by miners who are rewarded in Bitcoins (Bitcoins are actually created in this process and this process is known as mining).
The bitcoin network came into existence after Satoshi Nakamoto mined the first ever block on the chain, known as the genesis block in January 2009. Since then the blocks are added to the chain by other transactions.
Where to store the Bitcoins?
Bitcoin is not like physical currency to store in banks or in vaults. So in order to store the Bitcoins a wallet is used. A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold or store bitcoins, due to the nature of the system, bitcoins are inseparable from the Blockchain transaction ledger. A better way to describe a wallet is something that "stores the digital credentials for your bitcoin holdings" and allows one to access (and spend) them. Bitcoin uses public-key cryptography, in which two cryptographic keys, one public and one private, are generated. In simple words, a wallet is a collection of these keys.
Transactions
A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet. The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, through a process called mining.
Mining
Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain. It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by the network. These rules prevent previous blocks from being modified because doing so would invalidate all following blocks. Mining also creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the block chain. This way, no individuals can control what is included in the blockchain or replace parts of the blockchain to roll back their own spends.
Miners usually perform mining operations and paid for it.
Benefits of using Bitcoins
The benefits of bitcoin are easy and rapid transaction worldwide. A peer-to-peer transaction, you no longer need to go through a long process before sending a friend money. You are anonymous when doing transactions. Last is you can earn profit by holding bitcoin.
Tags: Bitcoin, blockchain, cryptocurrency, mining, Satoshi Nakamoto
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