The Ultimate Guide To Bitcoin

January 21, 2020

FrederikNielsen
44

Bitcoin is an ordinary computer program. Only it is located not on any separate computer or server, but directly on the millions of computers that communicate directly with each other through this program.

Torrents work according to a similar principle. You install the program, and someone else does the same. After that, you can transfer files to each other directly, without the participation of any servers, and almost without control. This feature made torrents the main breeding ground for piracy on the Internet. So the bitcoin system works the same way. Only the task of this program is not to transfer files between users, but to give them “virtual points”.

Table of contents

  1. What is Bitcoin: Understanding The Basics
  2. Bitcoin Benefits
  3. Bitcoin Wallets: Everything You Need To Know
  4. 5 Ways To Buy Bitcoin
  5. How To Sell Your Bitcoin
  6. Inside Bitcoin Transactions: How It All Works
  7. Where Can You Spend Bitcoin? Here Are The Places
  8. How To Accept Bitcoin Payments For Your Business
  9. The Best Bitcoin POS Terminals For Your Business
  10. Can Bitcoin Scale?
  11. Bitcoin Law: What Are The Rules?
  12. Who Created Bitcoin? An Overview of Satoshi Nakamoto
  13. Understanding Bitcoin Charts
  14. Bitcoin Mining: How It Works
  15. Want To Mine Bitcoin? Here’s How To Set Up
  16. Bitcoin Mining Pools: Collective Mining Power
  17. The Most Popular Bitcoin Mining Pools
  18. Bitcoin Forums: Where To Discuss Bitcoin
  19. What Is Bitcoin Cash?
guide to bitcoin

The Ultimate Guide To Bitcoin

Bitcoin is an ordinary computer program. Only it is located not on any separate computer or server, but directly on the millions of computers that communicate directly with each other through this program.

Torrents work according to a similar principle. You install the program, and someone else does the same. After that, you can transfer files to each other directly, without the participation of any servers, and almost without control. This feature made torrents the main breeding ground for piracy on the Internet. So the bitcoin system works the same way. Only the task of this program is not to transfer files between users, but to give them “virtual points”.

How does Bitcoin work?

A certain character under the pseudonym Satoshi Nakamoto (or a group of characters) introduced the world to Bitcoin. In the already legendary research work, it was defined as “peer-to-peer electronic payment system”. In other words, Bitcoin is a decentralized peer-to-peer digital currency system. The whole system works thanks to the actions of a group of people called miners.

Adding transaction information to blocks

When a group of miners creates a new block, they become the temporary owners of this block. Imagine that Masha sent Pete 5 Bitcoins. Of course, she physically does not send anything, just users add information about this operation to the blocks in the blockchain, and only at the moment when the block is added, this transaction will become perfect, and Bob will receive her 5 coins.

Problems of scalability

To solve the problems of scalability, two ways were proposed: Soft fork and Hard fork.

Fork (fork) – in the practice of software developers, the so-called project cloning followed by changing its code. Thus, the original code of the project remains unchanged, and its new version can exist in parallel with the old one.

What is Soft Fork?

A soft fork is easiest to imagine as a software update with backward compatibility. What does it mean? Suppose you are using MS Excel 2005 on your laptop and want to open a spreadsheet created in MS Excel 2015. It will still open in Excel 2005 because MS Excel 2015 is backward compatible (with older versions).

What is Hard Fork?

The main difference between the soft fork and the hard fork is that the hard fork does not have backward compatibility. Once it is implemented, there will be no way to return to the original state.

What transaction data does the block body contain?

  • Any transaction consists of three elements:
  • The sender information is input.
  • Information about the recipient – exit.
  • Digital signature.

The digital signature is very important because it confirms that the sender has the necessary amount of funds required to complete the transaction. As you can see in the diagram above, it is part of the input. And although this is very important data, a big problem arises with them – they take up a lot of space. In a block of 1 MB in size, the signature takes up almost 65%!

What will happen to Bitcoin in the future?

If we talk specifically about Bitcoin, then it will be the same as with any other financial bubble. He will burst. But it will last for a long time because the system is “sharpened” under the automatic reduction of the issuance of coins to miners.

But if we talk about the idea of cryptocurrency in general, then it seems to me that everything is much more promising. The financial situation in the world is increasingly heating up due to a small flaw in the modern monetary system. Namely, the Fed issues the currency as they want, and they also demand to return this money with interest.

1. What is Bitcoin: Understanding The Basics

2. Bitcoin Benefits

3. Bitcoin Wallets: Everything You Need To Know

4. 5 Ways To Buy Bitcoin

5. How To Sell Your Bitcoin

6. Inside Bitcoin Transactions: How It All Works

guide to bitcoin

7. Where Can You Spend Bitcoin? Here Are The Places

8. How To Accept Bitcoin Payments For Your Business

9. The Best Bitcoin POS Terminals For Your Business

10. Can Bitcoin Scale?

11. Bitcoin Law: What Are The Rules?

12. Who Created Bitcoin? An Overview of Satoshi Nakamoto

guide to bitcoin

13. Understanding Bitcoin Charts

14. Bitcoin Mining: How It Works

15. Want To Mine Bitcoin? Here’s How To Set Up

16. Bitcoin Mining Pools: Collective Mining Power

17. The Most Popular Bitcoin Mining Pools

18. Bitcoin Forums: Where To Discuss Bitcoin

19. What Is Bitcoin Cash?

https://www.youtube.com/watch?v=DT1dVIP1teE&frags=pl%2Cwn
Frederik Nielsen
Frederik Nielsen

I’m a freelance writer and full-time curious person. My main interests are philosophy, politics, art, culture, science, and how they’re all interlinked. When I’m not writing, I’m fronting a band, producing records, and making videos. I’m also currently working on launching a YouTube channel that will focus on culture and politics. I think blockchain technology is fascinating because of the huge potential it has to revolutionise not only the financial sector, but society as a whole.

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