We’ve now covered how bitcoin addresses are secured and become acquainted with the blockchain. In this post we are going to learn about the process known as mining which acts to secure the network.
What is bitcoin mining?
Miners are the engine that powers the blockchain. They check transactions are valid and then record them into blocks to be added to the chain.
There are two key questions that mining answers.
Bitcoin uses a peer-to-peer network, with no central authority issuing transactions. As a result, each node is likely to include different transactions in their respective blocks.
(1) How does the network decide which block to add to the chain?
Furthermore, computers are expensive to buy and operate.
(2) Why would anyone spend their resources running a node?
In the last post, we uncovered exactly what a Bitcoin address is and how one can be secured using modern cryptography.
In this post we are going to delve into the database underpinning bitcoin and learn how it is structured. That database is known as a blockchain:
A blockchain is simply a distributed database
For many years, it was thought that fully decentralised digital currencies were impossible. The reason being the problem of double spending. How do you ensure that a digital coin has not been copied electronically and therefore spent repeatedly without the use of a central authority for verification?
In this post we will take a closer look at the magic of cryptography and how it features in Bitcoin.
Bitcoin begins with public key cryptography
As I’ve touched on in my previous posts, the Bitcoin protocol is essentially a record of transactions between addresses. For simplicities sake you can think of an address as being akin to an online bank account. The Bitcoin ledger contains records of the coins that each address has sent and received.
But what actually is an address? Public key cryptography was published in the 1970s and provides a method for asynchronous encryption and decryption of information.
What on earth does that mean?
So far, we’ve covered an introduction to crypto currency and the key innovations which inspired the creation of Bitcoin.
Now let’s lift up the hood and take a peek at Bitcoin’s delicates.
Welcome back reader.
So you’ve read about the crazy new world of crypto currency and want to understand where it all began?
The tale of Bitcoin is long and winding, it all begins with an underground online community which emerged in the early nineties on a usenet mailing list.