Bitcoin in a Nutshell

Bitcoin is a digital currency that is not controlled by anyone. Its network is literally capable of direct transactions to anyone, anywhere in the world without involvement of any third parties. It is completely open-source, which means anybody can audit its code and test it for vulnerabilities. So far one of the most secure digital systems ever created, bitcoin network effectively utilizes mathematical cryptographic techniques to make it tamper proof. The overall system of the network is decentralized in a way that there is no room for hackers to corrupt its software.

Initially, proposed and created by Satoshi Nakamoto, bitcoin’s method of peer-to-peer electronic payment system is based on a very innovative and secure system of databases known as the blockchain.

 

Bitcoin logo

 

Blockchain Technology

Bitcoin is currently the best implementation of the blockchain technology. Blockchain fundamentally provides the basic conceptual structure and workable protocols to create the most secure, resilient and transparent computer databases in the world. These novel databases, generally referred to as the blockchain seem to have countless applications around a multitude of fields. Bitcoin is just a single product of this blockchain technology.
Blockchain in bitcoin network works as an open-ledger where, every single transaction on the network is recorded for ever. And most importantly, it is mathematically impossible to tamper with any entry on this open-ledger thus making bitcoin the most secure cryptocurreny out there.

Bitcoin Transaction Cycle

Mining

Another very important aspect of the bitcoin network is mining. It is basically a simple mathematical process of verifying the transactions recorded on the blockchain. Mining is done by people known as miners who use computer processing power & electric power to regularly update & verify the open-ledger. Anyone with a powerful computer and bitcoin software can participate in mining. Mining is a competitive process where different miners compete for bitcoins that are rewarded for mining a single block. The fundamental protocols that govern bitcoin mining are very dynamic. These mining rules depend heavily upon the number of miners and the value of bitcoin thus dynamically altering the difficulty of the mining process. The bitcoin network which is completely decentralized both physically and virtually also incorporates the concept of network consensus. Which essentially means that every node on the network agrees before any significant updates are executed. These important protocols effectively govern the future development of the network. These network consensus rules are a great manifestation of bitcoin’s true open-source nature.

Moreover, the built-in protocols within the bitcoin core, that are incorporated to limit the total number of bitcoins to 21 million has the ability to effectively curb the possibility of an inflation. Thus making bitcoin the most stable, secure and transparent economic model ever created.