Post Menu and Details.
- Is Blockchain Technology the New Internet?
- Bitcoin in Delineation
- The Technology behind Bitcoins
- Bitcoin: Blockchain technology
- Is Blockchain Private?
- Two Pillars of Blockchain Technology
- Blockchain’s Practical Application and Bitcoin
- Understanding the technology behind Bitcoin FAQs
Reading time: ~4 minutes
Is Blockchain Technology the New Internet?
Here you will understand all about the technology behind Bitcoin. Basically, not allowing copying but allowing digital information to be distributed is what blockchain technology is all about. That has become the new backbone of the internet. Originally made just for digital currency, the tech community has found many other uses of this technology.
In this guide, we will try to explain the technology behind Bitcoin, and how it works, the properties that make it so unique. So created in 2009 by Satoshi Nakamoto, Bitcoin is one of the first decentralized peer-to-peer public ledgers with over 400,000 transactions per day.
Its market cap amounts up to 93 billion USD. Bitcoins and other altcoins can be and will become the future of financial transactions.
Therefore it is essential to understand the technology behind Bitcoin, how transactions are made, different types of uses, and how we can increase our privacy.
Bitcoin in Delineation
Bitcoin is considered the most advanced form of currency. It is the first cryptocurrency that came into existence. Several available Bitcoins are limited; hence its prices are very much volatile.
This transaction of Bitcoins takes a lot of time, sometimes a few hours to a few days depending on the transaction. Moreover, Bitcoin at the back-end used a fundamental encryption technique that makes it very safe to use.
This is why it is considered one of the most secure ways to safeguards one’s money.
The Technology behind Bitcoins
Before proceeding further, you should know the technology behind the Bitcoin system and how it works.
You should know about encryption and how its algorithms act as a building block of cryptocurrency. The technology behind Bitcoin is Blockchain, and we will discuss this in detail.
Bitcoin: Blockchain technology
Bitcoin and other altcoins use technology that is “Blockchain”. In simple words, blockchain has a list of records that are secured, decentralized, and public. And not only that, these records have a history of all transactions from the first block to the most recent block. Every user can have a copy of these records, which helps the user to verify the transaction. Users create a new partnership called miners who group transactions in a block and then compute Proof of work that proves its validity.
After it is added to the blockchain that makes it visible to the rest of the public, every block is connected to the previous block by pointing to a hash of the last block. The function of soup is that it takes data as input and returns a fixed-length output. The most extended chain rule is applied in the blockchain.
This means that the chain, which is the longest, is considered as the main chain.
This technology is called blockchain it has main advantages. First of all, it’s secured in all possible ways. This means that your money is not going anywhere n matter what; because of its decentralization, no third party has control over it, so this means no extra charges during the transaction.
So there are a few main advantages why people prefer blockchain-backed technology Bitcoin.
Is Blockchain Private?
Even though anyone can see the blockchain content, but users can opt to connect their systems to the blockchain as nodes. Their system receives a copy of the blockchain that keeps on updating automatically whenever there is a new block. It is just like a Facebook feed, which gives a live update whenever someone posts any new status.
Every user/system has its copy of the blockchain. In other words, there are millions of copies of the same blockchain, and each copy is identical to the other, so in this way, it is not possible to manipulate the information. To do so, hackers will need to manipulate every copy of the blockchain on the network, close to impossible. That Is what it means to have a distributed ledger.
Two Pillars of Blockchain Technology
There are main two pillars of Blockchain technology, which is the backbone of Bitcoin:
Before Bitcoin, everyone was used to centralized services. That means that an entity collects and stores all of your data, and users have to go to that entity to get whatever he wants. Banks can be a great example of this. This system has many problems with them. Since centralized, all data stored in one place.
Therefore hackers can easily hack into it. Incase f any software update whole system has to be halted for extended periods. But in the case of decentralization, there is no centralize entity looking over the data. That is the central ideology behind Bitcoin – users are the only sole responsible for the money they owe.
You can send or receive the funds without the involvement of any third party involvement.
People often misunderstood the concept of transparency of Bitcoin. Some say the Bitcoin rush gives privacy while some say it provides clarity. Let’s discuss this. User identity is hidden through complex cryptography and is represented by public address.
So if you look up anyone’s transaction history, you will not see “James sent 1 BTC” but you will see “1MF66JH78H33F34tyodnYU89c5C5C sent 1 BTC”. So in these ways, users’ real identity is secured, but you will see users’ whole transaction history. That is the level of transparency that was never seen before in any financial institution.
If you know the public address of any big firms, all you need to do is search it on the internet and look at all transactions they were engaged in. this forces firms to be honest about them.
That is the type of power that the user never had. Advanced blockchain technology is behind Bitcoin, and it is a reason that Bitcoin is considered a revolution in the financial industry.
Blockchain’s Practical Application and Bitcoin
- Bank use
- Used in cryptocurrency
- Healthcare use
- Smart contracts
- Property record use.
Understanding the technology behind Bitcoin FAQs
Is bitcoin is legal
It depends on the country, but usually yes. Bitcoin is legal
How does bitcoin make money?
Bitcoin make money from Bitcoin mining
Do you have to pay taxes on bitcoin
No, you don’t. So because bitcoin is so popular
Thank you for reading!