„Basically, Bitcoin is just a digital file that contains names and account balances.
people transfer their money by modifying this file. When Bob Carol uses a lawn mower
sold for 5.2 bitcoins, Bob’s account balance increases by 5.2 BTCs and Carol’s decreases by 5.2.
Bitcoin is not covered by gold or government regulation
Bob is only willing to sell his real lawnmower for a higher account balance in this digital file,
because he believes that others trust the system.
Who manages this transaction book and how is it ensured that nobody can cheat?
A goal of Bitcoin is to avoid central control, which is why each participant manages his own copy of this file.
However, it follows that everyone can see each account balance.
Therefore, in the real Bitcoin system, no names but account numbers are used, which gives a degree of anonymity.
How is it possible to keep these transaction books in sync with each other when making transfers?
even though everyone manages their own? If you want to send money, just tell everyone by sending a message
which contains your account number, that of the recipient and the amount of BTCs to be transferred
Everyone around the world then updates their transaction book
I briefly explain how Bitcoin works for power users (people who keep the system running)
You can also just use the system to send and receive money
without managing the transaction book
If sending money is as easy as creating a message with a few account numbers,
which then prevents a thief (Alice) from spending Bob’s money. Like a contract
Bitcoin requires some kind of signature to prove that the message comes from the real owner.
Such a signature works through math rather than handwriting.
An account number is always created with a mathematically associated private key.
A Bitcoin Wallet – wallet stores exactly these private keys,
because these enable the signatures – signatures.
To create a signature, the private key along with the text of the transaction becomes a special one
cryptographic function. Another function allows the signature to be verified and thus
ensure that it comes from the real owner and belongs to that particular transaction.
Unlike the handwritten version, these signatures cannot be copied and reused in the future,
because they are unique for every transaction.
The mathematical signatures can be used to prove who sent the transaction, but not
when it was sent. This is problematic.
If Alice spent two checks, but only had enough money for one
the bank would only pay the first person to cash the check
the second, however, not because Alice no longer had enough money in the account
The order of the transactions is therefore very important, because it determines who gets the money.
Unfortunately, the order in Bitcoin is a lot more difficult to determine than at a bank because it is here
are individuals that are distributed around the globe. The network can cause delays
As a result, transactions arrive at different locations at different times and timestamps can be falsified.
Both recipients would believe that your transaction came first and would ship the goods. That would result
that Alice can spend her money multiple times. Bitcoin prevents this by providing a system
that allows the whole network to regulate the order clearly.
When new transactions are created, they are put on hold. After that, they will be in one
huge transaction chain and the order is determined.
A kind of mathematical lottery is held to determine which transaction comes next.
The participants choose a transaction from the queue and try to solve a specific problem
that the transaction is linked to the end of the chain. The first person to find a solution
the transaction may be linked to the end of the chain.
How does this link work? It is based on a special function, on a hash function.
As scary as that may sound, it basically just mixes the input and outputs a value
however, it is special because it is irreversible. There is no way to go back from baseline to entrance,
except guesswork, that’s exactly what people do at Bitcoin.
Feed this function with so many random numbers until the exit
meets certain criteria.
In addition to the random number, the receipt also consists of a transaction from the queue
this creates the connection.
So now we have a way around“
COINASTRONAUTwe choose to go to the crypto moon!