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Bitcoin and cryptocurrency in simple terms

#Beginners
May 26
1 min read
Bitcoin. Features of blockchain technology. What is Bitcoin for users.

Bitcoin

It is a peer-to-peer payment system and digital cash at the same time.

The Bitcoin system is based on the assumption that everyone wants to deceive each other. Therefore, a method of interaction between the parties has been developed, where parties do not trust each other.

Bitcoin system is a mechanism of interaction between the parties when you do not need to trust anyone. 1 Bitcoin is a unit for accounting operations in the Bitcoin system.

The interaction mechanism in the Bitcoin system is implemented using blockchain technology.

Features of blockchain technology

OPENNESS. An example is the open ledger that is visible to anyone who wants to see it. All operations carried out in the Bitcoin system are publicly available - Blockchain.info.

AUTHORITY. The blockchain database is distributed among millions of participants that all have the same copy. Unlike a centralized base, we have copies of blockchain data on different continents and in different countries.

DECENTRALIZATION. The blockchain database lives in different jurisdictions. The regulation of one country does not allow to control the Bitcoin system.

CONTROL FOR HONESTY. Lack of monopoly on recording the information. Usually, whoever created the database can modify it. Bitcoin system allows to record data randomly, and it is unknown who exactly records the information until the calculation of the block. For that, miners exist. By choosing a miner at random, the system gives the right to record a block that applies to all copies.

Miners are people that calculate formula using computer power. The one who correctly calculates the formule (this is determined randomly) earns a reward from the system. That is, a commission is paid out for calculating each block.

The Bitcoin system pays for its life support to those people who want to play the game. A reward is sometimes (periodically) reduced by 2 times, which is called halving. Initial reward was 50 Bitcoins.

IT IS IMPOSSIBLE to change a recorded block because the end of the next block is connected to the beginning of the previous one. In order to change, for example, block №10500, you will need to demolish all 10499 blocks before it.

What is Bitcoin for users.

Bitcoin is a digital coin, therefore you can only send and receive it via Internet.

Bitcoins can be transferred directly from one person to another (from one “wallet” to another), bypassing banks or clearing systems.

Bitcoin operation is irreversible. You cannot cancel payments, force debit funds from your account, or freeze it.

To use Bitcoin, you need access to the Internet and a place to store it.