![]() It was once possible to do at home with powerful CPUs or GPUs. Mining may be a profitable endeavor if you live in a region with cheap electricity and have the needed equipment. The higher the fee, the higher the transaction is prioritized and sooner it is written onto the blockchain. Whoever needs their transaction to be confirmed faster can offer a higher fee. Those who transfer bitcoins pay a small fee to those who confirm the transaction. It consumes time, processing, disk space, electricity and, therefore, has a cost. It takes work, because it involves heavy encryption operations. The process of confirming transactions is called mining. This ledger is built synchronously, distributed by several network users and also uses encryption, so it’s difficult to tamper with it. After confirmation by several users (usually at least six), the transaction is recorded in a gigantic ledger that records all Bitcoin transactions that have ever occurred in history, called the blockchain. Just as in the BitTorrent network a file exists while users store and share that file, in the Bitcoin network a transaction exists from the moment that users confirm that transaction. It’s thanks to cryptography that Bitcoin transactions can be secured by the parties involved, unlike traditional currency transactions, which are secured by third parties (usually banks). Private key and signature are cryptography concepts, which is one of the Bitcoin pillars. The signature provides a mathematical proof that the transaction was actually made by the owner of the wallet and also prevents the transaction from being altered by anybody once it has been issued. Technically, Bitcoin wallets have an address, from or to which are transferred bitcoins, and a private key (also called a seed), which is a secret information used to sign transactions. But remember that bitcoins cannot be stored, just transferred. ![]() ![]() Conceptually, these wallets are similar to the traditional ones in which we carry notes, coins and credit cards. All transactions are announced to all of the network users, a process called broadcasting.Ī transaction is a transfer of value between Bitcoin wallets. In fact, what travels on the network are bitcoin transactions. They also cannot be downloaded, because they are not files. Unlike traditional paper currencies, which are printed by central banks, bitcoins cannot be printed: they exist only electronically. If you already know the BitTorrent network, which is also a peer-to-peer network, but used to share files, probably you are going to understand the Bitcoin network more easily. For this reason, it is called a peer-to-peer (P2P) currency. The Bitcoin currency depends only on the user network itself to exist. The Bitcoin Project aims to develop a decentralized currency, which is not controlled by governments or banks, is not dependent on a kind of central authority to be reliable, nor is it affected by political events. The paper that introduced the concept of Bitcoin, available for reading here. Out of curiosity, Satoshi Nakamoto is a pseudonym, nobody knowns if he is actually a person or a group of people. I recommend that you read the entire how-to just to learn how Bitcoin and Electrum work and then use them according to your real needs.īitcoin was created in 2008 by Satoshi Nakamoto, who wrote a paper explaining how the currency works. If that’s what you’re looking for, I recommend looking for other contents.ĭue to the high volatility of the Bitcoin price, if you follow the steps in this tutorial all at once, you may gain or lose money, be aware of that. I advance that it’s not the objective of this tutorial to teach you how to do that. ![]() ![]() There are people who make money speculating in Bitcoin, buying or selling it as it appreciates or depreciates.
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