Bitcoin (BTC)

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Bitcoin is a record in a distributed public ledger (blockchain). Bitcoin is used as a payment system, an investment instrument, and a financial instrument for speculative trading. Cryptography is used to protect the blockchain network.

Bitcoin is a computer program. However, it is not located on one specific computer, but simultaneously on thousands and millions of PCs that are directly connected to each other through this program. The principle of operation resembles torrents.

Such a system is called decentralized. It is almost impossible to somehow hack or take control. The main instrument of circulation within the network is BTC, virtual coins that exist exclusively on the Internet.

Let’s go through the main aspects of the Bitcoin cryptocurrency:

  • To store, receive and transfer funds, you need a cryptocurrency wallet. A wallet consists of a public key (address), a private key (giving access to account management), and a balance. A public address can be compared to a username, while a private address can be compared to a password. In order to send you money, the other party needs to know the public or public address, but the private key must be kept in a safe place and in strict confidence.
  • The bitcoin wallet address is an identifier of the form 19L2ffRrriLo3ZDmwKdSXssadQJdp9g1fv. It is noteworthy that the Internet is only needed to make payments, not to create a wallet. The process of creating a wallet is just a random generation of a password and log in. There is even a chance of generating a wallet with money in the account, but it is extremely small and amounts to 1.813595 * 10 to -62 degrees.
  • The entire bitcoin network can be described as a huge ledger that stores information about transactions. Any transaction is open for viewing by any participant. There are special sites where you can track them. for example, the Blockchain Explorer. Transferred amounts, like public addresses, are not confidential information. However, each transaction is securely protected by a cryptographic signature to prevent hacking.
  • Approximately 10 minutes pass before a new transaction is added to the blockchain. This time is needed to establish the system’s trust in the payment. Within 10 minutes, the transaction should be included in as many blocks as possible created by the miners.
  • The maximum number of possible bitcoins is 21 million. Emission is limited in order to prevent inflation. There are currently 19,118,431 coins in circulation, however, due to increased difficulty and periodic reward cuts, the process slows down over time. According to calculations, all bitcoins will be in circulation only by 2140.
  • The smallest unit into which bitcoin can be divided is satoshi, one hundred millionths. Named after the creator of the cryptocurrency.
  • Softfork. It is a non-critical update compatible with the current protocol of the blockchain network.
  • Hardfork. This is an update whose rules cannot be combined with current software in any way.
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In the Bitcoin network, hard forks are carried out by increasing the block size, when the nodes that make up the system upgrade the software to comply with the new rules. If the change is not made, then nodes using different software will not be able to adequately perceive the same information. In this case, the blockchain is divided into two independent parts. All operations that were carried out in the original network become invalid for the second one.