In
October 31, 2008 ‘Satoshi Nakamoto’ published a 9 page white paper and on November 2008 this was
released in cryptography mailing list under
the name Satoshi Nakamoto titled Bitcoin:
A Peer-to-Peer Electronic Cash System.
See
below image of the letter.
In
January 2009, Satoshi Nakamoto released the first version of the
open-source bitcoin core software on SourceForge and the bitcoin
protocol started running. Nakamoto mined the first 50 bitcoins.
During
October 2009, an exchange rate for the bitcoin was established, which
was US$1 = 1,309.03 BTC. This rate was decided after framing up an
equation as to how much is the cost of the electricity to run a
computer, generating bitcoins.
Bitcoin
version 0.1 released on January 9, 2009 which compiled through
Microsoft’s Visual Studio for Windows. And on January 12, 2009
the first bitcoin currency transaction takes place in block 170,
between Nakamoto and programmer Hal Finney.
December
16, 2009 – Bitcoin version 0.2 is released.
July
7, 2010 – Bitcoin version 0.3 is released.
February
19, 2013 - Bitcoin version 0.8 is released.
May
22, 2010 – Florida programmer Laszio Hanyecz offers to pay 10,000
bitcoins for a pizza on the bitcoin forum marking the first,
real-world transaction.
What
is bitcoin?
Bitcoin
is a digital currency that exists only
in
the virtual realm, unlike physical currencies like dollars, euros and
rupees.
Bitcoin
is electronic currency, known
as 'cryptocurrency'. It
is a form of digital public money that is created by mathematical
computations and policed by millions of computer users called
'miners'.
Bitcoin
is a decentralized currency managed by peer-to-peer technology
(P2P2), without a central authority. All functions such as Bitcoin
issuance, transaction processing and verification are carried out
collectively by the network
Bitcoin
has a maximum 21 million limit
Bitcoin
is self-limiting because only 21 million total bitcoins will ever be
allowed to exist, and in current circulation, approximately 11
million of bitcoins already mined.
Bitcoin
mining involves commanding your home computer to work around the
clock to solve 'proof-of-work' problems (computationally-intensive
math problems). Each bitcoin math problem has a set of possible
64-digit solutions. Your desktop computer, if it works nonstop, might
be able to solve one bitcoin problem in two to three days, likely
longer.
Bitcoin
transactions have limitations
A
Bitcoin transaction can take as long as 10 minutes to confirm.
Transactions are also irreversible and can only be refunded by the
Bitcoin recipient.
Bitcoin
balances are not insured
This
means that if you lose your Bitcoins for any reason – for example,
your hard drive crashes, or a hacker steals the digital wallet in
which your Bitcoins are stored, or the Bitcoin exchange where you
held a balance went out of business.
How
does bitcoin work?
Once
you have installed a bitcoin wallet on you computer or smart phone,
it will generates you first bitcoin address and you can create more
as your need. You can share you bitcoin address to you friends or for
others with whom you wants to by or sell.
Bitcoins
are traded from one personal 'wallet' to another.
Wallet
A
wallet is a small personal database that you store on your computer
drive, on your smartphone, on your tablet, or somewhere in the cloud.
Blockchain
A
blockchain is a ledger that keeps records of digital transactions.
Instead of having a central administrator, like a bank or the
government, blockchain organizes data in batches called blocks. These
data batches use cryptographic validation to link themselves
together. In other words, each block identifies and references the
previous block by a hash value, forming an unbroken chain.
Blockchain
solves two of the most challenging problems of digital transactions :
controlling the information and avoiding duplication. When a purchase
is carried out, the ledger records it and sends it out to the entire
network. Computers all over the world then compete to confirm the
operation by solving complex math equations. The first to figure out
the answer and validate the block receives a reward in Bitcoins (this
process is called mining.)
A blockchain is a ledger of records arranged in data batches called blocks that use cryptographic validation to link themselves together. Put simply, each block references and identifies the previous block by a hashing function, forming an unbroken chain, hence the name.
Put
like this, a blockchain just sounds like a kind of database with
built-in validation—which it is. However, the clever bit is that
the ledger is not stored in a master location or managed by any
particular body. Instead, it is said to be distributed,
existing on multiple computers at the same time in such a way that
anybody with an interest can maintain a copy of it.
Effectively
a blockchain is a kind of independent, transparent, and permanent
database coexisting in multiple locations and shared by a community.
This is why it’s sometimes referred to as a mutual distributed
ledger (MDL).
Transactions
A
transaction is a
transfer of value between Bitcoin wallets that
gets included in the block chain. Bitcoin wallets keep a secret piece
of data called a private
key or
seed, which is used to sign transactions, providing a mathematical
proof that they have come from the owner of the wallet.
The signature also
prevents the transaction from being altered by anybody once it has
been issued. All transactions are broadcast between users and usually
begin to be confirmed by the network in the following 10 minutes,
through a process called mining.
Processing
Mining
is a distributed
consensus system that
is used to confirm waiting
transactions by including them in the block chain. It enforces a
chronological order in the block chain, protects the neutrality of
the network, and allows different computers to agree on the state of
the system. To be confirmed, transactions must be packed in
a block that
fits very strict cryptographic rules that will be verified by the
network. These rules prevent previous blocks from being modified
because doing so would invalidate all following blocks. Mining also
creates the equivalent of a competitive lottery that prevents any
individual from easily adding new blocks consecutively in the block
chain. This way, no individuals can control what is included in the
block chain or replace parts of the block chain to roll back their
own spends.
What
is a satoshi?
Satoshi
is the smallest unit in a bitcoin and this unit is named after
Satoshi Nakamoto - the alias of the bitcoin creator. Each bitcoin (1
BTC) is can have a smallest part up to 8 digits, so 1 bitcoin can be
divided into 100,000,000 units and each of these bitcoin
units(0.00000001 BTC) is called a satoshi.
Table of units for Satoshi → BTC
1
Satoshi
|
=
|
0.00000001
BTC
|
||
10
Satoshi
|
=
|
0.00000010
BTC
|
||
100
Satoshi
|
=
|
0.00000100
BTC
|
=
|
1
μBTC (bit, you-bit, microbitcoin)
|
1
000 Satoshi
|
=
|
0.00001000
BTC
|
||
10
000 Satoshi
|
=
|
0.00010000
BTC
|
||
100
000 Satoshi
|
=
|
0.00100000
BTC
|
=
|
1
mBTC (em-bit, millibitcoin)
|
1
000 000 Satoshi
|
=
|
0.01000000
BTC
|
=
|
1
cBTC (bitcent)
|
10
000 000 Satoshi
|
=
|
0.10000000
BTC
|
||
100
000 000 Satoshi
|
=
|
1.00000000
BTC
|
Comments
Post a Comment