What is BTC?
Simply put, Bitcoin (BTC) is a cryptocurrency. However, there are some differences from traditional fiat currencies. For example, there is no authority controlling Bitcoin. Each Bitcoin is unique, reproducible, indestructible, and maintained on distributed ledgers maintained by thousands of computers around the world. There are now thousands of cryptocurrencies like Bitcoin on the market. The first and foremost of these is Bitcoin.
What is Bitcoin?
As mentioned above, Bitcoin is the first cryptocurrency. It is a decentralized cryptocurrency system with a highly reinforced structure against fraud.
Bitcoin can be defined as a digital currency that is maintained in distributed ledgers and operates with peer-to-peer economic system.
The system is based on open source software that is constantly updated by a large developer community. Bitcoin cannot be regulated or controlled by a single authority or organization, but is maintained by many computers around the world. The Bitcoin network is kept in a distributed ledger called Blockchain, which is responsible for maintaining a synchronized list of all transactions. These operations are grouped into interconnected blocks to form a chain structure.
Bitcoin is often confused with Blockchain, because they are used together. Now we will explain Blockchain to clarify the distinction.
What is Blockchain?
The blockchain structure is a series of records that look just like an accounting book. But what makes blockchain unique is the mechanism it uses to verify at every stage and protect these records.
The unchangeable and unique data problem is one of the most fundamental problems of digital storage since the past. Since data within a disk can be easily erased or changed, determining which data is legitimate and accurate will always be a problem. An idea put forward by W. Scott in 1990 was unique to produce solutions to this problem. The new arrangement introduced by W.Scott prevented the data from being stored unchanged or tampered backward with a method called timestamp.
Correcting the deficiencies since 90s, the anonymous Satoshi Nakamoto released the Bitcoin White Paper in 2008. It was the first time people heard Bitcoin’s name.
Distributed and Secure
The technology underlying Bitcoin is designed to ensure the integrity of data and transactions. At the beginning of the transaction, each transaction is digitally signed using cryptography techniques and verified by the participants so that the funds are not used more than once. If validity is verified by the community, the action is permanently saved to Blockchain with a process known as mining.
This may seem like a process that requires a lot of additional effort, but it has a profound impact on the security of the system. Replacing the Bitcoin Blockchain requires solving the entire structure; this is practically impossible even for the most powerful computers.
Another important layer of security is that the data is distributed over countless network nodes in the world (each holding a copy of Blockchain data). This means that even if data can be changed on one node, the data cannot be easily changed and destroyed because it will not match with the copies of other network participants.
This process is governed by a consensus algorithm called Proof of Work. Making hundreds or thousands of copies of the same data simultaneously is a much larger order than making it all at once, so, the data can be stored very securely. In addition, a distributed system is much more resistant to malfunctions and cyber-attacks because it does not rely on a single data center like conventional central systems.
Blockchain technology has produced a unique piece of electronic data that leads to the creation of Bitcoin as a decentralized and cryptographically secure cryptographic currency, which can be traced through a series of distributed ledgers. The Bitcoin Protocol is designed to have a total supply of 21. New crypto coins are generated in the Bitcoin mining process, which is based on the cryptographic hash function and executed by the PoW consensus algorithm.
In other words, Blockchain acts as a distributed ledger that records all transactions and is highly resistant to manipulation and frauds. Database records cannot be modified without practical computing power. Therefore, the network applies the original digital document concept, making each Bitcoin a unique and incalculable form of cryptocurrency.
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