Bitcoin

2018-02-06

Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator.
The network is peer-to-peer and transactions take place between users directly, without an intermediary.
Bitcoins are created as a reward for a process known as mining

Mining

Mining is a transaction record process with bitcoins to blockchain – the public database of all the operations with Bitcoin, which is responsible for the transaction confirmation.
Network nods use blockchain to differ the real transactions from the attempt to spend the same facilities twice.
The main mining objective is reaching a consensus between network nods on which transactions consider legitimate.

Bitcoin history

Bitcoin history throws back ten-year researches of cryptography and distributed networks.
Bitcoin created in 2008 by Satoshi Nakamoto.

Emission of Bitcoins is limited as it cannot exceed 21 million Bitcoins. According to calculations Bitcoin production will end in 2140.

Bitcoin wallet

Bitcoinwallet is the equivalent of a physical wallet for transactions with Bitcoin.

Three types of Bitcoinwallets:

Bitcoinwallets provide the following functionality:

storage of Bitcoin addresses and corresponding closed/open keys on users computer in wallet.dat file,
conduction transactions of obtaining and transferring Bitcoins (BTC), also without connection to internet
providing information about the balance in BTC at all available addresses, prior transactions, spare keys.

Bitcoin transaction

A transaction is a section of data confirmed by a signature. It is sent to the Bitcoin network and forms blocks. It typically contains references to preceding transactions and associates a certain number of bitcoins with one or several public keys (Bitcoin addresses).
It is not encrypted because there is nothing to encrypt in the Bitcoin system. A block chain browser is where all transactions are combined in the form of a block chain. They can be found and verified. This is necessary to determine technical transaction parameters as well as verify the details of payments.

The general format of Bitcoin transactions

[table “12” not found /]

Bitcoin ATM

Bitcoin ATM is a machine for the exchange between crypto currencies and fiat currencies.
Such machines have been installed around the world since the end of 2013, and as of November 2017, there are 1833 of them in 59 countries. Four such machines on average are installed every day.

Buying Bitcoin

Bitcoin storage methods

Bitcoin address

Bitcoin address is an identifier (account number), starting with 1 or 3 and containing 27-34 alphanumeric Latin characters (except 0, O, I).
Address can be also represented as the QR-code, is anonymous and does not contain information about the owner.
It can be obtained for free, using, for example, Bitcoin software.

Address example:

14qViLJfdGaP4EeHnDyJbEGQysnCpwn1gZ

Bitcoin weaknesses