The Logic Behind Bitcoin

“A blockchain is the public ledger of all Bitcoin transactions that have ever been executed”. Therefore to begin to understand block chain, you must understand the logic behind bitcoin.

Bitcoin is a digital currency that allows transactions to occur without the need for a credit card or even a central bank. It began with the idea to enable users of bitcoin to send money over the internet in a simple and efficient way. A central bank is not required with Bitcoin, as it is run collectively by the users who use it. It is the users that must approve, by a majority vote for any changes to be implemented. Bitcoin is as virtual as credit cards and online banking networks that people use every day. Just one advantage alone to bitcoin is that all

For a blockchain transaction to take place it requires the users to hold a bitcoin address. You can send bitcoins to another user through their bitcoin address. People can have up to multiple different addresses, this is because each transaction requires a unique address. Transactions, the sending of bitcoins will hold three pieces of information. Input is a record of which bitcoin address was used to send the bitcoins at the beginning. The amount is the intended number of bitcoins that the user looks to send. The last piece of information is the output which is the address of who is to receive the

From a miner perspective, the transaction must be put through a process. They will take in the information from the block, apply a mathematical formula to it, which in turn generates a far shorter, random sequence of letters and numbers. This sequence is the hash that was spoken about previously. They will repeatedly calculate hashes with the intention to create a successful complete block. While the creation of the hash for a miner is an easy task, no matter how large the data amount, it is impossible to work out what the data of that hash just by looking at it. Each hash is unique therefore a change in one character or more in a bitcoin block, will completely the hash. It is not only the transaction in the current block that is used to create a hash but other data as well. This other data includes the hash of the previous block in the blockchain. The idea of using the previous hash is to confirm that the current block, all every block after it are legitimate. If a block is tampered with, everyone on the network will know about it.

If a user was to attempt to fake a transaction by modifying any of the blocks on the blockchain, the block’s hash would update and change. There is a hashing function available to users on the network that can be ran, allowing for the identification of a hash different to the hash previously stored. This block would be instantly spotted