The Only Beginning For Blockchain Technology
Department of Computer Science and Engineering
The blockchain is seen as the main technological innovation of
It stands as proof of all the transactions on the network.
A block is the ‘current’ part of a blockchain which records some or
all of the recent transactions.
once transaction is completed goes into the blockchain as permanent
Each time a block gets completed, a new block is generated.
What is Bitcoin? (Introduction)
Bitcoin is software-based online payment system ,described by
Satoshi Nakamoto in 2008.
Payments are recorded in a public ledger.
It is the first decentralized ,peer-to-peer payment network.
No central authority or middlemen.
Bitcoin is commonly referred to as cryptocurrency and it can be
divided into 8 smaller unit called Satoshi (one hundred milionth of a
BTC) (0.00000001),we can use a very small amount of it like rupees
Before a bitcoin transaction is approved and processed by the network, it is
verified using a cryptographic algorithm.
You can’t reach out and touch a bitcoin. It doesn’t exist in the physical
It can be used like cash to pay for goods and services like credit card and
Bitcoins can be used to buy merchandise anonymously.
In addition, international payments are easy and cheap because bitcoins
are not tied to any country or subject to regulation.
Small businesses may like them because there are no credit card fees.
Some people just buy bit coins as an investment, hoping that they’ll go
up in value.
How does Bitcoin work?
The basics for a new user
•As a new user, you have to installed a Bitcoin
wallet on your computer or mobile phone.
•It will generate your first Bitcoin address and you
can create more whenever you need one.
•You can disclose your addresses to your friends
so that they can pay you or vice versa.
•In fact, this is pretty similar to how email works,
except that Bitcoin addresses should only be used
What makes the blockchain unique
The blockchain differs from conventional databases in a few important ways:-
It does not uses a centralised system.
Instead of storing data in one central location, it distributes it among a
network of users running the bitcoin software.
Complete history of every bitcoin transaction is stored on the blockchain,
and all of these recorded transactions are open to public scrutiny.
Established companies are interested in the blockchain because it can clear
transactions almost instantly,offering both parties a high degree of
transparency and security.
What is it based on?
System is runned by The Bitcoin protocol.
Bitcoin has several features :
1. It is decentralized.
2. It is easy to set up and it is fast.
3. It is anonymous.
4. It is completely transparent.
5. Transaction fees are miniscule.
6. Transactions are irreversible.
1. It’s decentralized
Base for the Bitcoin protocol is a peer-to-peer
system which means that there is no need for
a third party.
Therefore, in theory, bitcoin network is not controled by central
authority (fully decentralized monetary system).
Bitcoins are being created by a community of people that anyone
Bitcoin is often described as an anonymous currency because it is possible to
send and receive bitcoins without giving any personally identifying
Bitcoins are stored in wallet with digital credentials ,allows you to access
Wallet uses cryptography, in which two keys, one public and one private are
Public key can be thought of as an account number or name and the private
key, ownership credentials.
Bitcoin is transferred to the next owner ,when the next owner gives a public
key and previous owner uses his private key to publish a record into system.
2. It’s anonymus and transparent
How are Bitcoins created - Mining process
Miners use special software to solve math problems (Bitcoin
algorithm), and upon completing the task they receive certain
amount of coins.
They are created each time a user discovers new block .
Software is creating new units until it reaches amount of 21
million unites (currency with Finite Supply).
The rate of block creation is approximately consistant
over time (6 per hour) with 50 % reduction every four years....
Bitcoin doesn’t charge fees for either national or international transfers.
Bitcoin is not the first private money, not the first digital currency, and not
first currency based on cryptography, but it has been the first to rely on peer
to peer network decentralization .
Bitcoin protects against double spending .
It verifying each transaction added to the block chain to ensure that the
inputs for the transaction had not previously already been spent.
3. Negligible fees and irreversible process
How can one obtain Bitcoins?
1. Earn Bitcoins from mining.
2. Earn Bitcoins by accepting them as a means of payment.
3. Earn Bitcoins trough trading.
4. Earn Bitcoins as a regular income.
5. Earn Bitcoin from interest payments.
6. Various ways (donations, gambling, getting tipped, completing tasks on
People compete to “mine”
bitcoins using computers to
solve complex math puzzles.
This is how bitcoins are
Currently, a winner is
rewarded with 25 bitcoins
roughly every 10 minutes.
Who controls the Bitcoin network?
Nobody owns the Bitcoin network much like no one owns the technology
behind email or the Internet.
Bitcoin transactions are verified by Bitcoin miners which has an entire
industry and Bitcoin cloud mining options.
Why price of bitcoins soared and why it became the
world pionner in virtual currency field?
data source: quandl.com and bundesbank.de, own calculations
It is easy to set up and
it is fast.
Low and irreversible
Bitcoins Are Not Widely Accepted.
Absence of relevant theoretical background.
Illegal or undefined in most countries of the
No Valuation Guarantee.
No Physical Form.
No Buyer Protection.
Wallets Can Be Lost.