The hot topic of the past decade, Bitcoin is a decentralized digital currency that came into existence in 2009. Originated by Satoshi Nakamoto, an incognito name of an individual or group of individuals who first drafted the concept of cryptocurrency in 2008.
The unit of the bitcoin system is bitcoin, represented as BTC or XBT. Some components of the bitcoin design are as follows:
- Blockchain – A blockchain is a public archive that keeps a record of bitcoin transactions. It is maintained by a network of communicating nodes that runs the bitcoin software. The implementation of blockchain is, as the name suggests, is done by a chain of blocks. Books, records, transactions can be examined using a blockchain system.
- Supply – When a new block is created, the remaining network can benefit from the new bitcoins and transactions.
- Transaction – When a user transmits a bitcoin, the amount and receiving address are termed as an output. The receiver’s actions comprise of what is called an input. Thus, a transaction involves a set of input(s) and output(s).
- Ownership – Bitcoins belong to bitcoin addresses that can be created using a private key followed by computing it with the bitcoin address. The private key is extremely important in case of loss, and the bitcoin network recognizes no other evidence of ownership.
- Mining – In the world of bitcoin, mining is a record-keeping service backed by computer processing. The consistency, completion, and originality of bitcoins are maintained by miners as new transactions are continuously assigned to the new block. Every block must contain proof of work to be accepted by the rest of the network.
- Wallet – The first wallet, named Bitcoin, was released in 2009 as open-source software. The main job of a wallet is to keep the necessary information required to transact bitcoins and earn bitcoin.
- Decentralization – Since bitcoin is decentralized, it does not consist of a central authority and no central server and central storage. The issue of bitcoins is based on the mining of new blocks. Anybody has the freedom to become a miner.
- Privacy – Although bitcoin transactions are public, they are associated with bitcoin addresses rather than an individual.