Wednesday, March 7, 2018

How bitcoin "technically" works ?

Continuing the discussion about bitcoin from my side using others who are "experts" like Andreas Antonopolous  again we emphasize the following , We should always have this in mind the characteristics of a bitcoin so as to be guided in our dealing with any site ,  with offers of bitcoin or other crypto's . It is imperative for us to SHARE this blog or articles about bitcoin for others who still dont know about bitcoin , or for those who are mixed up with so many informations online ( either way they are the truth or they are just trying to lure us )

1. Bitcoin is decentralized,  digital currency , It is a platform of trust. 
It's not a company, it's not a product, it's not a service you sign up for. it's not a currency.
 Currency is just the first application.

2. From the history of money ,  
From pure barter exchange to the introduction of the first abstraction of value, shells, feathers, beads, nuts, stones, and then precious metals. And then paper money, and then plastic money, and now, network money.  

3. Bitcoin introduces a platform on which you can run currency as an application,  it is the internet of money   Money simply allows us to express value  and that value may have economic consequences but it also has other consequences 

4. first completely global,  completely borderless, completely decentralized, and completely open form of money, one where you can build applications because this money is programmable ,

5. when you remove the requirement for permission, what happens? Exponential explosion in innovation.  Anyone in the world can download an application or use even a feature phone with text messaging  and immediately acquire the same powers that institutions of banking have today.

6. today we have systems of money for small payments, systems of money for large payments. We have systems of money for payments between individuals, we have systems of money for payments between companies, we have systems of money for payments between governments. 
What The Internet of Money does is, it creates a single network which can do , a micro transaction to a giga transaction , in seconds, anywhere in the world for any participant without permission. 

The videos about what is bitcoin should probably gives us an understanding of what this technology is all about  .  The bitcoin is a technology  so let us learn  " how the bitcoins works technically . 

From the video it describes how the bitcoin system works , me as a non techie newbie summarizes the following ; 

1.  In order for the  bitcoin system to work , you should have a wallet where your bitcoins should be kept , usually in my experienced i had a wallet from an online site this was the site where i happened to get the wallet .  So anyone who want to be involve with bitcoin should have a wallet. The  wallet had two component the public address and the private key.

2. In order for a transaction to materialize there should be two people or entities to be involve and the matter of transactions should be agreed upon by the parties. 

3. Those who have wallet will be given the digital signatures  a public address and a private key to be used in the transactions. Its only the public address  they should know not the private key (which should be a secret).   They will used this digital signatures and public key , which is like the username and password in an email.  Private key is like the password , you dont give this to anybody. The transactions will be listed on the public ledger which can be seen by the two involve in the transaction as well as those in bitcoin networks.  The matter of listing the transactions on the ledger is the assurance that there will be no second chance of using the transactions which had already transpired. 

4. The manner of checking the authenticity of the transactions is done by the miners in the blockchain where a mathematical computations are being done and after the transactions are authenticated miners are awarded .