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Understanding Important Parts of Bitcoin

Bitcoin is a digital currency that gained popularity in 2013. This currency is not controlled by banks or other institutions. This decentralized currency is designed to keep our money from those who want to take advantage. How could this currency work if no one could say they kept it. Bitcoin consists of three parts, namely: blockchain, mining network, and wallet. In order to understand how Bitcoin from bitlocity works, we must understand how each part of it works. Make a cup of coffee/tea and enjoy this article.

Blockchain is a list of every Bitcoin transaction that has occurred. Before the transaction enters the blockchain, the transaction has not been completed. As the name implies, a blockchain is a series of blocks. The block contains a set of new transactions and is linked to the previous block. Anyone can validate the blockchain by following all records that record every transaction up to the first transaction when Satoshi Nakamoto created Bitcoin. At this point, you may be thinking hard, who is in charge of managing this blockchain. The answer is none. No single organization or individual holds its own copy of the blockchain. Bitcoin is made to be properly distributed, so there are no points of error that can break the blockchain either on purpose or accidentally. The blockchain is held by each computer mining Bitcoin.

Mining Bitcoin
The people who mine Bitcoin (miners) are the people who keep old transactions and ensure new transactions are recorded. Their job is to make (or mine) new blocks. These blocks store new transactions as they occur. As compensation for mining these new blocks, they are awarded some Bitcoin. Incentives like this ensure there are enough people to mine so that the Bitcoin network system continues.

Wallets are the part of Bitcoin that users often see. The term wallet itself is not quite right because the wallet doesn’t actually store Bitcoin. The wallet only stores a private key which allows the owner to add transactions to the blockchain at an address in the form of a public key. The bitcoins are stored as a transaction log in the blockchain.

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