Understanding What Bitcoin Is and the Technology Behind ItTo understand the application of Bitcoin in the real world, one must first understand the basics of how bitcoin functions and the structure that it is set up in. Bitcoin is essentially a peer- to-peer network that is completely decentralized; this means that there is no one controller or central administrator. The users are the ones in control of the Bitcoin in the system and they hold their own bitcoins in a separate digital wallet.
In the network there are three types of users. These include a full client, a lightweight client, and a web client. Each level of interaction allows for a certain level of involvement and anonymity in the system. A full client can initiate transactions directly while lightweight and web clients work through a third party. All three can, however access their wallet and spend or receive bitcoin. The wallets can be accessed at anytime and anywhere in the world. The key that is in the wallet is what allows the user to access their bitcoin.Verifying Transactions-One of the most unique parts about the system is the process used to verify is transactions.
To some people this may seem quite confusing at first, but if it is looked at in greater detail, the process is clearly effective. This system is different from current systems on how credit card transactions are verified; the bitcoin system relies on public consensus because the transactions on the blockchain can be viewed by anyone. As soon as a transaction is made, that is instantly registered by some nodes in the world. This cycle continues until eventually all the nodes can verify the transaction without accessing the currency inside because a certain key is need to view those details.
This information is all integrated into a block which is hen confirmed by calculations made by the nodes on the system. Processing power is one thing that is necessary to be a full client in the system because it is one of the many nodes that confirms transactions. As all the computers across the globe complete this process every ten minutes, the process repeats itself.
The node that confirms the block must add it to the public blockchain. This is a ledger that keeps track of all the blocks and bitcoin transactions. The timing of confirming a block will always be roughly around ten minutes because the difficulty to confirm a block is adjusted regardless of processing power worldwide or the number of transactions. The blockchain system requires all blocks to be based off of the previous block, and is therefore further confirming the validity of that block. In order to trick the system by double spending bitcoin one would have to confirm the blocks faster than any other so that it can be set in the blockchain first.
This makes that transaction quite secure once it is a few block deep into the blockchain. Doing this would mean having a system that can alter the processing time; this can disrupt the entire bitcoin system or just a small part depending on how large the crime was.