How does Bitcoin work?
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As a new user, you can get started with Bitcoin without understanding the technical details. Once you have 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 once. The block chain is a shared public ledger on which the entire Bitcoin network relies.
All confirmed transactions are included in the block chain. This way, Bitcoin wallets can calculate their spendable balance and new transactions can be verified to be spending bitcoins that are actually owned by the spender. The integrity and the chronological order of the block chain are enforced with cryptography.
A transaction is a transfer of value between Bitcoin wallets that gets included bitcoin summary 070314 the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet. The signature also prevents the transaction from being altered by anybody once it has been issued.
All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, through a process called mining. Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain.
It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits bitcoin summary 070314 strict cryptographic rules that will be verified by the network.
These rules prevent previous blocks from being modified because doing so would invalidate all following blocks. Mining also creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the block chain. This way, no bitcoin summary 070314 can control what is included in the block chain or replace parts of the block chain to roll bitcoin summary 070314 their own spends.
This is only a very short and concise bitcoin summary 070314 of the system. If you want to get into the details, you can read the original paper that describes the system's design, read the developer documentationand explore the Bitcoin wiki.
How does Bitcoin work? This is a question that often causes confusion. Here's a quick bitcoin summary 070314 The basics for a new user As a new user, you can get started with Bitcoin without understanding the technical details. Balances - bitcoin summary 070314 chain The block chain is a shared public ledger on which the entire Bitcoin network relies.
Transactions - private keys A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Processing - mining Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain.
Going down the rabbit hole This bitcoin summary 070314 only a very short and concise summary of the system.
