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L histoire du bitcoin wallet
In the last article, here, I wrote about the basic technologies that power bitcoin these are: Worth noting that, there are far more complicated technologies behind the scene but for now knowing these three will help you understand and appreciate how bitcoin is secured, stored and transacted. As people transact bitcoins in the bitcoin network, you must be wondering how these transactions are approved and added to the blockchain as we described in the first article read here.
Your guess is as good as mine, there has to be some invisible work done behind the scene. The good news; this work is not assigned to any one person in particular or any one single entity unlike the traditional banks. In bitcoin network, the words "decentralized and distributed" have a profound meaning. The work of confirming all transactions in the bitcoin network is distributed to the participating nodes in the network. These nodes have the bitcoin software in them.
Each node, takes a list of unconfirmed transactions from the pool and proceeds to make a proposal to the network to have these transactions now known as block added to the end of the chain. But as you can imagine in a decentralized and distributed world of bitcoin with thousands of nodes, making a decision on which node's proposal should be accepted is a daunting task.
Therefore what bitcoin does, is to set a cryptographic challenge to all the nodes making a proposal to have a block added to the chain. This cryptographic problem is also know as PoW Proof of Work. In a nutshell this is how it works: A hash is unique for a given set of data and its impossible to reverse engineer a hash to get back the original data.
A set of data can only have one hash and any slight change to this data will completely change the hash. So what bitcoin does is to introduce a constraint to the expected format of the block hash. This is a very hard problem to solve and requires several cycles of "guessing" for you to have a chance of getting it right. The first node to get a solution to this problem announces to the network and that block is then added to the chain and all transactions in it confirmed.
This normally takes roughly 10 minutes, and its designed so to "stabilize" the network. Any person who dedicates his computer or computers to the task of solving this cryptographic challenge is basically doing what's called "bitcoin mining".
Since they commit resources to this cause, they are rewarded with new bitcoins for every block they successfully solve. Therefore miners play a very important role in the bitcoin world as they help to: Since its very hard for an individual to solve the cryptographic challenge, most people join mining pools.
Using a mining pool enhances the collective probability of solving a block. All the proceeds from the pool is then shared out to the miners in the pool based on an agreed formula - mostly based on the shares contributed by each person.
To increase your shares in the pool, you will need to make more contributions to the pool - and it makes sense to look at it this way. These shares are directly related to the processing power of your computer. Traditionally people have used CPUs in computers to achieve many computing tasks including bitcoin mining.
They do cost a fortune. Thank you for reading, don't forget to share and leave a comment in the comment section with the topics you would like me to talk about. In this short article, I will basically go over bitcoin mining, mining pools and GPUs.