Bitcoin
Bitcoin is a collection of concepts and technology that form the basis of a digital money ecosystem.
Bitcoin users communicate with each other using the bitcoin protocol primarily via the internet, although other transport networks can also be used.
Bitcoin can be used for variety of reasons which includes selling and buying good, send money to people or organization, or extend credit.
Bit can be purchased, sold, and exchanged for other currencies at specialized currency exchanges.
Bitcoin does not have any central server that is no single individual or organization.
Bitcoin is a distributed, peer-to-peer system.
Bitcoin is created using the process called mining which involves competing to find solutions to a mathematical problem while processing bitcoin transaction.
Any person can participate in the bitcoin network and operate as a miner. They have to use their computing power to process to verify and record transactions. Every 10 minutes, on average, someone is able to validate the transactions of the past 10 minutes and is rewarded with brand new bitcoin.
The bitcoin protocol includes built-in algorithm that regulates the mining function across the network.
The protocol also halves the rate at which new bitcoin are created every 4 years, and limits the total number of bitcoin that will be created to a fixed total just below 21 million coins.
The result is that the number of bitcoin in circulation closely follows an easily predictable curve that approaches 21 million by the year 2140.
Bitcoin currency is deflationary.
Bitcoin solves the issue of counterfeiting problem and overcomes the issue of double spending.
Cryptographic digital signatures enable a user to sign a digital asset or transaction proving the ownership of that asset.
History
Bitcoin invented in 2008, with publication title Bitcoin: A Peer-to-Peer Electronic Cash System, written under the name of Satoshi Nakamota.
Bitcoin network was started in 2009, based on a reference implementation published by Nakamota and since revised by many other programmers.
The largest transaction processed so far by the network was 150 million dollar, transmitted instantly and processed without any fees.
Interesting thing, the identity of the founder of Bitcoin still remains unknown.
Bitcoin is a protocol that can be accessed using a client application that speaks the protocol.
A bitcoin wallet is the most common user interface to the bitcoin system, just like a web-browser is the most common user interface for the HTTP protocol.
Mobile Wallet- Can be run on smart phone such as Apple iOS and Android.
Web-wallet- can be accessed through a web browser and store the user wallet on a server, owned by a third party.
It is inadvisable to store large amount of bitcoin on third-party systems.
Hardware Wallet- They are operated via USB with a desktop web browser or via near-field-communication(NFC) on a mobile device.
These wallets are considered very secure and suitable for storing large amounts of bitcoin.
Paper wallet- Wood, Metal can be used.
They are highly secure means of storing bitcoin long term.
Offline storage is referred as a cold storage.
Full-node client- stores the entire history of bitcoin transaction, manages user’s wallet, and can initiate transaction directly on the bitcoin network.
A full-node handles all aspects of the protocol and can independently validate the entire block-chain and any transaction.
A full-node client consumes substantial computer more than 125 gb of disk space and 2 GB of RAM.
Lightweight Client- simple-payment verification (SPV) clients, connects to bitcoin full nodes for access the bitcoin transaction information, but stores the user wallet and independently creates, validates, and transmit transactions.
