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      "body": "<html>\n<h1><strong>Understanding How Bitcoin Works</strong></h1>\n<p><img src=\"https://bitcoin.org/img/icons/opengraph.png\" width=\"500\" height=\"500\"/></p>\n<p><br></p>\n<p>Bitcoin is a digital currency that became popular in 2013. This currency is not controlled by the Bank or other agencies. This decentralized currency is designed to keep our money from those who want to take profits. But how does a digital currency work? How can this currency apply if no one can say they save it.</p>\n<p>Bitcoin consists of three parts: block chain, mining network, and wallet. In order to understand how Bitcoin works, we must understand how each part works. Make a coffee / tea and enjoy this article.</p>\n<p><br></p>\n<p><strong>Block Chain</strong></p>\n<p>Block chain is a list of every Bitcoin transaction that ever happened. Before the transaction goes into the block chain, then the transaction has not been completed. As the name implies, block chain is a series of blocks. The block contains a set of new transactions and is connected to the previous block. Everyone can validate the block chain by following all records that record each transaction up to the first transaction when Satoshi Nakamoto makes Bitcoin.</p>\n<p>Up here, you might think hard, who's in charge of managing this block chain. The answer is: no. No single organization or individual holds a block copy of its own. Bitcoin is made to be well distributed, so there is no point of error that can damage the block chain either intentionally or unintentionally. Block chain is held by every computer that mines Bitcoin.</p>\n<p><br></p>\n<p><strong>Mining Bitcoin</strong></p>\n<p>The people who mine Bitcoing (miner), are the ones who keep the old deals and make sure new transactions are recorded. Their job is to create (or mine) new blocks. These blocks keep new transactions going. As compensation has mine these new blocks, they are given some Bitcoin. This kind of incentive ensures that there are enough people to do the mining so that Bitcoin's networking system keeps on going.</p>\n<p><br></p>\n<p><strong>Wallet</strong></p>\n<p>Wallet is a part of Bitcoin that is often seen by users. The term wallet (wallet) itself is not quite right because the wallet actually does not save Bitcoin. Wallet only keeps a private key that allows the owner to add transactions to a block chain in a public key address. Bitcoin is stored as a transaction record in the block chain.</p>\n<p>The preceding paragraphs outline how Bitcoin works and we can start mining or using Bitcoin. However, it is possible that you do not trust this currency because of its rather strange way of working.</p>\n<p>The greatness of this currency is a cryptographic technique that protects the user. Let's look more closely at how this technique works.</p>\n<p>Bitcoin security mostly comes from hashing, and this hash is used to link blocks to one another in the block chain. Each block stores the previous block hash, and the hash value can not be changed without changing the current hash value of the block (which also needs to be changed in the next block, etc.). Everyone can check that no transaction ever changes the hash value because, if it is done, the next hash value will be affected and no longer linked.</p>\n<p>Block chain is a record of every transaction that can be verified publicly. Every transaction detail will be disseminated to all miner in bitcoin network with request to be put into next block.</p>\n<p>In order for a miner to be paid for his work to add a block, there are two things that must happen: they must make sure the hash is valid and the block is recorded in the block chain. The first requirement is purely a technical challenge, while the second condition will force them to examine all possibilities. If a block chain contains invalid transactions (eg, someone trades with a coin they do not own), then the next miner who gets the item from the miner will refuse it so he will not get paid. Therefore the miner will check each transaction to ensure its validity before being added to a block.</p>\n<p>When a miner receives a block from another miner, they will get an incentive when they find fault for two things. First, if they reject a block, that means they still have a chance to mine it for themselves. Secondly, if they accept blocks that other miners have rejected because they are invalid, then the mining they do will be useless because this block will not go into the block chain.</p>\n<p>At the same time they will get an incentive when they receive a valid block, because if they reject a block received by another miner, then the next block they mine will be rejected by other miners.</p>\n<p>There is a possible problem that two miners can create the same block at the same time and send it to another miner. When this happens, there will be a split in the block chain. Some miner can work in one block, and another miner in the other block. The Bitcoin rules state that a longer valid block chain will be used. One of the divisions of the two splits one of them will go into the next block first, so the miner will skip the shorter chain in order to get paid to mine a longer chain.</p>\n<p>This rule ensures that a miner network that wants to maximize private profits while maintaining the integrity of this currency. A group of miners who want to outsmart the system will require greater computing power from a combination of all the right miners (so they can mine blocks at a faster rate and have longer block chains). Hashcash further secures the Bitcoin network through raw computing power.</p>\n<p>This is the reason why Bitcoin mining should remain profitable. Currently, the Bitcoin network has a performance of 15 hash maps per second and continues to rise. To buy a larger computing power to beat the numbers above will require about 150 million pounds and will continue to grow. This price does not include electricity, storage space, refrigeration, salary of people who run it, etc.</p>\n<p><br></p>\n<p><strong>Hashcash</strong></p>\n<p>Hashcash is a system used by miners to verify that they have added a block before the block is inserted into the block chain. The basic function is to make the block chain impossible to change.</p>\n<p>This process depends on the hashing process, especially the SHA256 hash function. This function receives an input and outputs a 256-bit number. The number entered into the hash function is the header block (inside there is a counter) and all hashes from other transactions. The miner task is to find the value for the counter where the output of the hash function is below a certain value. This value limit will adjust to the current difficulty setting, which normally changes every 2016 blocks.</p>\n<p>The only way to get the required hash value is with large computing power. As more hash values ​​are gained in faster time will increase the likelihood of getting a fulfilling value. When the hash value is found, it means we have added the block and can send it to another miner on the network.</p>\n<p>The speed of a network or a miner Bitcoin computer is seen by how many hashes it can try in units of time (usually calculated in million hash per second or GHs).</p>\n<p>Miners do not have to worry about their work being taken because there is a hash of all transactions and one of those transactions is paid for the miner itself for mining blocks. This result can not be captured without changing its hash value.</p>\n<p>It should be noted that the hashcash algorithm used by Bitcoin is slightly different from the algorithm used to detect spam messages, although the workings of the two are almost identical.</p>\n<p><br></p>\n<p><strong>Fraud Prevention</strong></p>\n<p>Bitcoin mining benefits are controlled by two factors: difficulties in mining each block, and the amount of Bitcoin obtained by miner in each block. Both of these things must be balanced by taking into account the growing computing power and Bitcoin value in the market.</p>\n<p>The amount of Bitcoin given per block changes in the right value: starting at 50.5 per 210,000 blocks (about four years) to 21 million Bitcoin already mined, and no more Bitcoin can be given to mine the next blocks.</p>\n<p>The difficulty level varies every 2,016 blocks. The Bitcoin network is designed to make new blocks an average of every 10 minutes. This time is chosen for two things: a shorter time will make the transaction happen faster, but too short a time can also make more than one miner create a new block at the same time so there will be wasted resources because there are two block chain Compete for longer.</p>\n<p><br></p>\n<p>Source : codepolitan</p>\n</html>",
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