Bitcoin Fundamentals: Step by step explanation of a peer-to-peer Bitcoin transaction
Nakamoto introduced bitcoin on 31 October 2008 to a cryptography mailing list by publishing the White Paper “Bitcoin: A Peer-to-Peer Electronic Cash System”[1][2], and released as open-source software in 2009.
Bitcoins are created as a reward in a competition in which users offer their computing power to verify and record bitcoin transactions into the blockchain. This activity is referred to as mining and successful miners are rewarded with transaction fees and newly created bitcoins.
Technically, Bitcoin consists of:
● A decentralized peer-to-peer network (the Bitcoin protocol)
● A public transaction ledger (the blockchain)
● A set of rules for independent transaction validation and currency issuance (consensus rules)
● A mechanism for reaching global decentralized consensus on the valid blockchain (Proof-of-Work algorithm)
One of the most interesting things is that blockchain promises disruptive changes because empowers the ‘Internet of Value’ that represents a world where money is exchanged at the speed in which information moves today. Transactions would occur in real-time and across global networks, solving the problem of…
