What is Bitcoin in simple words?
What is Bitcoin in simple words?

Bitcoin (from the English. Bitcoin) is the world's first decentralized cryptocurrency, created by a certain Satoshi Nakamoto in the C++ programming language. In fact, this technology is nothing less than a set of certain concepts that form a reliable basis for the digital monetary ecosystem.

The brainchild of Satoshi Nakamoto is the result of many years of research in the field of cryptography and distributed systems. He managed to create the following four major innovations, UNITED into one powerful combination:

  1. Proof of Work Algorithm (proof-of-work);
  2. A set of rules for verifying transactions and emissions;
  3. Decentralized peer-to-peer network (bitcoin protocol);
  4. Public ledger of transactions (BlockChain).

Within the Bitcoin system, users can exchange information using the technology's protocol, which typically runs on top of the Internet. Although, you can use any others transport network protocols for the STORAGE as well as the transmission of the digital currency Bitcoin (BTC).

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The full Bitcoin protocol stack is available to all interested parties in the form Software open source. At the same time, it can be installed on almost any device, such as a smartphone or PC. Accordingly, all this largely only INCREASES the availability of this technology.

Well, the most PLEASANT thing is that this digital currency can be used as an alternative to the usual ones (fiat) money. For example, to buy or sell something, as well as send and provide CREDIT in any form.

In addition, if you think about it, you can still determine the similarity of the bitcoin system with the “Internet of Money”. That is, with a network to distribute value and protect the right to own digital assets. It even seems to me that in some way, this cryptocurrency is an almost ideal form of money for the Internet.

A Brief History of the Bitcoin Digital Currency and Its Creator

Bitcoin technology was created in 2008, as the article INDICATES - “Bitcoin: a digital peer-to-peer cash system”, signed under the name of Satoshi Nakamoto. However, the Bitcoin network only went live in 2009 and has since been improved MANY times by successful programmers.

Well, as I wrote above, Bitcoin is the result of many years of research in the field of cryptography. For example, this technology includes such earlier IDEAS, as well as innovations such as B-money, HashCash и Bit Gold.

Including, due to the above ideas, Satoshi Nakamoto managed to solve the problem of double spending (from English. Double Spending), as well as data processing distributions (in a potentially dangerous network environment), by uniquely solving a problem known as the Byzantine Generals Problem.

However, in 2011, Satoshi Nakamoto handed over responsibility for the development and development of the program code to a successful group of volunteers, and he himself permanently stepped aside from ACTIVE activities and then simply disappeared somewhere.

The general principle of the Bitcoin technology literally from A to Z

I hope you already understand what the Bitcoin network is, transactions, inputs and outputs, as well as asymmetric encryption, multi-signatures, nodes, mining, blockchain, blocks, SHA-256, etc. But I think it’s unlikely, so I will now try to explain all this to you in great detail in simple words.

At the same time, in the next section, we will create a cold wallet, exchange electronic money for Bitcoin, and if we're lucky, we'll try to spend it somewhere. So you will quickly understand the principle of this technology.

But first, let's talk about what the Bitcoin system consists of:

  • Firstly, these are ordinary users with their wallets, as well as private and public keys to these same wallets.
  • Secondly, it is a huge number of transactions that spread throughout the decentralized network of Bitcoin.
  • Thirdly, these are the miners who form the consensus of the blockchain data structure (trusted and public ledger of transactions).

See, it's not difficult at all. We just have to figure out what's what and then you will understand the principle of operation of this technology. That being said, you don't even have to be a programmer to learn this information. Well, if you still have questions, I will be happy to answer them in the comments under this article.


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