Bitcoin(BTC) - The Decentralized Digital Currency
Bitcoin is a type of digital currency used for secure transfer of value anywhere in the world, in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. BTC is developed by a software developer Satoshi Nakamoto in 2008 as a software based online currency that uses cryptography function (Hashcash SHA-1 or SHA-256) to control its creation, circulation, control and management.
Bitcoin is not controlled or issued by any bank or government - instead it is an open network which is managed by its users. The software is available as a free source and it can be downloaded by any individual from internet. The BTCs can be produced by running the software program to solve mathematical problems (i.e BTCs are created as a reward of processing work in which users offer their computing power to verify and record payments into the public ledger). BTCs are electronic money (i.e traded digitally), which has no physical forms like conventional currencies (dollars, coins etc.,).
The BTCs are called as decentralized, because the transaction requires no central authorities (i.e no need of banks, documents, contracts) and it can be transferred electronically between any individuals from PC-PC, PC-Mobile when connected in group using peer-to-peer technology, which means we can send and receive bitcoins via online without any service charges or transaction fee.
BTC ADDRESS
A bitcoin address is an identifier of 26-34 alphanumeric characters. It begins with a number 1 or 3, that represents a possible destination for a bitcoin payment. Creating bitcoin addresses are free. for example, using Bitcoin-QT, one can click new address and be assigned an address. It is also possible to get a bitcoin address using an account at an exchange or online wallet service.
For example My Address:
BITCOIN SECURITY
A Bitcoin address is a 160-bit hash of the public portion of a public/private ECDSA keypair. The public key is your bitcoin address and the private key is the encrypted form of your public key. using public-key cryptography, you can sign data with your private key and anyone knows your public key can verify that the signature is valid, thats what the miners do.
The private key in the contect of bitcoin is a secret number that allows bitcoins to be spent. In bitcoin the private key is a 128 to 512 -bit number, which can be represented one of several ways. here is a private key in hexadecimal 256 bits in hexadecimal 32 bytes or 64 characters in range 0-9 or A-F.
BTC TRANSACTION - THE BLOCK CHAIN PROCESS
The bundle of BTC transaction process is known as block chain in which every single BTC transaction of an individual that ever happened in the network in a huge version of general ledger is stored in blocks and the complex puzzles in each blocks are solved and verified by miners to complete the irreversible or permanent transactions. The block chain is formed by arranging the blocks in a sequence and it follows the cryptographic hash function and bitcoin uses SHA-256 of the previous block to prevent modifications in the block chain process, which is quickly published in all the network nodes. By using BTC address in the block chain anyone can know about the transactions made at a particular address but no one can able to know who owns it. So all your BTC transactions are securely stored with the block chain and the cryptography secure your bitcoins from illegal thefts.
The Block chain is distributed. For every transaction output the block chain registers the address to which the output is restricted or controlled. To use the output in a future transaction, the payer must digitally sign the transaction using the correcponding private key. This prevents unauthorized transfers, since only the user knowing the private key can sign the transaction and network verifies the transaction using public key. If the private key is lost, the owner can not use the account and all the bitcoins earned by the account will be deleted. For example , in 2013 one user said he lost 7,500 bitcoins, when he discarded a hard drive containing his private key.
When Bitcoins introduced into market its value was lesser than a dollar. As the growth in economy states the value of bitcoin reached a standard range 200$ to 800$.
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