Simple tech explanation: What is Bitcoin?

 

Bitcoin represents a value in the system named Bitcoin-Blockchain. In this system, block contains all the transactions between people made within ten minutes. After this ten minutes the block is closed no more transactions can be added to it. So, that means that the new block has to be created. The new block is connected to the existing one via ‘‘chain’’. So this means that the system of blocks and chains is always getting new blocks. The content of all of this blocks we are also call a ‘‘public ledger’’. Every new transaction has to be confirmed by the nodes (computers which are verifying the transactions), after that the copy of transactions are spread around the world to update the rest of the bitcoin ledger. This is how the integrity of the Blockchain is protected from any fraud.

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But, what would happen if someone writes his own transaction?

Then the other nodes will deny it, by not adding that transaction into their copy of the ledger, which means that they would validate it as a fraud. This particular transaction will have no value in the Bitcoin Blockchain, which means no value at all. Also, should be mentioned that much more energy would be spent on this attend than potential reward is worth, so would be waste of time and energy.

Why is bitcoin here and what is so special about it?

Bitcoin is here to provide decentralization of the monetary system. Thanks to the dozens of thousands of independent nodes the network is censorship resistant. No one can disable all the nodes, as long at least one node is up and running, the system will work. This allows for the first time in the history independence of the money from the centralized systems we currently use. Bitcoin gives us the advantage to send money from all over the world and no permission is needed by any third party. Idea is to let people manage their money, to avoid third parties, avoid the fact that banks need to be between you and person who is receiving your funds. Bitcoin is creating a society where people want to have responsibility for their own funds: to have coins, pay with them, invest with them - use them as a regular payment method. In an ideal world, created by Satoshi, you would be able to pay: safely, privately and promptly - using bitcoin.

And how privacy is provided?

If you are familiar with private and public keys you understand that this system is basically providing the privacy. When the transaction is happening what receiver and the rest of the world can see is someone’s public key and the amount that is sent. Nothing more, so identity of the sender stays secured.

 
Pavel Karpisek