Bitcoin and other cryptocurrencies are no longer an unknown territories to many. In recent years, the value of a bitcoin has gone up tremendously. Nobody can accurately predict the future of this currency but it has been observed that every day more and more people are infatuated by this next generation digital gold.
In order to understand how Bitcoin works, we first have to understand the principal that manages this cryptocurrency which is known as Blockchain. Unlike conventional currencies, Bitcoin is not centralized to only one source. Instead it is managed by global network of computers which are linked together to manage the database that records Bitcoin transactions. It serves as a public ledger and save the record in blocks. Each block is link to a previous block and is secured by cryptography.
Imagine a hospital record. The record is saved and can only be accessed by concerned doctors and patient. This record is saved with timestamp and is not modified as to keep all the information genuine regarding the patient. Blockchain works on similar principal but in more efficient manner. The concept was introduced in 2008 by Satoshi Nakamoto, and then implemented for the first time in 2009 as part of the digital bitcoin currency. By using a Blockchain system, bitcoin was the first cryptocurrency to solve the double spending problem (unlike physical coins or tokens, electronic files can be duplicated and spent twice) without the use of an authoritative body or central server.
Blockchain is practically incorruptible as it checks in with itself every 10 minutes. This self-auditing system is also a reason of its sustainability. As it’s not directed to any single processor, hacking the system requires huge computing power which is enough to penetrate the global network of Blockchain.