Secrets and insights of Bitcoin currency and trading. In this tutorial, you will learn all about BitCoin and other cryptocurrencies. This slide will also explain you about the links between Ransomware and Bitcoin.
This tutorial is of 100 slides and NOT meant to educate the user for
BitCoin trading. I am not an expert in trading and do not advice Bitcoin
trading. If you want to do trading in Bitcoin, do it at your own risk.
I sometimes feel that these Cryptocurrencies are world’s biggest scam.
If the government does not legalize it, then very soon it will become a
threat to all Governments.
At least government should start using the technology and start issuing
their own cryptocurrencies and these cryptocurrencies should have the
facility to talk to each other.
You can know all about me at: https://www.linkedin.com/in/jagdeepyadav/
In this tutorial, we will learn many things about BitCoin which you
always wanted to know, but had no time to log on to the Internet and
browse through more than 500 pages to learn all about BitCoin.
I have taken that pain for you and tried to compile that information
in this Tutorial.
No, BitCoin does not look like this and it does not come in Metallic form, this is just a picture downloaded from the Internet!.
What is BitCoin?
Before we start understanding about BitCoin, we need to understand Digital Currency and
Digital currency or digital money is distinct from physical (such as banknotes and coins) that exhibits
properties similar to physical currencies but allows for instantaneous transactions and borderless transfer-of-
Examples include virtual currencies and cryptocurrencies, among others.
A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to
secure the transactions and to control the creation of additional units. There are more than 800
Cryptocurrencies available as of 21-May-2017. BitCoin is one of them which has become very popular.
BitCoin is the first decentralized cryptocurrency, created in 3-Jan-2009 by Satoshi Nakamoto.
It uses SHA-256, a cryptographic hash function, as its proof-of-work PoW.
One Bitcoin can be further subdivided into Satoshi and there is 10 crores (10^8, 100 Million) Satoshi in one
BitCoin. BITCOIN (B) is a protocol which runs BitCoin Network. Currency is called bitcoins(b).
Analogy of BitCoin with Government Currency?
1. In olden days, there were no Governments and no paper currency.
2. People used to buy and sell products using Barter System.
3. People had lots of trust on each other and hence no Guarantee was required.
4. When governments were formed, politics came into existence and they started printing paper currency and took all the
gold from citizens assuring them the Guarantee.
5. This was the biggest Scam and we all came under Government Control.
6. Of-late people felt of having currencies which should not be in control of anybody.
7. Hence, they were in search of Neutral Body who can take the Guarantee and they found that COMPUTER can be the
neutral body with the help of blockchain technology and BitCoin was born.
8. In this technology, you can create your own Currency, but it will have zero value unless you recharge it with the help of
Mining or get it recharged by someone whose Bitcoin has value.
9. Whenever there is a transaction in Bitcoin, millions of computers come together to update the public ledger and by
doing this, these computers get rewarded with BitCoins.
Why BitCoin is in news these days?
Since WannaCry ransomware attack
which happened on 12-May-2017, in 10
days the price of BitCoin has increased
from $1,695.79 (12-May-2017)
Do we need a Bank Account to have BitCoin?
Yes and No
1. If you know someone who has a BitCoin, then you can purchase directly from him.
2. If you have a powerful computer, then you can Mine your own BitCoin.
3. If you do not have any of these, then you can buy online. Some sites allow anonymous buying and some wants that
the buyer should have Bank Account and do the KYC.
Is BitCoin similar to PayTM or other Wallets?
Yes and No
1. No, it is not similar to PayTM. However, if you have your BitCoins stored in Wallet, then it somewhat similar to
Is BitCoin similar to Shares?
Yes and No
1. No, it is not similar to shares, because it is not owned by Company. However, nowadays it is getting traded like
shares in Private Exchanges or directly.
2. In normal shares, you buy them from a company who is actually doing business and if something happens, it is
controlled by Government Agencies.
Is BitCoin similar to real currency
Yes and No
1. Yes, it is similar to real currency. Jeetna note Government ney nahi chaapa, utna in computerone chaapa hain.
2. However, it is not backed up by Government. Recently some countries have started recognizing it, but not all
governments are recognizing.
3. Real currencies are recognised by all Government.
Can BitCoin be stolen?
1. Yes, it can be stolen. If you have printed your BitCoin and kept it in your drawer and someone steals that, then it is
gone; unless you have a copy with you and you immediately transfer to some other BitCoin Address.
Can BitCoin be Hacked?
Yes and No
1. Yes, it can be hacked if you have stored your BitCoin in Online Wallet and that Wallet gets hacked. But, as a
technology, it cannot be hacked.
Can BitCoin be Forged / Counterfeited?
1. No, it cannot be forged or counterfeited. You cannot create duplicate BitCoins with the help of any Technology in
Who invented BitCoin?
Satoshi Nakamoto is the name used by the unknown person or persons who
designed bitcoin and created its original reference implementation.
As a part of the implementation, he also devised the first blockchain database.
In the process, he was the first to solve the double spending problem for the
digital currency. He was active in the development of bitcoin up until December
bitcoin.org was registered on August 18th 2008, the registrant actually used a
Japanese anonymous registration service anonymousspeech.com, and hosted it
using a Japanese ISP.
The registration for the site was only transferred to Finland on May 18th 2011.
Who is Satoshi Nakamoto?
Nakamoto has claimed to be a man living
in Japan, born on 5 April 1975. However,
speculation about the true identity of
Nakamoto has mostly focused on a number
of cryptography and computer science
experts of non-Japanese descent, living in
the United States and Europe.
As of 2 February 2017, Nakamoto is
believed to own up to roughly one million
bitcoins, with a value estimated at over
What do you mean by Satoshi Nako moto?
“Satoshi” means "clear thinking, quick witted; wise".
“Naka” can mean “medium, inside, or relationship”.
“Moto” can mean “origin”, or “foundation”
Who owns BitCoin?
The general concept of currency and money is that a bank controls
and owns the Currency.
Bitcoin defies all of these. It is, in fact, not controlled and owned by
any single body/org/government.
How BitCoin Looks like?
BitCoin Address (Public Key) BitCoin Private Key
Starting with 1 or 3 and it is 34 Characters Private Key starting with 5, 51 Characters (256 bit)
What is the actual value of BitCoin?
If you look at any currency, you know that it is simply a piece of paper
with a number on it and some fancy pictures saying that it is “worth” 100
INR or $1 and so on.
It, in fact, only has value because we say it does.
Bitcoins are the same way. Those little digital pieces of code are only
worth money because people say they are and want to trade real
goods/services for them. The more popular bitcoin gets, the more value is
going to be placed on each individual bitcoin
How to get BitCoin?
There are multiple ways to get Bitcoin:-
2. Buy from the Internet
3. Buy from direct seller
4. We can buy/transfer Bitcoin using Bluetooth, NFC, Sweeping QR
Code or even noting it in a piece of paper. However, always make
sure to update it online so that it reflects in public ledger. Or else,
there is a huge chance of getting it used by the Bitcoin seller. 245/24/2017
How to send and receive BitCoin?
You need to have a BitCoin Address(Public Key) with
a private Key.
You can give your public key to the sender and ask him
to transfer funds in that. You can do this even without
going online and have a Wallet. The only thing what
you need is BitCoin Address(Public Key) with a private
How to send and receive BitCoin using Wallet?
If you have online Wallet, it becomes easy to send and receive bitcoins.
Your wallet automatically creates new bitcoin addresses as it needs them.
You can optionally import an existing address and transfer the funds to
your wallet if you have the corresponding Private Key. This is an advanced
functionality and only suggested for advanced users.
You can only access these funds if you have the private key stored
elsewhere. If you do not have a paper wallet or other backup you should
not instruct anyone to send you coins to this address.
What happens if you loose the BitCoin Wallet?:
Losing a wallet means those bitcoins are lost forever.
While the bitcoins in the wallet may still be in existence because they were
recorded on the block chain, they are no longer able to be spent because the
wallet is lost. These bitcoins have unique keys to them and so if they’re lost
with a wallet, then they are essentially removed from circulation forever.
However, if you have printed the Printed them or kept it somewhere, then
you can reuse them.
You can also try to recover it with the help of Recovery method provided by
You can also send and receive BitCoin using Software
Where to keep BitCoin?
You can keep BitCoins in Mobile Phone Wallet
You can keep BitCoins in Website Wallet
You can keep BitCoins in Desktop Software
You can use special Hardware to store BitCoin
You can print and keep the BitCoins
You can also memorize your BitCoin
How many BitCoins can be Mined/Created?
12.5 bitcoins per block (approximately every ten
minutes) until mid 2020, and then afterwards 6.25
bitcoins per block for 4 years until next halving. This
halving continues until 2140, when 21 million bitcoins
will have been issued.
Note: You can have more than 21M BitCoin address,
but not BTC.
How BitCoin works?
Bitcoin uses public-key cryptography, peer-to-peer networking,
and proof-of-work to process and verify payments. Bitcoins are sent (or
signed over) from one address to another with each user potentially having
many, many addresses.
Each payment-transaction is broadcasted to the network and included in
the blockchain so that the included bitcoins cannot be spent twice. After
an hour or two, each transaction is locked in time by the massive amount
of processing power that continues to extend the blockchain. Using these
techniques, Bitcoin provides a fast and extremely reliable payment
network that anyone can use.
Architecture of BitCoin?
What is Mining and Can I mine BitCoin?
Bitcoin mining is the process of adding transaction records to
Bitcoin's public ledger of past transactions. This ledger of past
transactions is called the blockchain as it is a chain of blocks.
The block chain serves to confirm transactions to the rest of
the network as having taken place.
You can do mining with the help of a computer(preferably
powerful PC) along with the BitCoin Software.
How does mining Hardware look like and how to buy one?
How many BitCoin Address one can have?
There is no upper limit to the number of addresses a bitcoin
holder can control. All one’s bitcoins can be stored in a single
address, or they can be dispersed into dozens or even thousands
Meanwhile, good practice recommends (though does not
enforce) that every address is used only once. Any amount left
over in change from a transaction should not be kept in the old
address but moved to a new one.
How many BitCoin Address can be created?
How Anonymous is BitCoin?
Bitcoin is anonymous but not private. Identities are nowhere recorded in the bitcoin protocol itself, but every
transaction performed with bitcoin is visible on the distributed electronic public ledger known as the
For many users of bitcoin, who access the currency through one of the popular online wallet or exchange
services, their participation at the outset entails linking their personal identity to their bitcoin holdings. Bitcoin
for these users is effectively no more anonymous than a bank account.
For those who wish to take advantage of bitcoin’s intrinsic anonymity, they must find an alternative entry point,
such as acquiring bitcoin in a private transaction, as compensation for goods or services rendered, or as a reward
Subsequent bitcoin transactions can then be anonymous, since real-world identities are not recorded on the
blockchain ledger: the only identifying information recorded there are the bitcoin addresses, whose
corresponding private keys are held by the owners as proof of ownership.
Maintaining one’s anonymity from this point forward, however, is in no way guaranteed.
An example of this kind of IP address deanonymization made public is blockchain.info, which discloses the IP
address of the first node to report a transaction to its servers.
Some interesting facts and claims about BitCoin
March 30, 2010, 12:18:53 AM
SmoketooMuch wanted to sell 10000 BTC for
May 18, 2010, 12:35:20 AM
Laszlo Hanyecz claim to sell 10,000 BTC for 2
April 25, 2011, 02:53:46 AM
theymos claiming to sell 15000 BTC for 0.003
Missing: hard drive containing 7500 Bitcoins
- James Howells
https://news.bitcoin.com/guy-lost-bitcoin-computer-upgrade/ 150 BitCoins Hard Drive given in trash
£625m lost forever - the phenomenon of
February 15, 2011, 02:49:16 AM
An Australian member of the Bitcoin Forum
attempts to sell his 1984 Celica Supra for
3000 BTC, and becomes the first person to
offer a vehicle in exchange for Bitcoins
https://www.youtube.com/watch?v=ZqEdBCKFPAo&feature=player_embedded First BitCoin ATM
Some Facts about BitCoin
The FBI owns 15 percent of the world's bitcoins
When the US federal government raided and shut down the first online drug
marketplace, Silk Road, it also seized bitcoins to the tune of $28.5 million or almost 15
percent of the world's bitcoin mine. It is now auctioning them off to put them back in
circulation without flooding the market and crashing their value.
A man threw away his hard drive with $4 million worth of bitcoins on it.
In Newport, Wales, sometime in July 2013, a man named James Howell innocently
threw away his old hard drive, without realising that it also held his digital wallet with
7,500 bitcoins. He had mined them in 2009 when bitcoins were only known in tech
circles. By the time he discovered his mistake in November 2013, the value of those
bitcoins had soared to $4 million and it was lost under five-feet .
Some more Facts about BitCoin
1. Maximum of 21M BTC can be mined.
2. The last bitcoin will be mined in the year 2140.
3. Satoshi Nakamoto did the first transaction of BitCoins and sent 100
bitcoins to Hal Finney on January 12th, 2009.
4. The computing power of the Bitcoin network is 7468 times higher than the
cumulative of 500 world supercomputers.
5. In 2008, 3000 BTC used to get mined each day!
6. It took 5 years for Bitcoin to reach 1000$ from 0$.
7. You cant create a block, but can validate the block.
8. Only 36% of the actual BitCoins are in use, 64% are sitting in accounts
that have not been touched.
9. 31000 lines of computer code behind Bitcoin Protocol.
Some Facts about BitCoin
1. Transaction of a BitCoin Address is transparent and open to the
public. This means anyone having your BitCoin Address can know
the balance of that BitCoin Address.
2. A Person can have more than 1 BitCoin Address.
3. You cannot reverse a transaction or be forced to pay.
One of the most integral features about bitcoins is that you can
never be forced to pay, nor can you take back a transaction. If
you send a company some bitcoins for a product, you cannot
revoke that transaction nor can they repeat bill you and force
money to be taken out.
Smoketoomuch – wanted to sell 10K BTC for 50 USD
Laszlo- Asking some one to sell Pizza – 18-May-2010
Theymos – Claiming to sell 15K BTC for 0.003 USD
First Block of BitCoin worth 50 BTC
Bitcoin Price in USD till 2012
USD : 1
Jan 2009 – Mar
No exchanges or market, users were mainly cryptography fans who were
sending bitcoins for hobby purposes representing low or no value. In 30-
March-2010, user "SmokeTooMuch" auctioned 10,000 BTC for $50
(cumulatively), but no buyer was found.
On 25 Apr 2010, the now-defunct BitcoinMarket.com exchange is the first
one that starts operating.
On 22 May 2010, Laszlo Hanyecz made the first real-world transaction by
buying two pizzas in Jacksonville, Florida for 10,000 BTC.
Jul-2010 $0.08 In five days, the price grew 1000%, rising from $0.008 to $0.08 for 1 bitcoin.
9-Feb-2011 $1.00 Bitcoin reached parity with the US dollar, touching $1 per BTC at MtGox.
25-Apr-2011 NIL Theymos claiming to sell 15000 BTC for 0.003 USD
08-Jul-11 $31.00 top of first "bubble", followed by the first price drop
Dec-2011 $2.00 minimum after few months
Dec-2012 $13.00 In Mar-2012 it was 4.91 $ and then it slowly increased to 13 $ in Dec-2012
Do you want to go Back in Time?
Don’t you wish you can go back to May-2011 and buy a 1000 Bitcoins for the price of $10? Then
wait around until May 20th, 2017 to sell all of them and make a 20 million dollars! Yes, we all do.
Unfortunately, we can’t go back, but what you can do; is make a new smart investment.
You can enter in ByteCoin whose value as of 21-May-2017 is 0.002473$.
Cryptocurrencies are a form of money specifically designed to take advantage of the architecture
of the internet. Instead of relying on a standard financial institution to guarantee and verify
transactions, cryptocurrency transactions are checked, or "confirmed," by the computers of the
users on the currency's network.
The computers that verify the transactions usually receive a small amount of currency as a reward.
The process of receiving rewards in exchange for verifying transactions is called "mining," and it
is the main way that new currency is produced. Mining works differently for different currencies.
Information about Cryptocurrencies
Market share of most popular bitcoin mining pool
Mystery and Facts of BitCoin inventor/founder
Satoshi Nakamoto – from Australia
One person, Australian
programmer Craig Steven
Wright, has claimed to be
Nakamoto, though he has not
yet offered proof of this.
The New Yorker’s Joshua Davis believed that Satoshi
Nakamoto was Michael Clear, a graduate cryptography student
at Dublin's Trinity College.
He arrived at this conclusion by analyzing 80,000 words of
Nakamoto’s online writings, and searching for linguistic clues.
He also suspected Finnish economic sociologist and former
games developer Vili Lehdonvirta.
Both have denied being bitcoin’s inventor. Michael Clear
publicly denied being Satoshi at the 2013 Web Summit.
Satoshi Nakamoto – from Ireland and Finland
Adam Penenberg at FastCompany claimed that Nakamoto may
actually have been three people: Neal King, Vladimir Oksman, and
Charles Bry. He figured this out by typing unique phrases from
Nakamoto’s bitcoin paper into Google, to see if they were used
One of them, "computationally impractical to reverse," turned up in
a patent application made by these three for updating and distributing
encryption keys. The bitcoin.org domain name originally used by
Satoshi to publish the paper had been registered three days after the
patent application was filed.
Satoshi Nakamoto – Part-1
Others think that it was Martii Malmi, a developer living in
Finland who has been involved with bitcoin since the
beginning, and developed its user interface.
A finger has also been pointed at Jed McCaleb, a lover of
Japanese culture and resident of Japan, who created troubled
bitcoin exchange Mt. Gox and co-founded decentralized
payment systems Ripple and later Stellar.
Satoshi Nakamoto – Part-2
Another theory suggests that computer scientists Donal O'Mahony and Michael
Peirce are Satoshi, based on a paper that they authored concerning digital
payments, along with Hitesh Tewari, based on a book that they published together.
O’Mahony and Tewari also studied at Trinity College, where Michael Clear was a
Israeli scholars Dorit Ron and Adi Shamir of the Weizmann Institute retracted
allegations made in a paper suggesting a link between Satoshi and Silk Road, the
black market website that was taken down by the FBI in October 2013. They had
suggested a link between an address allegedly owned by Satoshi, and the site.
Security researcher Dustin D. Trammell owned the address, and disputed claims
that he was Satoshi.
Satoshi Nakamoto – Part-3
In May 2013, Internet pioneer Ted Nelson threw another hat into
the ring: Japanese mathematician Professor Shinichi Mochizuki,
although he admits that the evidence is circumstantial at best.
In February 2014, Newsweek’s Leah McGrath Goodman claimed
to have tracked down the real Satoshi Nakamoto. Dorian S
Nakamoto has since denied he knows anything about bitcoin,
eventually hiring a lawyer and releasing an official statement to
Satoshi Nakamoto – Part-4
Technical Details of BitCoin?
During mining, your Bitcoin mining hardware runs a cryptographic hashing function (two
rounds of SHA256) on what is called a block header.
For each new hash that is tried, the mining software will use a different number as the random
element of the block header, this number is called the nonce.
Depending on the nonce and what else is in the block the hashing function will yield a hash
which looks something like this:
To keep blocks coming roughly every 10 minutes, the difficulty is adjusted using a shared
formula every 2016 blocks. The network tries to change it such that 2016 blocks at the current
global network processing power take about 14 days. That's why, when the network power
rises, the difficulty rises as well.
What is BitCoin Mining Difficulty?
Bitcoin mining a block is difficult because the SHA-256 hash of a block's header must be lower than or equal to the
target in order for the block to be accepted by the network.
This problem can be simplified for explanation purposes: The hash of a block must start with a certain number of zeros.
The probability of calculating a hash that starts with many zeros is very low, therefore many attempts must be made. In
order to generate a new hash each round, a nonce is incremented. See Proof of work for more information.
Network Difficulty Metric
The Bitcoin mining network difficulty is the measure of how difficult it is to find a new block compared to the easiest it
can ever be. It is recalculated every 2016 blocks to a value such that the previous 2016 blocks would have been
generated in exactly two weeks had everyone been mining at this difficulty. This will yield, on average, one block every
As more miners join, the rate of block creation will go up. As the rate of block generation goes up, the difficulty rises to
compensate which will push the rate of block creation back down. Any blocks released by malicious miners that do not
meet the required difficulty target will simply be rejected by everyone on the network and thus will be worthless.
Cloud Mining Advantages and Disadvantages?
What is Proof of Work(PoW)?
A proof of work is a piece of data which was difficult
(costly, time-consuming) to produce so as to satisfy
certain requirements. It must be trivial to check
whether data satisfies said requirements.
Producing a proof of work can be a random process
with low probability, so that a lot of trial and error is
required on average before a valid proof of work is
generated. Bitcoin uses the Hashcash proof of work.
What is Block Reward?
When a block is discovered, the discoverer may award themselves a
certain number of bitcoins, which is agreed-upon by everyone in the
network. Currently, this bounty is 25 bitcoins; this value will halve every
210,000 blocks. See Controlled Currency Supply.
Additionally, the miner is awarded the fees paid by users sending
transactions. The fee is an incentive for the miner to include the
transaction in their block. In the future, as the number of new bitcoins
miners are allowed to create in each block dwindles, the fees will make
up a much more important percentage of mining income.
Cryptography is the branch of mathematics that lets us create mathematical proofs
that provide high levels of security. Online commerce and banking already use
cryptography. In the case of Bitcoin, cryptography is used to make it impossible for
anybody to spend funds from another user's wallet or to corrupt the block chain. It can
also be used to encrypt a wallet, so that it cannot be used without a password.
Bitcoin - with capitalization, is used when describing the concept of Bitcoin, or the
entire network itself. e.g. "I was learning about the Bitcoin protocol today."
bitcoin - without capitalization, is used to describe bitcoins as a unit of account. e.g. "I
sent ten bitcoins today."; it is also often abbreviated BTC or XBT.
Bitcoin is different than any currency you’ve used before, so it's very important to
understand some key points. Unlike government-issued money that can be inflated at
will, the supply of Bitcoin is mathematically limited to twenty-one million bitcoins and
that can never be changed. 905/24/2017
BTC is a common unit used to designate one bitcoin (B⃦).
The Bitcoin blockchain is a public record of all Bitcoin transactions. You might also
hear the term used as a “public ledger.” The block chain shows every single record of
bitcoin transactions in order, dating back to the very first one. The entire block chain
can be downloaded and openly reviewed by anyone, or you can use a block explorer to
review the block chain online.
The blockchain is a public record of Bitcoin transactions in chronological order. The
block chain is shared between all Bitcoin users. It is used to verify the permanence of
Bitcoin transactions and to prevent double spending.
Blocks are found in the Bitcoin blockchain. Blocks connect all transactions together.
Transactions are combined into single blocks and are verified every ten minutes
through mining. Each subsequent block strengthens the verification of the previous
blocks, making it impossible to double spend bitcoin transactions (see double spend
below). A block is a record in the blockchain that contains and confirms many
waiting transactions. Roughly every 10 minutes, on average, a new block including
transactions is appended to the block chain through mining.
The block height is just the number of blocks connected together in the block chain.
Height 0, for example refers to the very first block, called the “genesis block.”
What is Block Reward?Difficulty
Difficulty is directly related to Bitcoin mining (see mining below), and how hard it is
to verify blocks in the Bitcoin network. Bitcoin adjusts the mining difficulty of
verifying blocks every 2016 blocks. Difficulty is automatically adjusted to keep block
verification times at ten minutes.
A confirmation means that the bitcoin transaction has been verified by the network,
through the process known as mining. Once a transaction is confirmed, it cannot be
reversed or double spent. Transactions are included in blocks.
Confirmation means that a transaction has been processed by the network and is
highly unlikely to be reversed. Transactions receive a confirmation when they are
included in a block and for each subsequent block. Even a single confirmation can be
considered secure for low-value transactions, although. for larger amounts like 1000
US$, it makes sense to wait for 6 confirmations or more. Each confirmation
exponentially decreases the risk of a reversed transaction.
Let’s say you are spending $1.90 in your local super market, and you give the cashier
$2.00. You will get back .10 cents in change. The same logic applies to bitcoin
transactions. Bitcoin transactions are made up of inputs and outputs. When you send
bitcoins, you can only send them in a whole “output.” The change is then sent back to
What is Block Reward?Mining
Bitcoin mining is the process of using computer hardware to do mathematical
calculations for the Bitcoin network in order to confirm transactions. Miners collect
transaction fees for the transactions they confirm and are awarded bitcoins for each
block they verify. Bitcoin mining is the process of making computer hardware do
mathematical calculations for the Bitcoin network to confirm transactions and
increase security. As a reward for their services, Bitcoin miners can collect transaction
fees for the transactions they confirm, along with newly created bitcoins. Mining is a
specialized and competitive market where the rewards are divided up according to how
much calculation is done. Not all Bitcoin users do Bitcoin mining, and it is not an easy
way to make money.
What is Block Reward?Double Spend
If someone tries to send a bitcoin transaction to two different recipients at the same
time, this is double spending. Once a bitcoin transaction is confirmed, it makes it
nearly impossible to double spend it. The more confirmations that a transaction has, the
harder it is to double spend the bitcoins.
If a malicious user tries to spend their bitcoins to two different recipients at the
same time, this is double spending. Bitcoin mining and the block chain are there to
create a consensus on the network about which of the two transactions will confirm and
be considered valid.
Bitcoins have a finite supply, which makes them scarce. The total amount that will ever
be issued is 21 million. The number of bitcoins generated per block is decreased 50%
every four years. This is called “halving.” The final halving will take place in the year
What is Block Reward?Signature
A cryptographic signature is a mathematical mechanism that allows someone to
prove ownership. In the case of Bitcoin, a Bitcoin wallet and its private key(s) are
linked by some mathematical magic. When your Bitcoin software signs a transaction
with the appropriate private key, the whole network can see that the signature matches
the bitcoins being spent. However, there is no way for the world to guess your private
key to steal your hard-earned bitcoins.
The hash rate is the measuring unit of the processing power of the Bitcoin network.
The Bitcoin network must make intensive mathematical operations for security
purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10
trillion calculations per second.
What is Block Reward?Wallet
A Bitcoin wallet is loosely the equivalent of a physical wallet on the Bitcoin
network. The wallet actually contains your private key(s) which allow you to spend
the bitcoins allocated to it in the block chain. Each Bitcoin wallet can show you the
total balance of all bitcoins it controls and lets you pay a specific amount to a specific
person, just like a real wallet. This is different to credit cards where you are charged by
When a block is discovered, the discoverer may award themselves a certain number of
bitcoins, which is agreed-upon by everyone in the network. Currently, this bounty is 25
bitcoins; this value will halve every 210,000 blocks. See Controlled Currency Supply.
Additionally, the miner is awarded the fees paid by users sending transactions. The fee
is an incentive for the miner to include the transaction in their block. In the future, as
the number of new bitcoins miners are allowed to create in each block dwindles, the
fees will make up a much more important percentage of mining income. 985/24/2017
For each new hash that is tried, the mining software will use a different number as the
random element of the block header, this number is called the nonce.
Peer-to-peer refers to systems that work like an organized collective by allowing
each individual to interact directly with the others. In the case of Bitcoin, the network
is built in such a way that each user is broadcasting the transactions of other users.
And, crucially, no bank is required as a third party.