WHAT IS BITCOIN?
Good day everyone. On October 31, 2008, Satoshi Nakamoto published the Bitcoin white paper. The title of the published white paper is "Person-to-Person Electronic Cash System". The main purpose of Bitcoin is to make it possible to make secure, fast and cheap transactions without the need for financial institutions. The basic features of Bitcoin:
1-Cryptographic encryption algorithm for transaction security.
2- The spending ledger (blocks containing all transactions in Bitcoin) should be transparent.
3-Verification of transactions with the blockchain system.
4-Always be auditable.
5-Decentralized administration.
6-Limited money supply.
7-Semi-anonymous transactions are possible.
8-Global accessibility.
9-It is an open source software.
Cryptography
Cryptography is a branch of science that uses mathematical techniques and algorithms to ensure the secure transmission of information. Cryptography forms the basis of blockchain technology. The security of cryptocurrencies and the accuracy of transactions are ensured by cryptographic methods. Transactions are secured using public key encryption and digital signature technologies.
Proof of Work and Decentralized Administration
The Bitcoin blockchain is a transparent spending ledger that is managed decentrally. All transactions on the network are written into blocks that are produced every 10 minutes. From the first Bitcoin transaction (the first Bitcoin block has a special name called "GENESIS BLOCK") to the last Bitcoin transaction, all transactions are added together chronologically in a chain system within the blocks. Bitcoin's decentralized management allows Bitcoin transactions recorded in the blocks in the Bitcoin blockchain to be audited by all users. The Proof of Work mechanism in Bitcoin is a mechanism used by miners competing to add new blocks, where a result is reached by solving a mathematical problem, and after confirming this in a very short time to all miners in the network, the miner who solves the problem is rewarded with Bitcoin. In this process, each miner competes to solve a complex mathematical problem. This process is a race to find the correct number from a very large pool of numbers with random guesses (trial and error). The number found as a result of this process (Hash Value) is the summary of the previous block in the blockchain (Hash The new block chain is created with the hash value of the previous block. The feature of the newly created block carrying the hash value of the previous block creates a chronological chaining of the blocks and the unchangeable structure of the block chain.
Limited Money Supply
The maximum supply in Bitcoin has been determined as 21,000,000, so a maximum of 21,000,000 Bitcoins will be produced. With the Halving mechanism that occurs approximately every 4 years, the last Bitcoin will be produced in 2140. Since the mining rewards are halved every 4 years thanks to the Halving mechanism, the amount of Bitcoin entering the market will decrease. We can say that Bitcoin has a deflationary structure due to its limited supply and the Halving mechanism. The currencies we use today are controlled by the central banks of the states to which the money belongs and can be printed unlimitedly.
Global, Open Source and Semi-Anonymous
Bitcoin can be accessed and used by everyone in the world. Due to its decentralized structure, Bitcoin cannot be controlled by a state or institution. Thanks to Bitcoin being an open source project, it can be developed by anyone and everyone can contribute. Bitcoin is semi-anonymous because every transaction made on the Bitcoin network since the first Bitcoin transaction can be audited and verified. The reason we call Bitcoin semi-anonymous is that users who want to join the system do not have to apply to an institution, do not have to share any private information or can use Bitcoin without having to specify a location.
Bitcoin's decentralized structure allows anyone who wants to use Bitcoin to use it, regardless of their ethnicity, place of residence, skin color, or outlook on life. The decentralized system shares the decision-making mechanism among all participants without discrimination. These are the features that make Bitcoin so valuable and will continue to make it so valuable. Bitcoin is a revolution :). Stay healthy.
(Most of this information is taken from the Youtube channel "Our Course is Crypto")