How does BTC work and why you couldn’t lie to him?
Nowadays, everyone has heard about the colossal growth of the cryptocurrency market: TV and radio, thousands of web-pages and articles.
Some people take such information with skepticism, some make a fortune out of this. But even people who make money out of this don’t know the structure of this mechanism and such things as, for example, fork. Let’s try to make a summary of cryptomarket.
The most popular cryptocurrency, which has confidently taken the most of the market is Bitcoin, BTC for short. It was created in 2009 by Satoshi Nacamoto and only after 7 years BTC has got wide approval. Bitcoin can be named as a first implementation of blockchain technology created long time ago, real potential of which developers have noticed only years later.
Core of Bitcoin is blockchain as it was stated earlier. This is a system of information cycles, each element of which confirms every other element. The way network confirms and check transactions is called consensus algorithm. Bitcoin uses Proof of Work algorithm — new blocks are created via finding the solution of a mathematical task. You calculate it first than others -> you prove that “work” has been done -> you get reward for block. There is a possibility that somebody will have 51% of the total power of the system and break the rules but due to the system structure this will be totally unprofitable.
What if one of the system participants begins “lying” and try to spent one amount twice for example?
System participant won’t confirm such actions because everyone knows everything and such fraud can’t be possible. But, there is a fair way of making changes — hardfork. Hardforking the system means doubling the chain and continuing it with the new rules you’d like to set in a ‘new’ blockchain which starts from the previous one!
We can talk about Bitcoin for a long time but the basics are simple. Even though BTC is now on the top of the cryptomarket but its algorithm is very resource-taking and it could be pushed of the market by other currencies pretty soon.
We’ll see.
