We saw in our previous edition that Bitcoin was a big account book that shows, records or reports who paid to whom, how much and when. It is not a paper book, but they are files called blocks. And these interconnected blocks are called Blockchain. It is not a currency that exists in the form of paper or coins but a virtual currency. We have also seen that banks create money through credit.
In fact, the whole principle of Bitcoin is to create a decentralized currency system. There should be no central server. So, no middleman. Everything works according to the peer-to-peer principle, such as ‘torrents’ that allow files to be exchanged between computers. Computers are actually interconnected. Each is called a “node” in the network because it owns a copy of the Blockchain. The whole principle aims to eliminate the bank as an intermediary and deprive it of the power to create money through credit. Remember in the previous article: we wrote that consumption is based on credit and that banks create money through credit.
So anyone can connect to the network with their computer. You just need to run software called “Bitcoin Core” on your computer. You should know that the computer connected to this network will fetch the Blockchain from the other network devices and this requires much more time and space on the computer disk.
Bitcoin draws its power from its complex algorithm that bypasses any central authority by agreeing linked computers with each other without any interference. Network computers constantly monitor Bitcoin’s history. Thanks to the features of the Hash, they can be sure of the entire route of the transactions and indicate without error that Thierry paid an amount of $2000 to Calixte on June 8, 2010 at 2:25 PM. In fact, all computers check the integrity of Bitcoin.
We understand that Bitcoin is a decentralized currency, i.e. without central authority. We also learn that anyone can connect to a Bitcoin network through their computer thanks to software called “Bitcoin Core” and that any computer gets the Blockchain from other computers. These computers linked together by the Hashes do not allow intruders in and therefore they all monitor to protect the Bitcoin. The question now is how are new blocks created?
Minors
The history of money is linked to gold. Miners are the ones who have found gold in the mines by digging. With Bitcoin, the vocabulary has not changed. The gold rush is not an offensive against the underground, but virtual. And miners are computers. Mining in the search for new Bitcoins is dedicated to computers. So, to generate new Bitcoins we make computers work non-stop. These virtual Stakanovs must answer a question to earn the right to create a new block in the Blockchain and then earn new Bitcoins. It must be said that it is a race without stopping. You have to be faster because it is the one who answers first, that wins etc. Obviously the “little” computers, as they are called, are trying to solve a math problem. And exactly these computers are trying to find a number that, hashed, gives a number that starts with a long string of zeros. And when it is missed it is necessary to start over etc. It just takes all the computers in action to come up with an answer every 10 minutes. To create a new block every 10 minutes, as you will have understood, it all depends on how many computers are hashing.
So first all computers in the network must be active and at the same time there must be slightly fewer computers in hash activity to have a chance of a new block and thus be rewarded in Bitcoins. Granted, it’s like winning the lottery. You must be patient and come back to it every time. Gold is always hard to find for miners. They dig deep for months to find a few grams. And the same goes for virtual miners. It is getting harder and harder to find Bitcoins to mine and the reward is shrinking even more. It is also said that in 2140 Bitcoins will be exhausted. As of today, a miner who wins will be rewarded with 6.25 BTC (Bitcoin).
Knowing that there are no tangible coins of Bitcoins, the question being asked is, how do Bitcoin transactions go from one account to another? It is very well known and since the beginning of the birth of Bitcoin that it stores its transactions in a ledger called Blockchain. And that all transactions are visible to everyone from day one. The key is transparency.
Do you remember Calixte? Everyone knows he got $2,000 from Thierry. It is no secret for people who are in the network. Blockchain information is not accessible to the general public. It is jealously guarded between the small computers that are all interconnected. When Thierry pays Calixte $2000, Calixte has to sign that he has received it and the other computers are informed and validate the transaction. The principle of Bitcoin is to take control of this currency. Intermediaries such as banks are excluded. The goal is to maintain control over the creation of Bitcoin currency, its transactions and its value. Satoshi Nakamoto, the creator of Bitcoin, wants to take this power of money creation through credit away from banks. I remind you that Satoshi Nakamoto is a pseudonym. Nobody knows his real name.
