Bitcoin and blockchain: how does it work?
Bitcoin is this encrypted virtual currency, or cryptocurrency, invented in 2008 by the mysterious Satoshi Nakamoto, whom no one really knows. This new currency offers the advantage of being able to conduct online transactions in a completely anonymous and secure way. This is the main benefit of Bitcoin: providing security to users. More and more e-commerce sites are now accepting Bitcoin as a means of payment, the best known of which is Amazon.
The operation of Bitcoin is based on the peer-to-peer relationship. The currency is exchanged as a classic file. No central authority ensures its operation as is the case with the Euro for example and the European Central Bank. Bitcoin can be freely traded or sold. Still, to be able to move from hand to hand or to be sold, Bitcoin relies on a secure computer network, a block of computer blocks, the blockchain.
The blockchain, the essential link
The blockchain is a technology of storage and transmission of information, a computer accounting entry. Technology is a huge decentralized database, totally transparent but also completely secure. It also works without any control body. This database records and keeps the entire history of all the exchanges made between the different users. Securing the blockchain has its origin in the fact that it is shared by the users themselves, without any other intermediary.
The operation of Bitcoins and blockchain is special, the blockchain just requires a virtual currency. When one person sends a certain amount of Bitcoins to another, this transaction (or exchange) operation is immediately recorded in a block. This block is then validated by nodes also called "minor" which correspond to an immense network of tens of thousands of computers. And this, thanks to cryptographic techniques called "Proof-of-Work" ("proof of work"). The block is dated and then added to the larger blockchain. All users can access information that can not be erased. Finally, the person who ordered the Bitcoins can then receive them.
The big advantage of the blockchain and therefore the use of Bitcoin as currency lies in the fact that this computer protocol is completely secure, encrypted and invulnerable to cyber-attacks. As such, other uses are made and will be made of the blockchain as asset transfers (shares, bonds ...).
The privacy and security of blockchain technology are the two most important benefits to date, as confidentiality and data security are intrinsically secure.