Why did you create cryptocurrencies? A tour of the history of digital money

The first and most famous cryptocurrency – Bitcoin – was invented in 2008. Only the pseudonym of the Bitcoin creator Satoshi Nakamoto is known. He is a man, a woman or a group of people – is still unknown. In order to explain what Bitcoin is and why it was created, it is necessary to understand what the blockchain is – the technology underlying this cryptocurrency.

Blockchain is a technology that allows you to transfer information, including financial transfers, without the participation of a third party, without an intermediary. All information is recorded in blocks and cannot be changed or deleted, as it is stored on all computers (nodes) of the network at the same time. If you try to change the information in one place, all other computers on the network will not confirm the change and cancel it.

For money transfers, this means that the transaction will take place directly from one user to another, bypassing the intermediary in the form of a bank, payment system or state. These traditional payment systems can affect the transaction, delay it, require various confirmations. This was one of the main tasks of Satoshi Nakamoto. He wanted to create a system in which transactions would not require an intermediary and were reliable and anonymous. This system was Bitcoin. Find more at the https://winten.win

Also, for transfers using the blockchain, the geographic location of the addressee and the addressee does not matter – you can make a transfer from any country to any other country, regardless of their political differences and sanctions. Now international bank transfers of fiat money are processed and delivered within 3-5 days. With the use of blockchain, this time can be reduced to hours and even minutes.

Where do bitcoins come from?

Bitcoins are created using mining. This English word draws an analogy between Bitcoin, “digital gold”, and real minerals. So, bitcoin is mined or mined. The extraction process itself consists in solving complex mathematical problems using computer power. At the same time, all transactions with Bitcoin are recorded in a chain of blocks, which are also checked for authenticity by computers (nodes) of this network. Since the nodes have information about all transactions in the network, they can confirm the transaction or recognize it as illegitimate in the case of, for example, trying to use the same tools twice.

In order for the number of blocks mined by miners in one day to remain unchanged, mathematical tasks are complicated in proportion to the increase in computing power of computers in the Bitcoin network.

A total of 21 million bitcoins can be mined, of which about 17.5 million already exist. The last bitcoin, due to the increasing complexity of mining, will be mined only in 2140.

How is the transaction in the Bitcoin network?

As there are no bitcoins in the form of ordinary coins, so there are no them in the form of files on the network. All bitcoins are only records of transactions in the network. For example, in the transaction of transferring one Bitcoin will be indicated:

  • Data on where from this bitcoin wallet this sum of bitcoins (records of previous transactions);
  • The number of bitcoins sent;
  • The address of the bitcoin wallet of the person to whom the transfer is made.

Further, transaction records for a certain amount will be detached from the addressee’s wallet and attached to the addressee’s wallet. If in the purse initiating a transaction there are no transaction records for a specific amount that is transferred, a transaction record with a large number of bitcoins will be attached to the addressee’s wallet. In turn, a reverse transaction with a “change” will be created, which will be attached to the sender’s wallet.

For the transfer will need to pay a commission. It is the main source of income for many miners who confirm transactions. Usually, the commission is low, but if the sender wants his transaction to be confirmed faster, he can pay extra. It is noteworthy that during the peak period of the Bitcoin price in 2017, the transaction fee reached $ 55.

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