Satoshi Nakamoto introduced the bitcoin in the year 2008. Bitcoin is a cryptocurrency (virtual currency), or a digital currency that uses rules of cryptography for regulation and generation of units of currency. A Bitcoin fell under the scope of cryptocurrency and became the first and most valuable among them. It is commonly called decentralized digital currency.
A bitcoin is a type of digital assets which can be bought, sold, and transfer between the two parties securely over the internet. Bitcoin can be used to store values much like fine gold, silver, and some other type of investments. We can also use bitcoin to buy products and services as well as make payments and exchange values electronically.
A bitcoin is different from other traditional currencies such as Dollar, Pound, and Euro, which can also be used to buy things and exchange values electronically. There are no physical coins for bitcoins or paper bills. When you send bitcoin to someone or used bitcoin to buy anything, you don’t need to use a bank, a credit card, or any other third-party. Instead, you can simply send bitcoin directly to another party over the internet with securely and almost instantly.

How Bitcoin Works?

When you send an email to another person, you just type an email address and can communicate directly to that person. It is the same thing when you send an instant message. This type of communication between two parties is commonly known as Peer-to-Peer communication.
Whenever you want to transfer money to someone over the internet, you need to use a service of third-party such as banks, a credit card, a PayPal, or some other type of money transfer services. The reason for using third-party is to ensure that you are transferring that money. In other words, you need to be able to verify that both parties have done what they need to do in real exchange.
For example, suppose you click on a photo that you want to send it to another person, so you can simply attach that photo to an email, type the receiver email address and send it. The other person will receive the photo, and you think it would end, but it is not. Now, we have two copies of photo, one is a simple email, and another is an original file which is still on my computer. Here, we send the copy of the file of the photo, not the original file. This issue is commonly known as the double-spend problem.

The double-spend problem provides a challenge to determine whether a transaction is real or not. How you can send a bitcoin to someone over the internet without needing a bank or some other institution to certify the transfer took place. The answer arises in a global network of thousands of computers called a Bitcoin Network and a special type of decentralized laser technology called blockchain.
In Bitcoin, all the information related to the transaction is captured securely by using maths, protected cryptographically, and the data is stored and verified across the entire network of computers. In other words, instead of having a centralized database of the third-party such as banks to certify the transaction took place. Bitcoin uses blockchain technology across a decentralized network of computers to securely verify, confirm and record each transaction. Since data is stored in a decentralized manner across a wide network, there is no single point of failure. This makes blockchain more secure and less prone to fraud, tampering or general system failure than keeping them in a single centralized location.

Blockchain Version

The brief description of the evolution of blockchain technology and its versioning from 1.0 to 3.0 are explained below.

Blockchain 1.0: Currency

The idea of creating money through solving computational puzzles was first introduced in 2005 by Hal Finney, who created the first concept for cryptocurrencies (The implementation of distributed ledger technology). This ledger allows financial transactions based on blockchain technology or DLT to be executed with Bitcoin. Bitcoin is the most prominent example in this segment. It is being used as cash for the Internet and seen as the enabler of an Internet of Money.

Blockchain 2.0: Smart Contracts

The main issues that came with Bitcoin are wasteful mining and lack of network scalability. To overcome these issues, this version extends the concept of Bitcoin beyond currency. The new key concepts are Smart Contracts. It is small computer programs that “live” in the blockchain. They are free computer programs which executed automatically and checked conditions which are defined earlier like facilitation, verification or enforcement. The big advantage of this technology that blockchain offers, making it impossible to tamper or hack Smart Contracts. A most prominent example is the Ethereum Blockchain, which provides a platform where the developer community can build distributed applications for the Blockchain network.
Quickly, the blockchain 2.0 version is successfully processing a high number of daily transactions on a public network, where millions were raised through ICO (Initial Coin Offerings), and the market cap increased rapidly.

Blockchain 3.0: DApps

DApps is also known as a decentralized application. It uses decentralized storage and communication. Its backend code is running on a decentralized peer-to-peer network. A DApp can have frontend code hosted on decentralized storages such as Ethereum Swarm and user interfaces written in any language that can make a call to its backend like a traditional App.

Role of Bitcoin Miners

To understand the role of bitcoin miners, let us first understand Bitcoin Mining.

Bitcoin Mining

Bitcoin mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions. This ledger of past transactions is called the blockchain as it is a chain of blocks. Bitcoin mining is used to secure and verify transactions to the rest of the network.

Role of Bitcoin Miners

Within the bitcoin networks, there are a group of people known as Miners. In miners, there was a process and confirm transactions. Anybody can apply for a minor, and you could run the client yourself. However, these minors use very powerful computers that are specifically designed to mine bitcoin transaction. They do this by actually solving math problems and resolving cryptographic issues because every transaction needs to be cryptographically encoded and secured. These mathematical problems ensure that nobody is tampering with that data.
Additionally, for this task, the minors are paid in bitcoins, which is the key component in bitcoin. In Bitcoin, you cannot create money as like you create regular fiat currencies such as Dollar, Euro, and Yuan. The bitcoin is created by rewarding these minors for their work in solving the mathematical and cryptographical problems.

How is the Bitcoin Blockchain built?

The role of a minor is to build the blockchain of records that forms the bitcoin ledger. These ledgers are called blocks, and each block contains all the different transactions that have taken place. A new block is added in every 10 minutes as a new Bitcoin Transaction takes place. So, as the minors process these different transactions, they build the block, and when a block is confirmed, it gets added to the blockchain. The bitcoin blockchain provides a permanent record of all bitcoin transactions to the beginning.

Key Concepts of Bitcoin

There are four key concepts that you need to aware in Bitcoin. These are:
• Disintermediated
• Distributed
• Decentralized
• Trustless

Disintermediated

When you send money to someone over the Internet, you need a third party like banks which manages all your transactions. But in Bitcoin, you are doing transactions directly to another party over the Internet. This transaction takes place in the Bitcoin network. This network takes care of confirming and verifying that there was a true transfer of value between the two parties. This concept is called Disintermediated.

The Disintermediated is the act of removing the middleman. It is one of the key components that makes blockchain so valuable because it eliminates the unnecessary inefficiency that’s involved when we are using a third-party during the transfer of value between parties.

Distributed

The entire bitcoin network runs on a network of thousands of distributed computers which shares the work. So, instead of having one centralized computer which handles the workload, you are distributing it across multiple computers. The distributed network is more reliable because there is no single point of failure. Here, the work is shared across thousands of computers which are all running and sharing the workload.
Decentralized
Bitcoin is decentralized. It means that there is no central control, no central repository of data and no management in the middle that overseeing what Bitcoin does. As a result, there is no central point of failure.

Trustless

Bitcoin is Trustless because there is no need to have a third-party, such as a bank to certify and bring trust to the entire process of transactions. Instead, the blockchain and how Bitcoin process the transactions enable the trust is done by Distributed Trustless Consensus in which all the nodes agree that a transaction took place.

So, this brings us to the end of blog. This Tecklearn ‘Overview of Bitcoin and Key Concepts of Bitcoin’ blog helps you with commonly asked questions if you are looking out for a job in BlockChain or Ethereum. If you wish to learn BlockChain or Ethereum and build a career in BlockChain domain, then check out our interactive, Blockchain and Ethereum Developer Training, that comes with 24*7 support to guide you throughout your learning period. Please find the link for course details:

https://www.tecklearn.com/course/blockchain-and-ethereum-certification-training/

Blockchain and Ethereum Developer Training

About the Course

Tecklearn’s Blockchain and Ethereum Certification Training course in the blockchain technology that covers essential concepts like Blockchain programming, Ethereum, Solidity, Digital ledger types, Smart Contracts, Multichain, Bitcoin mining, Cryptocurrency, etc. The course provides an overview of the structure and mechanism of Blockchain. You will learn about the Ethereum ecosystem, how smart contracts are developed using Solidity and how to deploy a business network using Hyperledger Compose.

Why Should you take BlockChain and Ethereum Certification Training?

• The average salary of a Blockchain Ethereum Developer is $158,860 per annum – Paysa.com.
• Blockchain tech has gone far beyond its beginnings in banking and cryptocurrency: In 2019, businesses are expected to spend $2.9B on the technology.
• IBM reports that Blockchain markets are headed to $60 Billion worldwide by 2024.

What you will Learn in this Course?

Introduction and origin of Blockchain

• How does our current financial system work?
• What can be the possible solution
• What is a distributed system
• What is Blockchain
• How does a Blockchain work
• Components of Blockchain
• Business network
• Consensus, Provenances, immutability and finality

Cryptocurrency and Blockchain

• Distributed system
• Distributed Ledger technology
• Global Payments
• Why BlockChain
• BlockChain and use case needs
• Requirements of blockchain for business
• BlockChain benefits
• Types of BlockChain
• Hands on

Bitcoin Platform

• What is Bitcoin?
• Why use Bitcoins?
• Bitcoin Ecosystem
• Structure of a Bitcoin Transaction
• Merkel Trees
• Scripting language in Bitcoin
• Applications of Bitcoin script
• Nodes in a Bitcoin Network
• Bitcoin Economics
• What is Bitcoin Mining?
• Types of Mining
• Mining and Consensus
• Hands On

Introduction to Ethereum

• What is Ethereum?
• Ethereum Layers
• Introducing Smart Contracts
• Cryptocurrency in Ethereum
• Mining in Ethereum
• Consensus Mechanism
• Platform Functions in Ethereum
• Technologies that support Ethereum
• Ethereum Programming Language
• Components for the development of Ethereum DApps
• Editors and tools
• Frontend Development
• Ethereum Test Networks
• ERC Tokens
• Hands On

Solidity

• Introducing Solidity
• Sample Code, Layout of Source File
• Structure of a Contract
• State Variables, Functions Types, Reference Types
• Special Variables and Functions, Expressions and Control Structures
• Function Calls, Error Handling
• Visibility for Functions and State Variables
• Inheritance, Constructors
• Importing Smart Contracts
• Gas Limit and Loops
• Sending and Receiving Ether
• Recommendations
• Contract ABI
• Setting up the development environment and Deploying DApp
• Hands On

Hyperledger

• Introduction to Hyperledger
• Hyperledger architecture
• Hyperledger Fabric V1 Architecture
• Consensus
• Hyperledger API
• Hyperledger Application Model
• Hyperledger project and tools
• Network Topology
• Exploring Hyperledger frameworks
• Business Network Deployment on Hyperledger Composer Playground
• Sample Transaction
• Service invoices
• Hands On

Hyperledger Composer

• Development Environment using Composer
• Developing business networks
• Testing business networks
• Introduction to Hyperledger Fabric
• Hyperledger Fabric Model
• Ways to create Hyperledger Fabric Blockchain Network
• Hands On

Create and Deploy Your Private Blockchain On Multichain

• What Is MultiChain
• MultiChain Privacy and Permissions
• Mining in MultiChain
• Multiple configurable Blockchains using MultiChain
• Setting up a Private Blockchain
• Hands On

Blockchain Use Cases

• Potential use cases in Blockchain
• BlockChain project

Got a question for us? Please mention it in the comments section and we will get back to you.

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