The real origin of Bitcoin is unknown. There are many speculative theories of how Bitcoin came to be. However, the most accepted one is that it was created by Satoshi Nakamoto in 2009 as a form of electronic cash currency.
How Does Bitcoin Work?
To understand how Bitcoin works, it is crucial to first explore its underlying technology, Blockchain. Blockchain technology is also known as Distributed Ledger Technology. Basically, it is a system that records information or transactions – as is the case with Bitcoin – on blocks that are duplicated and distributed across the entire network of computer systems on the chain. Thus, a crucial feature of Blockchain is decentralization. Since Bitcoin leverages blockchain technology, it also functions in a decentralized manner. In the Bitcoin network, a copy of a participant’s ledger is distributed across Bitcoin nodes.
What are bitcoin nodes?
Usually, Bitcoin require more than just a miners’ network to ensure that a transaction is processed correctly. It must first of all broadcast messages across the network using Bitcoin nodes. These nodes play an all important role in the network; they monitor the Blockchain to ensure that legitimate transactions are distinguished from others. They also provide an avenue to secure all transactions and reduce double-spending across the network.
However, it is vital to state that Bitcoin does not only require the use of nodes. Instead, it needs mining nodes that helps to secure the Blockchain network.
To determine if a Bitcoin user has enough bitcoin to conduct a transaction and ensure that double spending doesn’t occur, the system employs a process known as mining using mining nodes.
Bitcoin mining involves using computer rigs to confirm a pending transaction that is to be added to the ledger. To prevent a miner from easily including arbitrary transactions, the system presents them with a complex puzzle known as the Proof of Work.
Only after the miner has solved the puzzle, which happens at random, will they be allowed to add the transactions into the ledger, which can’t be changed. Since running these computer rigs requires spending money, miners are rewarded with a new supply of bitcoins that is part of its monetary system and some amount of fees paid by the person who wishes to transact, making the Bitcoin ledger resilient against fraud. The bitcoin mining node can be downloaded and run by anyone who wants to participate in the network, thus offering everybody visibility into each user’s ledger and eliminating disputes over fund balance.