Bitcoin and blockchain technology mark a new era of online security.

In October 2008, a mysterious character known as Satoshi Nakamoto revealed the first cryptocurrency: the bitcoin, which has since come to steadily change the world we live in.

To understand bitcoin, we need to dive into an emerging online world that the author calls the cryptocosm.

In the cryptocosm, personal data is decentralized from any universal and easily targetable central hub, and is instead held by every individual.

Each user has two keys specific to their online account, one public and one private. Whenever you send a message to a user, it is encrypted using the public key, but in such a way that it can only be deciphered with the user’s private key, so only they could ever read it. When they encrypt a response, they use their private key again, leaving a unique digital signature that proves their identity securely without revealing any personal information.

These signatures are integral to bitcoin and its blockchain technology.

Roughly every ten minutes, a block is created, which logs all the information about the most recent activity of bitcoins. This includes the digital signatures relevant to every transaction of bitcoin. It also includes a time-stamp, showing exactly when the block was made.

The time-stamp is created through mining. A new block can only be created once a complicated and time-consuming algorithmic problem has been solved by using the processing power of many computers from across the network. This is mining. When it’s complete and the problem is solved, a proof of work is generated, which time-stamps the block that’s just been built. And, as compensation for the mining, new bitcoins are generated.

Since the time-stamp can only be created once the mining has really been done, it can’t be forged. And since creating it involves many computers, it is verified by multiple users. This makes the information in the block trustworthy and unhackable.

Bitcoins get around. Every transfer and creation of one is registered in the next block created. All of these blocks are connected in a chronological chain which is unsurprisingly called a blockchain, and which is public. Each block has a unique fingerprint and leaves traces in all subsequent blocks, meaning anyone can trace a bitcoin’s trajectory all the way back to when it was first created.

The fingerprints also make it near impossible to edit the information inside any one block, since you’d have to edit all the previous blocks as well. Meaning that the bitcoin ledger – the record of all its transactions – is almost completely unhackable, and every transaction is thus very secure.

No wonder so many businesses are pouncing on the technology!

Photos From : read.cash.

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