Bitcoin is an ordinary computer program. It can only be found not on any separate computer or server, but directly on the millions of computers that communicate directly with each other through this program.
The sands work according to a similar principle. You install the program, and someone else does the same. After that, you can transfer files to each other directly, without the involvement of any servers, and almost without control. This feature made torrents the main breeding ground for Internet piracy. So the bitcoin system works the same way. The only task of this program is not to transfer files between users, but to give them a "virtual point".
How does Bitcoin work?
A specific character under the pseudonym Satoshi Nakamoto (or a group of characters) introduced the world to Bitcoin. In the legendary research work, it is referred to as the "electronic peer-to-peer payment system". In other words, Bitcoin is a decentralized peer-to-peer digital currency system. The whole system works thanks to the actions of a group of people called miners.
Adding transaction information to blocks
When a group of miners creates a new block, they become the temporary owner of this block. Imagine that Masha sent Pete 5 Bitcoins. Of course, physically he does not send anything, users only add information about this operation to the blocks in the blockchain, and at this moment when the block is added, this transaction will be perfect, and Bob will accept his 5 coins.
Measurement problems
To solve scalability problems, two methods have been proposed: Soft fork and Hard fork.
Fork (fork) - in the practice of software developers, the so-called cloning of the project followed by modification of its code. Thus, the original project code remains unchanged, and the new version may exist in parallel with the old one.
What is Soft Fork?
A soft fork is easiest to think of as a software update with backward compatibility. What this means Suppose you are using MS Excel 2005 on your laptop and want to open a spreadsheet created in MS Excel 2015. It will still open in Excel 2005 because MS Excel 2015 is backwards compatible (with older version).
What is Hard Fork?
The main difference between a soft fork and a hard fork is that the hard fork has no backward compatibility. Once implemented, there is no way to return to the original state.
What transaction data does the block body contain?
Any transaction consists of three elements:
Sender information is input.
Recipient information - exit.
Digital signature.
The digital signature is very important because it confirms that the sender has the required amount of funds required to complete the transaction. As you can see in the diagram above, it is part of the input. And although this is very important data, a big problem will arise with them - they take up a lot of space. In a block of 1 MB in size, the signature takes about 65%!
What will happen to Bitcoin in the future?
If we are talking specifically about Bitcoin, it is very similar to any other financial bubble. He will explode. But this will take a long time because the system is "restricted" under the automatic reduction of the issuance of coins to miners.
But if we talk about the idea of ​​cryptocurrency in general, then it seems to me that everyone is more committed. The financial situation in the world is heating up due to a small flaw in the modern money system. Namely, the Fed issues money as they wish, and they also demand that this money be returned with interest.
