29 lines
1.9 KiB
Markdown
29 lines
1.9 KiB
Markdown
---
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title: Basics of Bitcoin & Cyptocurrency
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---
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#### Bitcoin is a collection of concepts and technologies that form the basis of a digital money ecosystem, including:
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- A decentralized peer to peer network (enabled by the _Bitcoin protocol_)
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- A public transaction ledger (_the blockchain_)
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- A decentralized mathematical and deterministic currency issuance mechanism (distributed mining and the _“Proof of Work”_ concept)
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- A decentralized transaction verification system (transaction script)
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#### The Bitcoin system is based on decentralized trust, thus it heavily relies on cryptographic technologies, such as:
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- Cryptographic hash functions (i.e.SHA-256 and RIPEMD-160)
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- Public Key Cryptography (i.e. ECDSA–
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the Elliptic Curve Digital Signature Algorithm)
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#### Some Important Excerpts
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1. In Bitcoin, a transaction is a record informing the network of a transfer of bitcoins from one owner to another owner.
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- You may think of a transaction as the equivalent of a single line in a notebook page
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- You may think of a block as the equivalent of a page on taht notebook
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- You may think of blockchain as the quivalent of the whole notebook
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- All the users are able to read , write and get updated on that notebook.
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2. Ownership of bitcoins is established through digital keys, Bitcoin addresses, and digital signatures.
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3. _Digital Keys_ are crated and stored offline and consist of a mathematically-related Private-Public key-pair, created using the Elliptic Curve Signature Algorithm(_ECDSA_)
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4. The **Private key(Privkey)** is initially generated at random, and is kept secret at all times. It is used by the current owner of bitcoins to digitally sign a Bitcoin transaction, when he authorizes the transfer to the new user. A transaction
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5. The **Public Key(Pubkey)** is generated from the Private Key using a one-way cryptpgraphic hash function. It is used by the owner to validate a transaction's digital signature.
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