Bitcoin is an improvement on the concept of b-money, imagined by Wei Dai in 1999, and bitgold, described in 2005 by Nick Szabo. In particular, Bitcoin solves the crucial problem of the trust model: servers considered serious vote with their computing power to determine the legitimate transaction chain.

In b-money, servers were supposed to pay a security deposit according to a mechanism that is not very explicit.

The idea of using a computational chain of evidence was put forward in the bitgold project, although Nick Szabo proposed to use only a majority of addresses to establish the legitimacy of a transaction chain, leaving the problem of controlling the number of addresses open.

Satoshi Nakamoto

Satoshi Nakamoto is the pseudonym used by the person(s) who developed Bitcoin.

Satoshi Nakamoto first wrote a white paper describing how to create Bitcoin, and then deployed and distributed the reference implementation of Bitcoin.

As part of the Bitcoin implementation, Satoshi Nakamoto also designed the first database built with a chain of blocks.

How Bitcoin works

To create and manage Bitcoins, Bitcoin relies on software. In this software, Bitcoins are created according to a protocol that pays the agents (called “miners”) who processed transactions.

These agents use their computing power to verify, secure and record transactions in a virtual registry, called the blockchain, a name that comes from the fact that Bitcoin’s basic entity is called a block, and that the blocks are then linked together in a chain, the blockchain.

For each new block accepted, the verification-security-recording activity, called mining, is remunerated by newly created bitcoins and by the costs of the transactions processed.

As a currency or commodity, Bitcoins can be exchanged for other currencies or commodities, goods or services. The exchange rate for cryptomoney is set in specialized marketplaces and fluctuates according to the law of supply and demand.

Bitcoins can be purchased online on specialized platforms, physical terminals or in exchange for any good or service with a person who already owns it.

The platforms also make it possible to follow the evolution of the price of Bitcoin in real time in relation to other currencies or cryptocurrencies.

Comments are closed.