bitcoin
22
Sep

How bitcoins are created and how does the technology work?

At the core of Bitcoin, a simple data ledger file is there which is called ‘blockchain’. It is quite small in size and more or less similar to the size of a long text message in your smartphone. There are 3 parts of every blockchain namely identifying address, history of who bought it and sold it (the ledger) and the private key header log. The third part is the complex part of the bitcoin and the sophisticated digital signature is captured in the header for confirming each and every transaction for that bitcoin file.

Every digital signature is unique and belongs to a particular user and his/her personal wallet. The security of the bitcoins is governed by these signature keys. Every trade is tracked, tagged and publicly disclosed. The digital signature is attached to the blockchain as a confirmation. The transactions are prevented for being duplicated and forgery is prevented since these digital signatures are given several seconds in confirming their transactions on the network.

Every bitcoin records the digital address of every bitcoin wallet used in its transactions but it does not record the names of individuals owning those wallets.  This means that every transaction of bitcoin is confirmed digitally but the anonymity is maintained each time.

You can choose the computer you want for storing your bitcoins, but every bitcoin history is stored publicly on the bitcoin network and every user is able to see the bitcoin’s history anytime he/she wants. Although people are not able to see your personal identity, they are able to see all the history related to your bitcoin wallet. This is really good as the history put in public maintains transparency and security. This prevents dubious or illegal uses of the bitcoins and adds a great amount of security in transactions.

Also there are no banks involved in bitcoins transactions and there is a very small fee to use bitcoins.

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