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Author : Bitconnect
Banks are attempting to incorporate their own private blockchain, but as the computing power will be run by the banks themselves, this does not fully guarantee in any way that it is tamper-proof. A currency like bitcoin the ledger is maintained by any individuals and corporations willing to run nodes and validate transactions. The blockchain is therefore a tamper-proof record of what transactions happened, the fact they did happen, and solves the problem of a decentralized digital currency. The more computing power on separate nodes which is added to the network, the more secure the network is. Any chances to the bitcoin protocol rules must be agreed by at least 51% of nodes, although in reality this figure is higher due to variations in block solving time, and that the other 49% of the network which is still a large majority can reject the rules of the other 51% and still ‘work’ on its own. Fixed money supply. Bitcoin has the ability to be split into many units, called a ‘satoshi’ at its smallest amount. Currently, 100% of the bitcoin network’s nodes agree that 21 million bitcoins are the fixed amount. Unlike Fait money which can be printed at will be the central banks and governments, bitcoins supply is capped at 21 million whole units which can be broken down 100 million times if needed. They are introduced at a fixed rate every 10 minutes on average. When a miner solves the mathematical problem, they are awarded 12.5 bitcoins at the current writing.
This originally started out at 50, halving in 2012, then in 2016, set to halve at every 4 years on average. In 2020, the expected bitcoins per block mined is expected to be 6.25. Once they are all minted, transaction fees will give the miners an incentive to mine and record transactions on the blockchain. Transaction Fees. Unlike the traditional banking system, which can charge quite high transaction fees, bitcoin allows transactions globally with very little cost. The idea that once all the bitcoins are minted, people donating computing power are still given an incentive to do so, while keeping the supply capped and well distributed. The sender of a transaction does include a ‘transaction fee’ or ‘miner’s fee’ with their transactions, typically 0.0001 of a bitcoin or similar, during high network load times this can go up slightly. You can send transactions without a fee and hope miners still include it in their blocks, which they may do at times of low network demand. The small fees add up when thousands of transactions are taking place. This fee goes to the miner who generates the next block. The fees are the incentive to mine when all the bitcoins have been minted. The bitcoin consensus rules mean that no one person can manipulate transaction fees for their own motive. How bitcoin is used. Bitcoin is used by simply using bitcoin wallet software at https://bitcoin.org/en/choose-your-wallet. This generates your wallets public address and the private key that goes with it.
This private key must be secured, most wallets typically use a password and allow backup of the private key. This is what allows bitcoins to be spent from an address and is the only proof of ownership the network rules recognise. You can have a wallet on your own computer, phone, tablet or even a web based wallet or wallets on USB sticks. You can buy bitcoins from exchanges and individuals or even be paid in them for services. There are an increasing number of merchants accepting bitcoin at https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/. Currently it co-exists with the traditional banking system, so traditional money is used to buy them typically, or you can earn bitcoins directly, and even use them to store savings and wealth, although due to high volatility this can be a risk and should be researched thoroughly. The wallet software allows sending of coins to someone else within seconds, although it can take on average of 10 minutes for the transaction to confirm (that is, be recorded on the ledger and not just held in node memory pools). You can send money from one corner of the earth to another with an internet connection in an instant. Once the transactions are confirmed which is typically within 10 minutes, they are final and cannot be reversed, if you need your money back you are dependent on the merchant for this purpose. Escrow has become popular for this reason for large transactions.
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