Blockchain

How does Bitcoin make this possible?

Satoshi invented a secure distributed public ledger now called a ‘blockchain’.  The simplest way to explain this is that it is like a spreadsheet database of all Bitcoin transactions.  

This database is constantly shared amongst 1000s of computers around the globe on the network, there is no single point of failure and all records are public and easily verifiable.  This decentralisation of the blockchain is one of Bitcoins greatest traits.

The blockchain is continuously updated with agreed upon valid transactions. The network groups on average 2000 transactions every 10 minutes into a block and then attaches this block onto the block from the previous 10 minutes creating a chain of blocks or ‘blockchain’. This creates Bitcoins immutability as once blocks are created and added to the chain they can never be undone. So far there are over 500,000 blocks in the Bitcoin blockchain.

These transactions recorded on the blockchain are done trustlessly peer to peer from one person’s wallet to another person’s wallet. Wallets require no personally identifiable information so are anonymous, however they are publicly viewable meaning there are ways to identify some wallet owners meaning they are pseudonymous.

These blocks are created by miners who are rewarded with newly created Bitcoin and transaction fees for their hard work, this is the only way new Bitcoins are created.  The underlying Bitcoin code will only ever allow 21 million Bitcoins to be created which guarantees its limited supply.

To understand why all of this is needed and could become a great asset for humanity then please check out the Culture section.