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Bitcoin Guide
Bitcoin
Bitcoin is the first and most widely recognized cryptocurrency, launched in 2009 by an anonymous individual or group known as Satoshi Nakamoto. It operates on a decentralized network without the need for intermediaries, allowing peer-to-peer transactions on a global scale.
Blockchain
The Bitcoin blockchain is a decentralized, public ledger that records all Bitcoin transactions. Each block in the chain contains transaction data and is cryptographically linked to the previous block, ensuring the integrity and immutability of the data.
Proof of Work (PoW)
Proof of Work is the consensus algorithm used by Bitcoin to validate transactions and secure the network. Miners compete to solve complex cryptographic puzzles, and the first to solve it gets to add a new block to the blockchain and receive a block reward.
Bitcoin Mining
Bitcoin mining is the process of validating and adding new transactions to the blockchain by solving cryptographic puzzles. Miners use specialized hardware to compete for the right to add the next block to the chain, earning new Bitcoin as a reward.
Block Reward
The block reward is the amount of new Bitcoin awarded to the miner who successfully adds a new block to the blockchain. Initially set at 50 BTC, the block reward undergoes a halving approximately every four years, reducing the number of new Bitcoins entering circulation.
Bitcoin Halving
Bitcoin halving refers to the event that reduces the block reward by 50% every 210,000 blocks (roughly every four years). This mechanism ensures that Bitcoin's total supply is capped at 21 million coins and introduces scarcity over time, impacting the coin's value.
Satoshi
A satoshi is the smallest unit of Bitcoin, equal to 0.00000001 BTC. Named after Bitcoin’s creator, Satoshi Nakamoto, it allows for microtransactions and demonstrates Bitcoin’s divisibility, enabling users to send and receive very small amounts.
Private Key
A private key is a secret, cryptographic code that allows Bitcoin users to access and control their Bitcoin. It is essential for authorizing transactions and must be kept secure, as anyone with access to the private key can control the associated Bitcoin.
Public Key
A public key is derived from the private key and is used to generate a Bitcoin address. The public key allows users to receive Bitcoin but cannot be used to spend it. Public keys are shared with others to receive payments.
Lightning Network
The Lightning Network is a Layer 2 solution designed to improve Bitcoin's scalability by enabling faster and cheaper transactions. It allows users to open payment channels off-chain, facilitating micropayments and reducing the load on the main Bitcoin blockchain.
