Bitcoin which is also known as a “cryptocurrency” is a kind of unregulated digital currency, that was first created by Satoshi Nakamoto in the year 2008. Bitcoin was launched with an inclination for simplifying online transactions by getting rid of third-party payment processing intermediaries and for bypassing government currency controls.
The transaction related to Bitcoin is stored and transferred by using a distributed ledger on a peer-to-peer network that is open, public, and anonymous.
For performing this, the Blockchain is the underpinning technology that handles the Bitcoin transaction ledger.
The functioning mode of the Bitcoin blockchain
In its simplest form, the Bitcoin blockchain is a database or ledger that is comprised of Bitcoin transaction records. Therefore, this database is going to be distributed across a peer-to-peer network and it will be without a central authority. Upon the validity of the transaction, the network participants should agree before they can be recorded. The “consensus” that is none other than this agreement will be accomplished through a process known as “mining”.
Later on, someone who uses Bitcoins, then the miners will be engaging in complex, resource-intense computational equations for verifying the legitimacy of the transaction. A “proof of work” via mining, which meets certain needs will be created.
Proof of work is defined as a piece of data, which is costly and time-consuming for producing, however, it can be easily be verified by others. For a valid transaction consideration on the blockchain, an individual record should have proof of work to show that the consensus was accomplished. By means of this design, the transaction records cannot be tampered with or changed after they have been added to the blockchain.