FAQ

A blockchain is a distributed, cryptographically secure database structure that allows network participants to establish a trusted and immutable record of transactional data without the need for intermediaries. A blockchain can execute a variety of functions beyond transaction settlement, such as smart contracts. Smart contracts are digital agreements that are embedded in code and that can have limitless formats and conditions. Blockchains have proven themselves as superior solutions for securely coordinating data, but they are capable of much more, including tokenization, incentive design, attack-resistance, and reducing counterparty risk. The very first blockchain was the Bitcoin blockchain.

Blockchain software is like any other software. The first of its kind was Bitcoin, which was released as open-source software, making it available to anyone to use or change. There are a wide variety of efforts across the blockchain ecosystem to improve upon Bitcoin’s original software.

Historically, databases have incorporated a centralized client-server architecture, in which a sole authority controls the central server. This design means that data security, alteration, and deletion rests with a single point of failure. The decentralized architecture of blockchain databases emerged as a solution for many of the weaknesses of centralized database architecture. A blockchain network consists of many distributed nodes––voluntary participants who must reach consensus and maintain a single transactional record together.

When a digital transaction occurs in a blockchain network, it is grouped together in a cryptographically secure “block” with other transactions that have occurred in the same time frame. The block is then broadcast to the network. A blockchain network is comprised of nodes or participants who validate and relay transaction information. The block of transactions is verified by participants called miners, who use computing power to solve a cryptographic puzzle and validate the block of transactions. The first miner to solve and validate the block is rewarded. Each verified block is connected to the previously verified block, creating a chain of blocks. One important cryptographic underpinning of blockchains is the hash function. Hashing assigns a fixed value to a string that is inputted into the system. Blockchain hashing power results in a deterministic, quickly computable, and preimage-resistant system. 

Bitcoin is a decentralized digital currency that uses cryptography for security and can be used as a means of payment for goods and services. It is the first successful cryptocurrency, and it was created in 2009 by an unknown person or group of people using the pseudonym Satoshi Nakamoto. One important thing to remember is that Bitcoin is two things. It is an asset, known as bitcoin (lower case "b") or BTC, and it is also a network known as Bitcoin the network (upper case "B". This network is made up of physical, data-center infrastructure which is known as Bitcoin mining. It is also made up of a network of nodes which protect the network from centralization. 

Bitcoin is built on the idea of a distributed ledger, which allows for transparent and secure transactions without the need for a central authority. This ledger is known as the blockchain, and it consists of blocks of transaction data that are chained together using a consensus mechanism known as Proof-of-Work. Each block contains a cryptographic hash of the previous block, along with transaction data and a timestamp, which makes it difficult to alter the data once it has been recorded on the blockchain.

One of the key features of Bitcoin is that it is decentralized, meaning that it is not controlled by any single entity. Instead, it is supported by a network of computers around the world that work together to maintain the blockchain and process transactions. This decentralization makes it difficult for any single person or group to manipulate the system, which helps to ensure its security and integrity.

Another important aspect of Bitcoin is that it is a finite resource. There will only ever be a maximum of 21 million bitcoins in circulation, which helps to prevent inflation and maintain the value of the currency. The issuance of new bitcoins is controlled by a process called mining, in which computers compete to solve complex mathematical problems to validate transactions and add them to the blockchain. The first miner to solve the problem is rewarded with a certain number of bitcoins, which encourages people to participate in the mining process and helps to support the network.

Bitcoin mining is the process of using specialized computer hardware to verify and add transaction records to the public ledger (blockchain) of the cryptocurrency. The mining process helps to secure the Bitcoin network and ensures that new bitcoins are released in a controlled manner.

To begin mining, a person must first set up a Bitcoin wallet to store their bitcoins. They will then need to acquire specialized mining hardware, such as an application-specific integrated circuit (ASIC) and connect it to the internet.

Once their hardware is set up, the miner can join a mining pool, which is a group of miners who combine their computing power to increase the chances of finding a block and receiving a reward. When a block is found, the reward is distributed among the members of the mining pool according to their contribution to the process.

The mining process involves solving complex mathematical problems, and the difficulty of these problems increases over time. This is done to ensure that new blocks are added to the blockchain at a steady rate and that the total number of bitcoins in circulation does not exceed the maximum supply of 21 million.

Bitcoin mining is a competitive and complex process, and it requires a significant amount of computing power to solve the mathematical problem. As a result, it is not feasible for most individuals to mine bitcoins on their own, and many miners join mining pools to increase their chances of success.