What is Bitcoin ?
Bitcoin is an experimental network of property transfer and verification system based on a peer-to-peer network without trusted third-party. It was created in 2009 by Satoshi Nakamoto, a person or a group of people that haven’t revealed their identities and disappeared in 2010.
The first action on Bitcoin network was a message from Satoshi itself: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks” referring to article published by The Times on the same day and interpreted as a criticism of the actual financial system.
The initial application and the main innovation of the Bitcoin network is a decentralized digital currency “bitcoin”. This currency allows stakeholders to make safe and cheap transfer between two parties without a trusted third-party such as banks or other intermediate likes Paypal. Its number is limited to 21 million units, each divisible to an eighth decimal place so the smallest unit of bitcoin is 0.00000001 called by the community “satoshi” as a reference to its creator. This has been possible using the “blockchain” technology.
Although many do not differentiate Bitcoin and bitcoin, Bitcoin with an uppercase refers to the global network and bitcoin with a lowercase letter refers to the currency cicrulating through the network.
What is a blockchain ?
The Blockchain used by Bitcoin is a “public blockchain” it is basically a database with some particularities :
- It is publicly distributed.
- It is organized as a Ledger where information are time-stamped.
- It is immutable, registered information can’t be deleted or modified.
The network is organized into different “node” each node is a full copy of the blockchain , the nodes are interconnected and anyone can create a node and contribute to the network. Those who contribute to secure the network are called “miners” and get rewarded with new generated bitcoin and transaction fee for their contribution. This is how bitcoin monetary creation works.
To be added, new information are gathered in blocks, these blocks are verified by the miners who have to solve a mathematical enigma using cryptography functions in order to register a new block, this verification system is called “proof of work”. The miner who finds the solution will produce an “hash” which is the result of the enigma and guarantees the integrity of the data. This hash will be used as the fingerprint of the newly validated block and will be the first information in the next one, that is why each blocks are interconnected and why we have called this technology a blockchain.
A private blockchain works the same except that those who can participate by adding new information and/or read the information are chosen by the entity who owns it.
What are the other cryptocurrencies ?
There are more than 4000 different cryptocurrencies, some are derived from Bitcoin they are called “hard forks”, others have their own native blockchain, and a large part is based on Ethereum.
Ethereum is the most used blockchain and its crypto the Ether is the second biggest behind Bitcoin regarding the market capitalization. This is because Ethereum allows the creation of smart-contract that are programmable contracts able to be autonomous for their execution when the clauses are fulfilled. Ethereum is also the first blockchain that allows to create non native cryptocurrencies inside it ecosystem. The crypto that have their owns blockchain are called coin and the second one that are host on a blockchain are called “token”.
For example VeraOne [VRO] is an Erc20 token on the Ethereum blockchain.
