Intro to Bitcoin, Blockchain, and Mining with some Python

Hi everyone, hope you’ve all been doing well! This article will be a rough introduction to Bitcoin, blockchain technology, and Bitcoin mining. I never really got deep into understanding about cryptocurrencies, but a friend recently wanted to apply it towards his job and asked me about it. Naturally, I got curious and wanted to share my findings with all of you.

Bitcoin

Bitcoin is computerized cash. This implies it exists just as an electronic record, and, in contrast to physical cash, you can’t grasp it. You can send and get cash utilizing bitcoin like compensation for things and administrations with bitcoin. Basically, bitcoin is compatible with conventional cash.

There are exchanges where you can purchase and sell bitcoin. Also, there are a few other cryptocurrencies, yet bitcoin is the first and largest. Bitcoin uses a distributed ledger to work, with no central authority like banks and overseeing exchanges [1]. Bitcoin is open source. So, no one possesses or controls bitcoin, and everyone can utilize it. Without precedent for history, individuals can trade with fewer middlemen, which means more efficient transfers and lower expenses.

Blockchain

In straightforward terms, a blockchain is an advanced record. It’s an open record of bitcoin exchanges orchestrated in sequential request. It is a permissionless, appropriated database dependent on the bitcoin convention that keeps up a constantly developing rundown of value-based information records. It is disseminated so every member has the duplicate of the entire blockchain. The blockchain is shared between all bitcoin clients.

It is utilized to check the perpetual quality of bitcoin exchanges and to anticipate twofold spending. It is secure and changeless, and it’s likewise solidified against altering and modification, even by administrators of the information store’s hubs.

Each blockchain record is authorized cryptographically, and hosts run machines filling in as information store hubs. A blockchain is comprised of squares. A square is a record in the blockchain that contains and affirms many holding up exchanges.

Generally, at regular intervals, another square containing exchanges is annexed to the blockchain through mining. It is a record called the bitcoin blockchain sitting on a large number of PCs over the world, maybe even without anyone else PC at home. The document contains information pretty much all bitcoin exchanges — that is, the installment of bitcoins starting with one record then onto the next — that have ever occurred. This is frequently called a record and is like a bank record, which tracks installments.

Benefits of Bitcoin & Blockchain

For Bitcoin:

• Quick payments: It’s amazingly simple and quick to make payments with bitcoin. The bitcoin exchanges are always up, even on vacations. Sending payments universally is likewise simple. There are no banks to make anybody hold up three business days, no additional expenses for making a global exchange, and no unique restrictions on the base or most extreme sum one can send.
• Protection: Installment can be made utilizing bitcoin without sharing any close to home data; one doesn’t have to join or share any card data. Indeed, it is even conceivable to send an installment without uncovering one’s personality, practically like you can with physical cash. In any case, observe that some exertion might be required to ensure security.
• Irrelevant exchange expenses: There are next to no or negligible exchange charges while making installments with bitcoin. There are no expenses to get bitcoins, and having numerous wallets enables you to control how enormous a charge to pay when spending. Most wallets have sensible default charges, and higher expenses can support quicker affirmation of your exchanges. Expenses are inconsequential to the sum moved, so it’s conceivable to send 100,000 bitcoins for a similar charge it expenses to send one bitcoin.
• Secure: Bitcoins are made and held electronically, yet there is no Visa number included that somebody can take as no one can charge you cash for your sake. The exchanges are made utilizing military-grade cryptography and are exceptionally classified. Bitcoin will give full access over your cash and a significant level of security against practically a wide range of false works which includes certain means [2].
• Multisignature: Bitcoin’s multisignature highlight permits organizations full command over their spending by permitting bitcoins to be spent just if a subset of a gathering of individuals approve the exchange.

From the image above taken from Stackexchange, bitcoin basically protects the users through pseudonym by public keys [3]. For multisignature events, the public key is basically broken down into how multiple keys that combine to approve the multisignature verification. Example on how to generate keys in Python is shown below:

The code above with other goodies can be downloaded here .

For blockchain:

• Blockchain is the innovation behind bitcoin. It works like a database for all bitcoin exchanges, and it keeps all records of bitcoin exchanges since the absolute first exchange. The underlying and most broadly known use of blockchain innovation was the open record of exchanges for bitcoin. Be that as it may, advanced monetary standards are by all account not the only use for blockchain innovation.
• Blockchain is a no-trust-based framework, which can be utilized to lead a wide range of exchanges, for example, computerized agreement marking. blockchain innovation can be utilized to make a lasting open straightforward record framework for arranging information on deals, putting away rights information by validating copyright enrollment, etc.

Bitcoin Mining

Bitcoin mining adds more bitcoins in the world and the miner is rewarded money as coins are discovered. Each bitcoin digger engages with the various ways mining coins through arithmetical calculations. Yet, as time goes on, the calculations get more complex, which takes longer for coins to be mined. This time length increases the costs to mine coins.

Anybody can take an interest in bitcoin mining by running a PC program. Notwithstanding running on conventional PCs, a few organizations have planned particular bitcoin mining equipment that can procedure coins and cutting the time to mine significantly more rapidly [4]. Bitcoins are getting increasingly costly due to increased competition from other miners. Numerous supercomputers over the globe are in rivalry to mine the next bitcoin. As the quantity of bitcoin diggers has expanded, it has turned out to be progressively tricky and overrated to begin mining new bitcoin [5].

Conclusion

So, we went over bitcoin, blockchain, and bitcoin mining. Bitcoin is pretty interesting from the underlying technology it was made from — blockchain. From watching documentaries on bitcoin, I do think there is transaction value for its holders unlike what other people might say on how bitcoin adds no value. As for blockchain, I really like how the no trust idea that it operates off of makes very interesting record keeping. I think that it would be very useful for data integrity, which is probably why some of you might have read on the news how the supply chain is applying blockchain. On a final note for mining, just don’t do it. It costs too much now, and you have lower risks by just buying bitcoin in hopes of appreciation. On a personal level, I do not actively trade cryptocurrencies now, but it’s mostly due to other investment strategies that I found that are currently more profitable.

Disclaimer: All things stated in this article are of my own opinion and not of any employer. Investing carries serious risk. Please consult your financial professional before making any investments and all information presented is for educational purposes only.

[1] Garg, H. K. (2018). Hands-on Bitcoin programming with Python: build powerful online payment centric applications with Python . Birmingham: Packt Publishing.

[2] Newby, T. G., & Razmazma, A. (2018, April 9). An Untraceable Currency? Bitcoin Privacy Concerns — FinTech Weekly. Retrieved from https://www.fintechweekly.com/magazine/articles/an-untraceable-currency-bitcoin-privacy-concerns.

[3] Joachim. (2018). Are private keys published to the blockchain after spending coins from a wallet? Retrieved from https://bitcoin.stackexchange.com/questions/1819/are-private-keys-published-to-the-blockchain-after-spending-coins-from-a-wallet.

[4] Bitcoin.com. (2019). Bitcoin Mining Pool. Retrieved from https://mining.bitcoin.com/.

[5] Fortney, L. (2019, June 25). Bitcoin Mining, Explained. Retrieved from https://www.investopedia.com/terms/b/bitcoin-mining.asp.