NovaBit Trading Center: Why Bitcoin is a viable medium of exchange?
The underlying blockchain technology is designed to maintain the integrity of data and transactions. After the process of "mining," the blockchain permanently records confirmed transactions. Each transaction is digitally signed and verified through cryptography to ensure that the same funds are not "double-spent" or "multi-spent."
"Double-spending" is also prevented by providing economic incentives to miners. Miners will not package double-spent transactions because there is a risk that other miners will reject the block; they could potentially lose out on potential revenue. Double-spending is a criminal act, and people do not want to leave unalterable evidence of their attempts to steal.
Bitcoin mining is also the process of creating new Bitcoins. Mining relies on cryptographic hash functions and a consensus algorithm called Proof of Work (PoW). To alter the Bitcoin blockchain through mining, one would need to break down the entire structure, block by block, as each block contains the hash of the previous block. Attempting to do this would require an immense amount of funds and resources.
Data distribution is achieved through miner nodes across many networks worldwide. Each miner node maintains a copy of the blockchain ledger, if the data on one node is altered, other network participants will identify it as corrupted since it does not match the other copies.
Additionally, a timestamp server takes the hash of a block of transactions and widely broadcasts the hash. The timestamp confirms the existence of the data. Each timestamp includes the previous timestamp in its hash, reinforcing the previous timestamps with each new one.
Generally, distributed systems are more resistant to failures and network attacks because they do not rely on a single, specific data source like traditional centralized systems. Blockchain acts as a distributed ledger that records all transactions. It is highly fault-tolerant and difficult to tamper with or commit fraud due to its distributed nature. This database record is immutable unless one has substantial computing power to alter it.
How do I use Bitcoin (BSV) for transactions?
Bitcoin transactions do not involve intermediaries, so anyone with internet access can transfer Bitcoin to anyone anywhere in the world. To receive or send Bitcoin, users first need a Bitcoin wallet.
To describe how a transaction works, imagine the following scenario:
Tom provides Sean with his Bitcoin address, similar to an account number. Sean creates a transaction to transfer Bitcoin to Tom’s address using his wallet and signs the transaction with a digital signature. Once Sean clicks send, his transaction is broadcasted to the various nodes maintaining the network.
Miners package waiting transactions from the memory pool into a new "block." Miners will verify that Sean has the Bitcoin to pay and that his signature is valid. Once a miner finds the solution to add the new block (i.e., mines the new block), the transaction is confirmed and added to the previously verified blocks.
According to the rules defined in the original Bitcoin white paper, once a majority of miners reach a consensus, the new block containing the transaction is added to the Bitcoin ledger. On average, a new block is added to the blockchain every 10 minutes, allowing miners to officially update the transaction records on the blockchain. Thus, as soon as Sean sends the transaction record, Tom can see Sean's transfer in his wallet and can use the funds immediately without waiting for confirmation.
Transaction confirmation is not crucial for regular users unless the transaction amount is significant, such as for a car, house, or important contract. Miners propagate these transactions for two reasons: the possibility of earning transaction fees and ensuring that other miners record the transaction to reduce the risk of the block being rejected.
Since all miners record a transaction once it is broadcasted, its likelihood of being included in the next block (only on the BSV chain) is greater than 99%, effectively confirming the transaction.
Why use Bitcoin?
Bitcoin transactions cannot be altered once added to the blockchain, making them irreversible after being verified and recorded.
Since anyone connected to the network can use Bitcoin, it is ideal for those seeking quick settlements with low fees. People can securely transfer funds directly to anyone in a peer-to-peer manner on a protected distributed network without traditional financial intermediaries.
Additionally, anyone can view the complete history of Bitcoin transactions.