Topic: What is bitcoin? (Read 1103 times)

Bitcoin is a Virtual Currency based on the principles of Cryptography, limited to max 21 million coins, completely anonymous (as described everywhere, but I doubt at some pace) and its price is based on speculation, just as Gold and Silver, but it ain't a commodity, rises and falls like Google, but it ain't a stock and yes, it's a living of the currently involved members whoever are using it, its a P&D on one side, on the other hand, its stable too, many Big companies have accepted it as a payment method and many more are to join soon, all in all, its a boon provided by Satoshi Nakamoto to users like us to live a tax-free anonymous life and take its best advantage...

The miners secure the transaction history by grouping "unconfirmed" transactions into a "block" of transactions.  They then solve a proof-of-work to gain permission to add their block to the globally shared public ledger called the "blockchain".

The protocol automatically adjusts the difficulty of the proof-of-work so that a completed block is broadcast on average every 10 minutes.

The very first block (back in early 2009) was allowed to distribute 50 bitcoins to the miner that completed the block.  This remained true for the next 209,999 blocks. So, by the time the 210,000th block was broadcast (in late 2012) a total of 10,500,000 bitcoins had been distributed.  Starting with block number 210,001 the permitted distribution was cut in half to 25 BTC in each new block.  This is still true today (we just reached block number 338235).  With the additional 128,235 blocks distributing 25 BTC each, the total bitcoins that have been distributed so far is 13,705,875.  Some time in 2016 we will reach block number 420,000, and the total bitcoins distributed at that time will be 15,750,000.  After that the permitted distribution will be cut in half again to 12.5 bitcoins.  The permitted distribution will be cut in half every 210,000 blocks until eventually we reach block number 6,720,000 (somewhere around the year 2136). At that time the permitted distribution will be 0.00000001 bitcoins per block.  210,000 blocks later (somewhere around the year 2140), the 6,930,000th block will be broadcast.  From then on, there will be no additional distribution.  All 20,999,999.9769 of the bitcoins that will ever exist will already be created.

Thanks Danny

And how much bitcoin distribution by miners? How to calculate ?

It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen.
From a user perspective, Bitcoin is pretty much like cash for the Internet.

Distribution of new bitcoins or distribution of the bitcoin wallet software?

The Bitcoin Foundation is in control of the development, maintenance, and distribution of the program commonly known as Bitcoin Core.  This is not the only bitcoin wallet software.  Other individuals or organizations are in control of their own Bitcoin wallet software (such as Armory, Electrum, MultiBit, etc).  Anybody can start their own wallet if they know how to write computer programs. There isn't any permission necessary.

Nobody is in control of the distribution of new bitcoins.  New bitcoins are issued by miners (or mining pools) to themselves, and the entire bitcoin network running software that enforces the protocol rules prevent the miners (or mining pools) from issuing themselves more bitcoins than they are allowed. That process was built into the protocol from the beginning when Satoshi Nakamoto wrote and released the original Bitcoin software. It isn't likely to every change, since changing that rule would require agreement from nearly all users.

In layman's terms, Bitcoin is the "Internet of money".

In more technical terms, Bitcoin is a Cryptocurrency or protocol for payment transmission similar in method to the way TCP/IP was for the Internet.

Just like TCP/IP had NWLink and Appletalk protocols to compete with, Bitcoin has it's fair share of copy cat coins like Litecoin, Ripple, NXT, etc that have different features, but all derive from Bitcoin's original model.

Just like TCP/IP won out with developers over time to make the other protocols footnotes, Bitcoin will do the same for Cryptocurrency.  And just like TCP/IP has a IP version 6, Bitcoin will eventually evolve to the next iteration over time to address whatever flaws or limitations are found now.

Its not bitcoin only, alt coin too, they price move is significant, very different with fiat currency.
For all guys above me thanks for explains

My question is how bitcoin distribution? Its distribution by bitcoin foundations?

Thanks for the time to write long and better explain "kluge" , "danny" and all people here. Now I have better ideas about bitcoins and can explain what is bitcoin when people ask to me 

bitcoin is coolest and highest cryptocurrency to payment (for me) 

bticoin is a account book which record which address owm how many coins.

Most of your questions have already been answered pretty well by others in this thread, but I'll give my explanation and you can see if it's any better (or worse) than what you've already been told.



That's a pretty good explanation for anyone that doesn't want to know about all the technical details.

If you are asked "What's an automobile?" Do you say, "It's a machine that can be used to transport people and products long distances relatively quickly."  Or, do you try to explain how internal combustion leads to an increase in cylinder pressure, creating a force on a piston, that is translated into rotational motion by way of a crankshaft, with the resulting torque distributed to wheels through a differential gear set.


No.  There is no encryption in the bitcoin protocol at all.  You can use a password to encrypt your wallet to protect its contents if you want, but that's all the encryption there is.  Bitcoin makes use of cryptographic functions.  There are several types of functions are called "cryptographic" even though they aren't used for encryption.

One of these functions is a "hash".  Hashes are very useful for creating a unique identifier for data.  Therefore bitcoin uses a hash functions to generate transaction IDs as well as bitcoin addresses.  Hashes are very fast to verify, but require a lot of computation to find one that meets a certain criteria.  Therefore bitcoin uses hashes for proof-of-work to secure the blockchain.

Another of these "cryptographic" functions is a digital signature.  With a digital signature it is possible to provide proof that the signer has access to something called a "private key".  It is impossible to create a valid signature without the private key, so as long as the person with the private key keeps it away from everyone else, nobody else can create a valid signature.  Each private key has a matching public key.  The public key can be used to verify a signature without knowing what the private key is. Bitcoin uses this digital signature creation and validation to provide users a method of authorizing transactions that transfer value from themselves to someone else.


Although they are commonly called "miners" what they are actually doing is processing transactions and securing the blockchain. This is a very important and valuable service.  The more miners there are, the more secure the blockchain becomes.  Therefore, we want to provide an incentive for people to decide to do the expensive work that we call "mining".  The "miner fee" is a fee that is voluntarily paid when creating a bitcoin transaction.  In this way, the people who are most in need of the serivces of the "miner" pay for that service.


They go to the address that you send them to.  And they stay there forever.  It is very difficult to accidentally type an address that has not been "generated".  Addresses have a checksum on the end that any good wallet software will validate before allowing you to send the bitcoins.  This checksum means that a typo has a 1 in 4,300,000,000 chance of being a valid bitcoin address.  However, if you intentionally create an address with a valid checksum, and it isn't generated from a private key (or if the private key is already permanently lost), then bitcoin will allow you to send to that address.  It is impossible for anyone to ever properly generate that same address, so the bitcoins will remain unspendable and associated with that address forever.


Mining is transaction processing and securing the blockchain with a proof-of-work.  In bitcoin, that proof-of-work is a hash calculation that must meet specific conditions.  The nature of the conditions is such that the only known way to find such a hash is to repeatedly generate the hash while slightly changing the input each time until you happen to stumble across a resulting hash value that meets the necessary conditions.  The conditions are adjusted every 2016 blocks to make sure that the relative odds of success result in a block being completed on average every 10 minutes.


How did I do?

it's DDC, digital decentralized currency

I think the simplest term for bitcoin is that it's a decentralized peer-to-peer digital currency.

DannyHamilton is the guy to answer the other questions.

Fees aren't always mandatory (usually when the transaction where you received control of the coins is old and of "substantial value" and the transaction you want to make is of "substantial value"), and some miners will always allow transactions through without fees. However, some transactions require a fee or else other Bitcoin clients (not necessarily miners) will refuse to transmit the transaction to other clients (or significantly delay them). The latter is called the relay fee. https://en.bitcoin.it/wiki/Transaction_fees Fees are allowed to be heavily market-based in that it can be significantly modified by miners and clients to fit their ideals and other desires without requiring a network fork. That said, most people don't mess with the defaults, so you should probably assume the default fees listed on the wiki are a solid rule-of-thumb.

Transactions without a fee attached when required will eventually be ejected from the transaction queue, usually after a week or two, effectively giving you control of the coins again as if you never tried to push the transaction.

and if I don't pay the fee, the transaction will be not made right ?
Then it will just loss or it will return to my addy ?

I'll give it a whirl...

Bitcoin (capital "B") is a protocol used to generate and transmit bitcoin (the currency, lower-case "b").

The controller of any bitcoin is determined by which address is effectively flagged as the owner by miners. Addresses have two parts: the public key (what you see when people post "their Bitcoin address" - though this is hashed internally) and the private key (the "password" to that address which authorizes control). Breaking addresses into two parts allows for people to post the public key for the receiving of funds (either peer-to-peer or through generation) without compromising their security*.

bitcoins are NOT data. Addresses ARE data, and Bitcoin has already defined all addresses which are valid without being able to generate all of them (the number of addresses is too high for even all the computers in the world linked together to find in any reasonable span of time). There is data determining who controls bitcoin, but you will never "see" a bitcoin in your wallet because it doesn't exist.

Bitcoins came into being through generation in a method we call "mining," which is effectively just encrypting hashing a set of routine data (transactions and bitcoin generation which requires previous blocks to be valid). Mining is a bit like the lottery in that unlike, say, encrypting a .zip archive, you can not "progress" in mining -- there is no way to make a progress bar because the process requires computers to spit out as many valid strings of characters as they can. These strings provide different numbers when "decrypted." Bitcoin has been written in a way where miners must find an extremely high number, but they're unable to know the number any given string will produce before generating it. Think of it as a quadrillion-sided die and each "hash" a miner generates is one roll, where they need to land on one particular number (in reality, it's more like a 2^216-sided die where the die needs to land on anything above, say, 2^215). Each time the die lands on the right number and the data is submitted, clients on the network will quickly verify the findings and pass it along to everyone else until the vast majority of users recognize the work as legitimate and the block as being solved so they can go on to solving the next block (this does not necessarily mean the block is actually legitimate -- future miners will verify old miners' work, and if they dispute old miners' submissions, a fork will occur).

*DannyHamilton will correct this statement.

As title said, eventhought I'm sr member rank. I never fully understand what is bitcoin. I only know bitcoin was a digital currency or new method of payment. Already watch the video bitcoins on youtube fews time but still have lot of question. I only collect/buy/sell without know how bitcoins works.

Any good people that can explain bitcoin in easy language?
When someone ask me what is bitcoins, I will just said it was digital currency. Please give better explaination about it

-Btc is encrypt data?
-What is miner fee?
-Where the btc go if we send to address that still not generate?
-Mining is calculation?

If out there have people that can explain in easy way for all people to understand, I very appreciate that. Thank you