Tor And The Deep Web: The Complete Guide To Stay Anonymous In The Dark Net: Two Manuscripts In one by Leonard Eddison

Author:Leonard Eddison [Eddison, Leonard]
Language: eng
Format: azw3
Published: 2018-02-28T16:00:00+00:00

Chapter 2: The Technical Side

Since bitcoin is a digital currency that is dealt with entirely online, it is only natural that it has a technical side to it. As you briefly learned in the previous chapter, bitcoins are mined using complex mathematical equations that are solved by computers. In this chapter we are going to explore exactly what this means, the types of equations that are used, the computers required for the mining process, and other technical elements of this currency.

The Creation of Bitcoin

The creation of bitcoin is perhaps one of the most revolutionary technological creations in a long time based on the fact that it is done in a decentralized manner. This means that there is no particular system, computer, or network that is responsible for the creation and distribution of bitcoin. Instead, it is created using a decentralized algorithm that distributes it across a series of networks. This means that no particular network can hack or stop the creation of bitcoin .

Since the bitcoins are created in a decentralized manner, there is a process known as mining that is responsible for essentially “identifying” bitcoin and bringing them into creation. The process of mining results in a series of individuals who have designed computers and software that mine bitcoin. They are then rewarded with the bitcoins themselves. Essentially each time a new computer plugs into the mining process they are assisting with the processing of transactions and they are also assisting with securing the network using specialized hardware. Because of their contributions to the bitcoin network they are rewarded with bitcoins in exchange, which they can then use at their discretion.

The way the bitcoin algorithm works, they can only be created at a fixed rate. You cannot accelerate or decelerate the speed at which bitcoins are created. Because of this specific factor, bitcoin is a highly competitive business. When more individuals become involved in the mining process they take away some of the profits that were previously being earned by a fewer number of people, thus meaning it is distributed across a wider network and becomes less profitable to the existing network. Because of the decentralized nature of the currency there is no way to control how many miners become involved in the process or how many bitcoins are awarded to any specific miner. There is no way to manipulate the system or otherwise increase your odds of earning more bitcoins than others because any attempts at modifying the system will be shut down by every bitcoin node across the entire world.

One other aspect of bitcoins that is interesting to note is that the algorithm was designed so that the number of bitcoins created each year would be automatically cut in half. This means each year only half the number of bitcoins will be produced as the year before. The process will end when there are approximately 21 million bitcoins in circulation. Once they have capped out there is no way to create any further bitcoin as the algorithm will no longer allow it.

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