{"headers":{"Content-Type":"application\/x-www-form-urlencoded"},"body":"source_lang=&target_lang=NL&tag_handling=xml&split_sentences=1&preserve_formatting=1&text=How+does+bitcoin+work%3F&text=Part+two+of+Bitcoin+Basics%3A+The+phenomenon+explained+in+plain+english&text=%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EAs+we+outlined+in+%3Ca+href%3D%22https%3A%2F%2Fwww.coininsider.com%2Fnl%2Fwat-is-bitcoin%2F%22%3Epart+one%3C%2Fa%3E+of+our+Bitcoin+Basics+series%2C+Bitcoin+is+a+radical+new+form+of+currency+-+called+a+%3C%2Fspan%3E%3Ci%3E%3Cspan+style%3D%22font-weight%3A+400%3B%22%3Ecryptocurrency%3C%2Fspan%3E%3C%2Fi%3E%3Cspan+style%3D%22font-weight%3A+400%3B%22%3E+or+%3C%2Fspan%3E%3Ci%3E%3Cspan+style%3D%22font-weight%3A+400%3B%22%3Edigital+currency+%3C%2Fspan%3E%3C%2Fi%3E%3Cspan+style%3D%22font-weight%3A+400%3B%22%3E-+designed+to+serve+as+a+global+money+system.%3C%2Fspan%3E%0A%3Ch2%3EBitcoin+and+blockchain%3C%2Fh2%3E%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EBitcoin+relies+on+fundamentally+new+technology%2C+cryptography%2C+the+use+of+incredibly+powerful+computers%2C+and+the+internet+to+function.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EAs+no+single+administrator+is+responsible+for+the+maintenance+or+backing+of+Bitcoin%2C+transactions+issued+in+Bitcoin+are+verified+and+recorded+in+a+public+distributed+ledger+that+is+called+a+Blockchain.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EWhereas%2C+for+example%2C+one%E2%80%99s+bank+of+choice+might+hold+a+copy+of+the+ledger+that+represents+the+flow+of+financial+transactions+through+one%E2%80%99s+account%2C+the+Blockchain%3C%2Fspan%3E+%3Cspan+style%3D%22font-weight%3A+400%3B%22%3Eis+a+form+of+ledger+that+-+rather+than+being+kept+by+a+bank+-+is+instead+shared+between+Bitcoin+%E2%80%98miners%E2%80%99+and+%E2%80%98nodes%E2%80%99+around+the+world.%3C%2Fspan%3E%0A%3Ch2%3EWhat+is+blockchain+technology%3F%3C%2Fh2%3E%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EThe+Blockchain+draws+its+name+from+its+underlying+data+structure+that+consists+of+1-megabyte+files+called+%E2%80%98Blocks%E2%80%99%2C+which+are+essentially+ledgers+themselves.+Blocks+are+%E2%80%98Chained%E2%80%99+together+through+a+complex+mathematical+proof.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EThe+Blockchain+is+a+shared+public+ledger+that+the+entire+Bitcoin+network+relies+on.+All+network+nodes+%28computers+running+Bitcoin+software%29+have+the+potential+to+access+the+Blockchain+and+view+authenticated+transactions.+Transacting+parties+are%2C+to+some+degree%2C+anonymous+as+the+Blockchain+does+not+illustrate+the+names+of+parties+but+instead+provides+an+alphanumeric+designation.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EWhereas+one+might+rely+on+the+trustworthiness+of+a+bank+to+authenticate+the+integrity+of+a+ledger%2C+the+Blockchain+instead+relies+on+cryptography+%28the+art+of+writing+or+solving+codes%29+as+its+proof.%3C%2Fspan%3E%0A%3Ch3%3EBitcoin+wallets%3C%2Fh3%3E%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EWhen+transacting+in+Bitcoin%2C+parties+leverage+what+is+called+a+%E2%80%9CBitcoin+Wallet%E2%80%9D+to+exchange+denominations+in+Bitcoin+%28BTC%29.+Bitcoin+Wallets+provide+their+users+with+both+a+Public+Key+%28the+address+from+which+one+sends%2C+or+from+which+one+receives+Bitcoin%29+as+well+as+a+Private+Key.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EThe+term+%E2%80%98Wallet%E2%80%99+can+actually+be+described+as+a+poor+term+to+use%3B+a+more+accurate+name+might+be+a+%E2%80%98Keychain%E2%80%99%2C+where+users+can+copy+both+of+their+keys+rather+than+simply+have+access+to+one.%3C%2Fspan%3E%0A%3Ch3%3EA+Bitcoin+Private+Key%3C%2Fh3%3E%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EA+Private+Key+is+an+incredibly+important+%E2%80%98signature%E2%80%99+for+Bitcoin+users%2C+which+is+used+to+confirm+pending+transactions+by+giving+a+mathematical+proof+that+they+originated+from+the+owner+of+the+wallet+in+question.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EWhen+a+user+wishes+to+transact+in+Bitcoin%2C+their+intention+is+signalled+on+the+Blockchain+by+submitting+a+transaction+signed+with+the+user%E2%80%99s+private+key.+The+bitcoin+network+then+validates+the+transaction+by+checking+that+the+to+and+from+addresses+are+valid%2C+that+the+private+key+is+valid+and+that+it+has+access+to+enough+funds+to+perform+the+transaction.+The+transaction+usually+confirmed+on+the+network+within+the+following+ten+minutes.%3C%2Fspan%3E%0A%3Ch3%3EBitcoin+Mining%3C%2Fh3%3E%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EThe+process+of+authenticating+pending+transactions+and+collecting+them+into+a+block+to+include+in+the+Blockchain+is+called+Mining.+%E2%80%9CMiners%E2%80%9D+are+computer+users+with+incredibly+powerful+hardware+that+solve+complex+mathematical+problems+to+cryptographically+sign+a+block+of+transactions+and+connect+them+to+all+previous+transactions+in+the+Bitcoin+network.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EMiners+serve+the+Bitcoin+community+by+securing+the+network.+The+process+of+solving+the+cryptographic+proof+for+a+block+is+extremely+resource-intensive.+By+winning+the+race+to+mine+1-megabyte+%E2%80%98blocks%E2%80%99+of+transactions%2C+Miners+receive+a+%E2%80%98bounty%E2%80%99+or+%E2%80%98reward%E2%80%99+in+Bitcoin.+%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EA+malicious+transaction+requires+so+much+computation+%28and+thus+electricity%29+that+in+almost+all+cases+it+is+more+profitable+to+use+that+same+compute+power+to+secure+the+network+instead+and+collect+the+block+reward.+This+is+what+prevents+bad+actors+from+attacking+the+network+and+preserves+the+Blockchain+from+recording+malicious+or+fraudulent+entries.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EMining+draws+its+name+from+the+metaphor+that+Miners+receive+Bitcoin+as+a+reward+in+a+similar+fashion+to+how+rare+commodities%2C+such+as+gold%2C+are+mined+from+the+ground.%3C%2Fspan%3E%0A%3Ch3%3EWhat+do+I+need+to+know+about+using+Bitcoin%3F%3C%2Fh3%3E%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EWhile+Bitcoin+is+a+fascinating+technology+and+perhaps+both+an+exciting+store+of+value+and+means+of+exchange%2C+the+Bitcoin+network+is+fundamentally+different+from+the+traditional+banking+system+and+bears+some+notable+differences.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EWhile+Bitcoin+itself+is+unhackable+in+the+sense+that+the+Bitcoin+network+relies+on+complex+mathematical+proof+as+its+foundation+-+and+to+even+hack+one+transaction+would+immense+resources+-+Bitcoin+Wallets+share+the+same+vulnerabilities+as+conventional+wallets+in+the+sense+of+that+they+are+only+as+secure+as+their+user+leaves+them.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EAs+Bitcoin+can+be+transferred+anywhere+around+the+world+with+ease%2C+Bitcoin+Wallets+are+an+easy+target+for+computer+hackers+seeking+a+fast+way+to+steal+digital+currency.+One+should+take+care+in+selecting+a+trusted+Wallet+service+and+always+secure+their+Wallet.%3C%2Fspan%3E%0A%3Ch3%3EBitcoin+storage%3C%2Fh3%3E%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EOther+popular+means+of+storage+are+custodial+services+or+exchanges%2C+which+usually+either+participate+in+the+holding+or+transaction+of+cryptocurrency%2C+respectively.+Given+that+these+entities+usually+hold+vast+amounts+of+bitcoin+and+other+digital+currencies%2C+they+are+attractive+targets+for+internet+hackers+and+care+must+be+taken+when+using+them.%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EBitcoin+is+further+easy+to+steal+thanks+to+the+facts+that+payments+made+in+Bitcoin+are+irreversible+without+the+assistance+of+the+party+which+incorrectly+received+the+funds+in+question.+%3C%2Fspan%3E%0A%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EThough+the+Bitcoin+network+can+detect+typos+and+will+not+allow+users+to+send+Bitcoin+to+an+invalid+address%2C+confirmed+transactions+%28thanks+to+the+fact+that+they+are+secured+by+cryptography%29+must+be+treated+as+final.+Therefore%2C+transacting+parties+must+be+able+to+trust+one+another+when+exchanging+Bitcoin.%3C%2Fspan%3E%0A%3Ch2%3EBitcoin+is+transparent%3C%2Fh2%3E%0A%3Cspan+style%3D%22font-weight%3A+400%3B%22%3ELastly%2C+%3Ca+href%3D%22https%3A%2F%2Fwww.coininsider.com%2Fnl%2Fbitcoin-trader%2F%22%3EBitcoin%3C%2Fa%3E+is+not+a+fully+anonymous+system.+Whereas+one+might+rely+on+a+bank+to+secure+the+privacy+of+one%E2%80%99s+bank+account+%28a+private+ledger%29%2C+all+computers+on+the+Bitcoin+network+have+the+potential+to+view+the+Blockchain+and+can+usually+see+each+Wallet%E2%80%99s+balance.+All+transactions+are+further+visible+on+the+network.+Even+though+the+names+of+transacting+parties+are+not+disclosed+on+the+network+when+exchanging+Bitcoin%2C+sophisticated+analysis+of+the+blockchain+could+allow+third+parties+to+trace+how+bitcoin+flows+through+the+network.%3C%2Fspan%3E%0A%0A%3Ci%3E%3Cspan+style%3D%22font-weight%3A+400%3B%22%3EIn+part+three+of+our+Bitcoin+Basics+series%2C+we%E2%80%99ll+be+exploring+%3Ca+href%3D%22https%3A%2F%2Fwww.coininsider.com%2Fwhat-is-bitcoin-mining%2F%22%3Ehow+Bitcoin+mining+works%3C%2Fa%3E+in+greater+detail.%3C%2Fspan%3E%3C%2Fi%3E","timeout":15}