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Month: September, 2015

A gentle introduction to bitcoin

Bits on blocks

This article is a gentle introduction to bitcoin and assumes minimal technical knowledge.

In the popular media, you will often read comments like “Bitcoins are stored in a digital wallet”, or “You can send money using blockchain technology”.  These comments can be misleading and can confuse.  By the end of this you should understand enough to participate in a dinnertime conversation about bitcoin, and not be mystified by the topic.

Bitcoin

Although people refer to bitcoin as a decentralised digital currency, I prefer to think of it as an electronic asset, to sidestep questions around which government backs it and who sets the interest rate, which are often a mental block in understanding bitcoin.

As an electronic asset, you can buy bitcoins, own them, and send them to someone else.  Currently there are around 14 million bitcoins that have been created, increasing by 25 bitcoins every 10 minutes or so…

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A gentle introduction to blockchain technology

Bits on blocks

This article is a gentle introduction to blockchain technology and assumes minimal technical knowledge.  It attempts to describe what it is rather than why should I care, which is something for a future post.


PART 1 – EXECUTIVE SUMMARY


People use the term ‘blockchain technology’ to mean different things, and it can be confusing.  Sometimes they are talking about The Bitcoin Blockchain, sometimes it’s other virtual currencies, sometimes it’s smart contracts (to be discussed in another post).  Most of the time though, they are talking about distributed ledgers, i.e. a list of transactions that is shared among a number of computers, rather than being stored on a central server.

The common themes seem to be a data store which:

  • usually contains financial transactions
  • is replicated across a number of systems in almost real-time
  • usually exists over a peer-to-peer network
  • uses cryptography and digital signatures to prove identity, authenticity and enforce…

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