In today’s time, one of the most discussed applications of popular blockchain technology is Bitcoin. It is a virtual digital currency that uses the peer-to-peer network and can exchange to buy goods and services. Like traditional currencies, it has no value by itself but has value when used to buy goods and services. In simple words, a blockchain is a record that cannot be falsified, whereas, in technical terms, it is a distributed public ledger that keeps a record of all bitcoin transactions.
The shared public ledger isn’t stored in a server, but it is accessible worldwide through a network of computers that serve as both executing computations and storing data. In the network of private computers, each computer is referred to as a blockchain network node. Many people think why the public ledger isn’t maintained by banks or data centers and maintained by connected computers. There are many allegations to this, which are:
- Blockchain technology uses cryptography to secure the network and transaction, and therefore no trust of banks is required. The reliability and security of data and transactions are required through specialized, complex mathematical code and functions.
- The customers or users need to trust their financial institutions and query them to know their cash flow. The bitcoin network uses blockchain technology, which means it is distributed; no help desk can solve your issues if anything goes wrong.
- A user can only know his set of transactions, cash flow, and account details and balances in banks. In the blockchain, everyone can see the transaction of other users.
What is blockchain, and how transactions are performed?
Blockchain is a system that maintains a secure and updated ledger through a network of connected computers. A user requires a wallet to perform the bitcoin transactions on the blockchain. A wallet is a digital program that stores bitcoins and allows users to exchange them wherever and whenever required. There are many reasons to use bitcointrend , and blockchain technology is one of them. Only the user is the owner of his bitcoin wallet and can spend the bitcoins; this means the bitcoin is secure by the cryptographic method. The special cryptographic method utilizes a pair of different yet connected keys that are public key and private key.
The messages are encrypted with the public key and can only be decrypted by the owner who has the private key. If you encrypt the messages with private keys, then only the public keys can decrypt it. In order to spend the bitcoins, a user is required to broadcast an encrypted message with the private key of the bitcoin wallet. The blockchain network notes cross-check the request of the transaction from the user by using the public key to decrypt the message.
When users tend to encrypt a transaction’s request by using the private key, they tend to create a digital signature. The digital signature is utilized by blockchain computers to authenticate and verify the source and transaction. In technical terms, the digital signature is a sequence of text that is the outcome of transaction requests and usage of the private key. These can never be used to authenticate other transactions.
If a user tries to change the text of the transaction request’s message, it will change the digital signature as well. This means no attacker or hacker can attack your transaction request or change the bitcoin amount that you are transferring. A user can only send bitcoin if he/she has the private key of a bitcoin wallet. The user needs to encrypt the message of the transaction request and then use the private key to send bitcoins.
How to track the balance of the bitcoin wallet?
The nodes of the blockchain store a copy of the shared public ledger. The blockchain system does not maintain the record of account balances, and it only records the transactions that are approved and verified. The blockchain only keeps track of transactions that are broadcasted in the bitcoin network. To track your bitcoin wallet’s balance, the user is required to scrutinize and verify the transactions that have ever happened in the bitcoin network that belongs to your bitcoin wallet.