Bitcoin 101

Bitcoin is a decentralized digital currency that was created in 2009 by an unknown person using the name Satoshi Nakamoto.

Bitcoin works through a decentralized network of computers that use a public ledger called the blockchain to keep track of transactions. When someone sends Bitcoin to someone else, the transaction is verified by computers on the network and added to the blockchain. Once the transaction is added to the blockchain, it is considered to be confirmed.

There are several ways to get Bitcoin, including mining it, buying it on a cryptocurrency exchange, or accepting it as payment for goods or services.

Bitcoin mining is the process of using computer power to verify and add transactions to the blockchain. Miners are rewarded with new bitcoins for their work.

A Bitcoin wallet is a digital wallet that is used to store, send, and receive Bitcoin. There are several types of Bitcoin wallets, including hardware wallets, software wallets, and paper wallets.

A blockchain is a digital ledger that is used to keep track of transactions. It is decentralized, meaning that it is not controlled by any one entity, and is considered to be secure and tamper-proof.

A block explorer is a tool that allows users to view information about the blocks that make up the blockchain. It can provide information about individual transactions, including the amount of bitcoin transferred, the time and date of the transaction, and the public addresses of the sender and recipient. Additionally, it can show the current status of the network and provide statistics about the blockchain’s performance.

UTXO stands for Unspent Transaction Output, which refers to the amount of bitcoin that has not been spent from a previous transaction. Each transaction in the blockchain creates new UTXOs, which can then be spent in subsequent transactions. The UTXO model is used in bitcoin to keep track of the total amount of bitcoin that a user has at any given time, as well as to verify that they have sufficient funds to complete a transaction.

Public key cryptography is a system of encryption that uses a pair of keys to secure information. A public key is available to anyone and can be used to encrypt data, while a private key is kept secret and is used to decrypt the data. In the context of bitcoin, public key cryptography is used to generate unique public addresses for users to receive payments, while the private keys are used to authorize transactions and access bitcoin stored in those addresses.

A private key is a secret number that is used to access and authorize transactions from a bitcoin address. It is used in combination with a public key to create a unique digital signature that can be used to validate the transaction. Private keys are typically stored in digital wallets and must be kept secure to prevent unauthorized access to the bitcoin stored at the associated address.

A seed phrase, also known as a recovery phrase, is a series of 12 to 24 words that can be used to recover a bitcoin wallet if the original private keys are lost or stolen. These phrases are typically provided to users when they first create a wallet and must be kept secure and private to prevent unauthorized access.

A Bitcoin address is a string of letters and numbers that is used to send and receive Bitcoin. Each address is unique and can be used multiple times.

Native SegWit, also known as bech32, is a type of bitcoin address that uses a more efficient encoding system, resulting in lower transaction fees and faster transaction times. Native SegWit addresses start with “bc1” and are not compatible with all bitcoin wallets and exchanges, so users should check compatibility before using this type of address.

Taproot is an upgrade to the bitcoin network that aims to improve privacy and scalability while reducing transaction fees. It introduces a new type of bitcoin address that combines multiple public keys and scripts into a single, more efficient address. Taproot addresses will start with “tb1” and are expected to be fully implemented on the bitcoin network by late 2022.

A Satoshi is the smallest unit of Bitcoin, equivalent to one hundred millionth of a Bitcoin. It is named after the creator of Bitcoin, Satoshi Nakamoto.

To send Bitcoin, you will need to have a Bitcoin wallet and the recipient’s Bitcoin address. You can then initiate a transaction through your wallet by specifying the amount of Bitcoin you want to send and the recipient’s address. You will also need to include a transaction fee, which incentivizes miners to process your transaction and add it to the blockchain.

The time it takes to send Bitcoin can vary depending on a few factors, including the transaction fee you choose to pay and the current network congestion. On average, it takes around 10 minutes for a Bitcoin transaction to be confirmed by the network, but it can take longer during times of high transaction volume. Some wallets and exchanges may also require additional time to process and verify transactions.

No, once a Bitcoin transaction has been confirmed by the network, it cannot be reversed or canceled. It is important to ensure that you are sending Bitcoin to the correct address and double-check all transaction details before submitting.