How Does Bitcoin Work?

How does Bitcoin work?

This is a question that often causes confusion. Here's a quick explanation!

The basics for a new user

As a new user, you can get started with Bitcoin without understanding the technical details. Once you have installed a Bitcoin wallet on your computer or mobile phone, it will generate your first Bitcoin address and you can create more whenever you need one. You can disclose your addresses to your friends so that they can pay you or vice versa. In fact, this is pretty similar to how email works, except that Bitcoin addresses should only be used once.

Balances - block chain

The block chain is a shared public ledger on which the entire Bitcoin network relies. All confirmed transactions are included in the block chain. This way, Bitcoin wallets can calculate their spendable balance and new transactions can be verified to be spending bitcoins that are actually owned by the spender. The integrity and the chronological order of the block chain are enforced with cryptography.

Transactions - private keys

A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet. The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, through a process called mining.

Processing - mining

Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain. It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by the network. These rules prevent previous blocks from being modified because doing so would invalidate all following blocks. Mining also creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the block chain. This way, no individuals can control what is included in the block chain or replace parts of the block chain to roll back their own spends.

Going down the rabbit hole

This is only a very short and concise summary of the system. If you want to get into the details, you can read the original paper that describes the system's design, and explore the Bitcoin wiki.

 

Source:  "www.bitcoin.org"

Latest News Read more news

8 Feb
Currencies

Due the speed and functionality of BTC we decided that BTC will be reduced to a secondary currency in March / April 2019 on 1EX.TRADE.

The main currency will become CHBT in the future. If you are against this decision we would like to advice you to remove your BTC from 1EX.TRADE

Once CHBT becomes the main currency all trade are listed against this currency. 

Kinds regards

1EX support team

15 Jan
Maintenance

Maintenance 

We are running an update to our system, during this time all trades and withdraws are disabled.

Maintenance will take a few hours, from 1900hr on the 15.01.2018 to about 0100 16.01.2018

Kind regards,

1EX Supoprt team

1 Nov
2FA Notice

Dear Traders,

To increase the security for our traders we ask all traders to enable google 2FA on their account. 

​It is free to get 2FA and can be downloaded from the appropriate app store for your device. 2FA is available for iPhone, Android, Windows, Blackberry, PC's & iPads.  

IMPORTANT: 

As of the 15 November 2017, only withdraws with 2FA enabled will be allowed. This is to benefit your security on your account.

Kind regards,

1EX Support Team