Don
Sunday, July 14, 2013
How Bitcoin Works Under the Hood
Intro
The goal of this video is to explain how Bitcoin works under the hood, to give a clearer idea of what it really means to own, send or “mine” Bitcoins.
What is Bitcoin at a high level?
First, a brief high-level overview of what Bitcoin is.
At its core, Bitcoin is just a digital file that lists accounts and money like a ledger. A copy of this file is maintained on every computer in the Bitcoin network. These numbers don’t represent anything in the physical world, they only have value because people are willing to trade real goods and services for a higher number next to their account, and believe that others will do the same. The numbers only have value because we believe they have value, just like any other fiat currency.
To send money, you broadcast to the network that the amount on your account should go down, and the amount on a receiver’s account up. Nodes, or computers, in the Bitcoin network apply that transaction to their copy of the ledger, and then pass on the transaction to other nodes. This, with some math-based security, is really all there is--a system that lets a group of computers maintain a ledger.
While this may sound similar to the way a bank maintains a ledger, the fact that the ledger is maintained by a group rather than a single entity introduces a number of important differences. For one, unl ike at a bank where you only know about your own transactions, in Bitcoin, everyone knows about everyone else’s transactions.
Also, while you can trust your bank, or can at least sue it if something goes wrong, in Bitcoin, you’re dealing with anonymous strangers, so you shouldn’t trust anyone. The Bitcoin system is amazingly designed so that no trust is needed--special mathematical functions protect every aspect of the system.
The rest of this entry will explain in detail how Bitcoin allows such a group of strangers to manage each other’s financial transactions.
How Sending Money in Bitcoin Works
Read More and Watch the Video, if you haven't already in the Embedded Window...
http://www.imponderablethings.com/2013/07/how-bitcoin-works-under-hood.html
Go there...
http://www.youtube.com/watch?v=vC-vkJle05w
So, I Downloaded and Installed Bitcoin-Qt on my Fedora Linux System
Bitcoin-Qt is the third Bitcoin client, developed by Wladimir J. van der Laan based on the original reference code by Satoshi Nakamoto (https://en.bitcoin.it/wiki/Bitcoin-Qt). I got it from here (http://www.weusecoins.com/en/getting-started) And there are instructions on How To Install and Run Bitcoin, along with plenty of good Links to info about Bitcoin, on this page too. This Page has some good info on how to run Bitcoin (https://en.bitcoin.it/wiki/Running_Bitcoin)...Running Bitcoin
"There are two variations of the original bitcoin program available; one with a graphical user interface (usually referred to as just “Bitcoin”), and a 'headless' version (called bitcoind). They are completely compatible with each other, and take the same command-line arguments, read the same configuration file, and read and write the same data files. You can run one copy of either Bitcoin or bitcoind on your system at a time (if you accidentally try to launch another, the copy will let you know that Bitcoin or bitcoind is already running and will exit)." Read more... https://en.bitcoin.it/wiki/Running_Bitcoin
After installation of Bitcoin-Qt. The App automatically starts "Synchronizing with the Network"... This has been running now for a couple of hours. I didn't keep exact time. But, it's now at 79%... I had an idea that this could take a while on the first run. After watching the Videos and I think the App told me too. When I was looking around the menu's. After it's all done. We'll See, what else needs to be done, to get going with Bitcoin-Qt...
Here's some Screen Shots, that I took during the Process, of System Bitcoin-Qt and it's System Usage...
Bitcoin-Qt on my Fedora 14 Linux SystemDon
Bitcoin a "Digital Money System" - How Bitcoin Works Under the Hood and People Who is use it
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