This is my first ever blog, comment below if you find any mistakes or suggestions. ✌

Before understanding Bitcoin, we need to understand the underlying technology: Blockchain.

What is Blockchain Technology?

A blockchain is, in the simplest of terms, a time-stamped series of immutable records of data that is managed by a cluster of computers not owned by any single entity. Each of these blocks of data (i.e. block) is secured and bound to each other using cryptographic principles (i.e. chain).

Wait that statement has a lot of jargons 😛 lets break it down:

Think of an airline. We buy tickets on an app or the web. The credit card company (a single, central authority) takes a cut for processing the transaction. We and the airline both trust this single entity.

Blockchains provide a way to eliminate this central authority and create a trustless network.

Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet.

Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.

Alrighty, we have a very basic understanding of blockchain technology, I believe this should be enough for us to begin with with Bitcoin.

What is bitcoin?

In October 2008, A person or group using the name Satoshi Nakamoto makes an announcement on the Cryptography Mailing list at metzdowd.com: "I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party. This now-famous whitepaper published on bitcoin.org, entitled Bitcoin: A Peer-to-Peer Electronic Cash System which today is well-known as the Bitcoin Whitepaper.

Satoshi Nakamoto mined the genesis block in 2009 which can be viewed here. Visit the link and try to understand the contents of the block. This is the block where it all started!

The Block

A block in the bitcoin contains a number of transactions, a unique hash, the hash of the previous block and the hash of the next block (to chain the blocks).

Transactions

Transactions are the most important contents of a block. Whenever a transaction takes place, an exchange of bitcoins is reflected in the users' bitcoin wallet.

Transactions have its own unique hash. Have a look:

Working

Whenever a transaction takes place, it is first validated or rejected, i.e. it checks if the balance amount in the users' wallet is more than the transaction amount.

If the transaction is valid, it is added to a pool of unconfirmed transactions. Now to create a block in the blockchain, we have to choose a number of transactions from this pool of unconfirmed transactions and add it to a block.

BUT WAIT!! We don't have a central authority to add transactions to a block right? So who is going to do so?

Enter Bitcoin miners

A number of bitcoin miners can select transactions from this pool to add a block in the blockchain.

But who decides which miner is going to add the new block?

This is solved using the Proof-of-Work algorithm.

A number of miners solve cryptographically hard puzzles and the one who solves the puzzle first gets to add the new block. The winning miner is rewarded an amount of bitcoin in return.

After creating a new block, the new block is then broadcasted to all the miners in the group and after consensus, the block is finally added to the blockchain!

Learn more about bitcoin mining here

This was a basic overview of how the bitcoin blockchain works.

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