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Bitcoin Network or Bitcoin Web

Bitcoin network, What is it and how does it work?

To address these questions, it is first necessary to make clear certain differences that arise in the nomenclature of this Cryptocurrency. And it is that what we know as “Bitcoin” is the representation of the Blockchain network and its entire system, while the word “bitcoin” with a lowercase “b” indicates the name of the currency that is handled in the Bitcoin network.

The Bitcoin Web It is a payment system between peers or P2P that works under a Cryptographic protocol, where the participants of said network can send and receive bitcoins, these payments are sending messages with a digital signature that certifies a user to be the owner of a certain amount of currency and are received in a tool called Wallet that is essential for the operation of this system.

These payments or transactions are registered in a database shared by all the users that are also called nodes, this database is called Blockchain and is in charge of keeping the records of all the transactions made by the users and rewarding the participants in the verification processes.

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These verification processes are carried out by a group of users or nodes specialized in data mining, where thanks to a system called Proof of Work specialized hardware equipment is required to be able to solve a difficult mathematical problem, once the mathematical problem is solved, the user responsible for doing so will be rewarded with a specific amount of new bitcoins and this process happens every 10 minutes.

This system or network was designed and created by Satoshi Nakamoto, and thanks to this project launched in 2009, the door was opened to the development of new cryptographic models and the acceptance and adoption of Cryptocurrencies as a means of payment worldwide.

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Technical characteristics of the Bitcoin network?

Within the blockchain network of this famous Cryptocurrency, certain technical characteristics are handled that are at least interesting, among them we have the Mining processes, the Blockchain minutes, the Mempool, among others.

Below we will explain some of these technical characteristics present in the Bitcoin network and we will see how they directly influence the system.

Bitcoin Mining Process

The Bitcoin mining process was key to the development of what we know today as the Cryptocurrency ecosystem, thanks to this system today we can say that the records of a Blockchain are secure.

The mining that generates new bitcoins is based on a mining protocol called Proof of Work. This system consists of carrying out an encryption procedure through computer equipment to validate a new block that will be added to the chain of blocks, this procedure is necessary since the mining nodes must participate in a computational force contest to maintain equality of opportunity and thus protect the system from uncontrolled emission.

This contest consists in that each participating mining user will create their block model with transactions that have not yet been verified, these blocks will be stored within the Bitcoin Mempool until the correct block is selected.

The correct block has a header where a summary of the block data is stored, as well as an anchor called Nonce (Unique block number) that associates it with the last mined block within the block chain.

This header will be subjected to a mathematical function with an encryption code called SHA-256; The idea is to carry out these mathematical operations until the result in the SHA-256 Hash code matches the Nonce of the Block, if this result does not match the miner must adjust the Nonce and try again, which is why it is so difficult to find the answer to this math problem. It is estimated that each miner performs this procedure thousands of times per second for approximately 10 minutes.

When a miner manages to solve the problem, his block will be selected and it will be evaluated by other miners to verify that it is the correct answer to the mathematical problem; Once evaluated, the miner or miners will be awarded a standard amount as a reward for having mined said block.

Mempool 

The Mempool is a system that works as a waiting room for Bitcoin transactions that have been generated; This allegory is used since the transactions are momentarily stored here, waiting for them to be encapsulated in a block and then incorporated into the chain of blocks.

This system, in addition to carrying out transactional control, helps with network security, avoiding the feared DDoS attacks or denial of service attacks, since if the Mempool did not exist, the network would collapse due to the indiscriminate entry of transactions.

It should be noted that the miners give priority to the transactions that are in the Mempool with the greatest reward for them and this is what we interpret as “Network Commission”, which is why depending on how oversaturated the waiting room is, some transactions will increase your commission so that they are approved faster than others.

Energy consumption 

We already know that the Bitcoin network needs the miners to be able to function, and they need the computer equipment to be able to carry out this process; This vicious circle has currently generated controversy in the Crypto ecosystem and in the world due to the exaggerated consumption of energy involved in mining Bitcoin.

And it is that currently there are Cryptocurrencies that have managed to solve this problem by changing the protocol of Work test by others such as the protocol of Proof of Participation, doing an excellent job of doing the same thing but without the extraordinary consumption of energy.

Nodes

A very important feature of Bitcoin is its nodes that allow communication throughout the network. As we mentioned before, this system is a P2P network where all users have a copy of said network, therefore if a node fails it is omitted and replaced by another.

In Bitcoin there are two types of nodes, user nodes and miners’ nodes, the latter can be a set of users who come together to increase their computing power and thus be more likely to be able to solve the mathematical problem; It is currently estimated that there are around the world an amount of 300,000 active nodes of this Cryptocurrency.

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Correct, all the transactions that are carried out with the bitcoin Cryptocurrency will be executed within the Bitcoin network, it should be noted that our wallet will modify the connection fee so that the transactions of our users are always received and executed in the next block to be generated.

This is a good practice adopted by the Crypto community, and it is that each time a block is generated after the block where our transaction is located, it is taken as a confirmation, and it is normal to find platforms where a minimum limit of confirmations is required to be 100% sure that the transaction has been included in the block chain, which brings us to why many transactions last more than 20 minutes and it is because of this wait, since each confirmation or creation of a new block takes approximately 10 minutes .

At Ccoins, the minimum number of confirmations to guarantee that a transaction is 100% included in the block chain will depend on the Cryptocurrency or token, in the case of transactions with bitcoins it is 3 confirmations, remember that from the first confirmation the system it will give us the TxID of the transaction, this code is to be given to our counterparty so that they can verify the status of the transaction.

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