Bitcoin, month by month, is attracting increasing interest. Most people are interested in the money they can make. However, Bitcoin is also about a technology that can revolutionize digital systems: blockchain.

To start an explanation of "what is a blockchain?", I have to start with another question: how can a user send a certain amount of Bitcoin to another without an entity that validates this transaction? Here, cryptocurrency uses blockchain.

As the name suggests, blockchain is a continuous list of records in which there is no possibility to modify a record. Each block in the blockchain contains a hash pointer to the previous block. Thus, this chaining creates the blockchain. In turn, it is based on the "peer-to-peer" principle.

The first blockchain implementation was made by Satoshi Nakamoto and was used in Bitcoin. All other currencies that followed were based on this principle, that of the blockchain. Meanwhile, some are moving away from this context .

All blockchain records are visible and public, meaning anyone can view a transaction.

If everyone can see the records of a Bitcoin, what prevents system fraud?

Each transaction comes with a public key (public key - no), visible by the whole blockchain system, but also with a private key, visible only by the one who sends the Bitcoin amount and by the one who receives it. The private key is a randomly generated number, and the public key is derived from this random number.

The private key is used to sign the Bitcoin transaction, and the public key is intended to validate if the signature is correct. The encryption algorithm used is AES-256-CB.

To give an insight into how difficult it is to decrypt such a key generated with this algorithm we should see where that 256-bit encryption comes from and the length of the encrypted key.

Basically, if someone wants to break this key, they need 2 ^ 256 combinations.

How big is this number? The age of the Universe is 2 ^ 30 years. The total number of atoms that make up the Earth is about 2 ^ 167. The estimated number of atoms in the entire universe is about 2 ^ 257. Only then is there a number greater than the number of combinations needed to decrypt such code.

Okay, but in short what is this Bitcoin blockchain?

A simple explanation of a blockchain is a table that is duplicated hundreds of thousands of times by each person who uses that table, and each transaction will receive an update in the table visible to each person in the network.

What are the advantages of such a distributed database? First, it is not centralized by a particular entity, cannot be corrupted, and is owned by all the people who create a transaction.

Secondly, it is transparent, being owned by all the people who use the network, whenever you can see any transaction made.

However, what does it mean that it is not centralized, in fact? I will use the dollar as an example. The Congress of the United States of America deals with the way the money is administered, and the Treasury deals with the printing of banknotes and decides to print.

There is thus a single node (the Treasury or the State itself) from which various other institutions or users start using "money", in this case dollars.

How can Bitcoin be viewed? It can be seen as a network of nodes in which each user is a node and each transaction is public. Each node has the same rights, the same attributions and does not depend on a person or entity.

Then come the questions: how can a currency like Bitcoin have value? What's the point of a Bitcoin if it has no value?

It is based on the basic principle of a currency, namely fiat money, ie fiat money. A fiat currency is a currency that, in itself, has no value. But its value is given by the confidence that a person can give in trading this currency.

Fiduciary coins start with the support of the institution that creates them. That institution gives value to the currency and guarantees that that currency can be the equivalent of something concrete. The fiat currency is a currency that is also based on public trust.

If an institution, for example, the Romanian Treasury states that the Romanian leu has the same value as the US dollar, this will not change the purchase prices of a product and you will not be able to suddenly buy products that normally cost 100 of dollars with 100 lei.

A coin is based on this concept: a number of people think that that coin has a value with which you can buy something else.

The value of Bitcoin is given by users (who believe in the currency)

Bitcoin is also based on this principle: the value is given by the users who use that currency. However, what is different about Bitcoin compared to a conventional currency is that it is not backed by an institution, it is not regulated, you cannot influence the number of coins created and you cannot change their number.

For example, if a certain state is in a financial crisis and the state needs money, the quick solution it will use most of the time is to print more money. What will happen at that moment? The value of the currency will decrease as a result of the greater amount of money put into circulation, but the number of people using that currency will remain the same. This is how inflation could be defined, in short.

Bitcoin is not affected by such a problem. There is no inflation. The number of valid bitcoins is influenced by the number of people who "mine".

How is Bitcoin actually stored and where is the relevant blockchain again?

Each user has a complete copy of all Bitcoin transactions to date. The curiosity remains: where is the data stored? Well, in an e-wallet. There all the data in the blockchain are recorded and it creates that node through which you can transmit a sum of Bitcoin to someone else.

There are two types of e-wallets: Full Client and a Lightweight Client.

A Full Client electronic wallet stores all the data in the blockchain and is the safest way to trade Bitcoin. This type of client can check the validity of a mined block. However, it comes with a noticeable disadvantage, the size of the blockchain at the moment is 145GB and constantly growing.

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A Lightweight e-wallet (ie a "light" wallet) is a wallet that makes a request to a Full Client e-wallet to receive data from the blockchain. It does not require a physical copy of the blockchain, and these types of e-wallets are much faster to create and use. They are usually good on smartphones or other devices with low processing power and storage. However, they have certain vulnerabilities, among which you cannot check the validity of a blockchain transaction and some errors may occur.

Blockchain security is turning technology into a revolutionary one. But the discussion has moved more and more on Bitcoin fluctuations and how fast you can make money. The last major announcement about the blockchain was with a potential voting system . As the future cannot be predicted, we can still expect the stabilization of both cryptocurrencies and the development of the blockchain until it will no longer be just a subject of the passionate, but a tool of the new digital man.