Genesis block – the fundamental block of every blockchain

What is the Genesis Block and what is its significance?

The genesis block, is a key element of any blockchain that runs the network by establishing ground rules, and linking all future blocks to a starting point. In proof of work (PoW) blockchains, a genesis block is the first block ever mined and serves as the foundation for all subsequent blocks, usually embedded in the protocol and created by the creators of the blockchain. This block does not go through the traditional mining process because there are no previous blocks to refer to. On the other hand, in proof of stake (PoS) blockchains, the genesis block is created by developers and/or validators who run the network according to specific protocol criteria. Historically, the first genesis block was created by Satoshi Nakamoto in 2009. year at the launch of the Bitcoin network, thus establishing the foundations for the most valuable cryptocurrency in the world. The Genesis block is crucial for the initialization of the blockchain because it cryptographically connects all subsequent blocks, allowing trust in an immutable ledger of transactions. It sets initial parameters such as mining difficulty and block rewards, thus ensuring a secure and reliable start of the blockchain network. Without it, the blockchain would not have a stable foundation for permanently recording transactions.

Source: cointelegraph

Bitcoin Genesis Block

Bitcoin’s genesis block, known as block 0, represents the fundamental block of all blockchain technology. Created by an anonymous creator, Satoshi Nakamoto, this block was mined on 3. January 2009. years and does not contain a reference to previous blocks, which makes it unique. It contains a message that probably served as proof that the bloc was created after that date, but also as a commentary on the instability caused by fractional banking: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”. This message reflects the initial vision and purpose of Bitcoin in response to financial crises and the systems that made them possible, and offers Bitcoin as a decentralized alternative. The reward for mining the first block was 50 BTC, but due to the specifics in the code, this reward is not expendable. The Bitcoin Genesis block not only ushered in a new era of digital currency, but also laid the groundwork for the development of decentralized systems that are changing the world of finance today.

Source: cointelegraph

Genesis Block in other cryptocurrencies

Although the concept of genesis block is universal for all cryptocurrencies, each of them has its own unique story or hidden message within its genesis block. For example, Bitcoin’s genesis block contains the famous message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”, which reflects the reasons for the creation of Bitcoin during the 2009 financial crisis. Year2. Similarly, other cryptocurrencies are using their genesis block to send messages or lay the groundwork for their vision of a decentralized financial system1. The Genesis block is, therefore, more than a technical element; It is a symbol of the beginning of a new era of digital economy and data autonomy.

Source: cointelegraph

Genesis Block Structure

The genesis block lays the groundwork for the blockchain by establishing a format for data and a structure that all future blocks will follow. It contains basic information such as timestamp, block hash, previous block hash, nonce, and block reward address. The timestamp indicates when the block was created, while the previous block hash is zero because the previous block does not exist. In PoW blockchains like Bitcoin, the nonce is changed to find a valid block hash that satisfies the target weight of the network. The address for the block reward indicates where to send the block reward, although this works differently in the initial block compared to later blocks. The block structure includes the block header and body. The header contains metadata like version, timestamp, target weight, Merkle root hash, and nonce. The body contains all the transactions in that block, which is only a reward transaction for the creator of the initial block in the newly launched networks. This standard structure forms a template for the chronological sequence of blocks that follow, establishing the principle for validating transactions, adding new blocks, reaching consensus, and growing the chain. It is also not uncommon for the initial blocks to carry encrypted messages or references, adding symbolic or commemorative meaning to the block.

Source: cointelegraph

What after the Genesis Block?

The Genesis block launches the network, after which confirmations, incentives, and weight adjustments allow decentralization to grow, consensus, and mining so that the blockchain can evolve. Once the block is established, the blockchain network can be formally launched. This milestone opens up public participation and triggers a process of consensus and decentralization. After the launch, the blockchain begins to build on the basis of the genesis block. As an inaugural block, the genesis block is automatically accepted by network nodes as valid, but does not require confirmations in the traditional sense as transactions or later blocks do. The following blocks reference the hash genesis of the block, establishing an unbroken chain that connects to the starting point of the network. With the confirmation of the genesis block, miners compete to add new blocks. As blocks are added, additional confirmations are collected for previous blocks, thereby solidifying the durability and security of the blockchain. New coins are issued through block rewards, and transactions are confirmed. The weight of the network is dynamically adjusted based on activity to maintain the rhythm of block creation. More miners and higher participation increase competition and weight, while lower activity reduces the target weight. This fluctuation ensures the self-regulation of the blockchain. After the genesis block, the blockchain grows organically through decentralization, consensus mechanisms, and incentive mining. The number of transactions increases rapidly as the network grows. In the case of cryptocurrencies, the value rises as trust in the network strengthens. Coins acquire monetary value according to the market dynamics of supply and demand. Speculation, trading, and real utility drive investment and participation, all of which were driven by genesis block. We hope you enjoyed it and learned something new, if you have any questions or suggestions, you can always contact us on our social networks (Twitter, Instagram).

Blockchain Scalability and Block Size

What is block size and why is it important?

Block size is a key factor in optimizing the storage, speed, and cost of transactions in blockchain technology. Block size refers to the amount of data that is processed or transmitted in a single segment within a computer system or storage device, serving as the fundamental unit for storing and accessing data. In context, smaller blocks reduce unused space, thereby increasing memory usage efficiency. In contrast, larger blocks can speed up data transfer, which is especially useful when working with large files. In the blockchain world, block size has a significant impact on the performance and structure of the network. Blocks contain a set of transactions, and their number depends on the size of the block. Larger blocks allow multiple transactions to be processed at once, thereby increasing the bandwidth of the network. However, this can also lead to higher resource requirements and longer verification times, which reduces the decentralization of the network. On the other hand, smaller blocks can encourage decentralization, making it easier for more nodes to access the network due to their lower resource requirements. Because of this, block size is a subject of debate in the blockchain community, where developers seek to strike a balance between security, decentralization, and scalability.

Source: cointelegraph

What is Scalability?

Scalability in blockchain refers to the network’s ability to adapt and efficiently manage an increased number of transactions and users, while maintaining its key characteristics such as decentralization and security. This concept is essential because it allows the blockchain to maintain a high level of performance despite the growing load, which is crucial for its wider adoption and adoption. Mismatches in scalability can lead to issues such as network bottlenecks, slower transaction confirmation, and higher transaction fees, which can limit the practical use of blockchains. Therefore, solutions that improve scalability, such as Level 2 (L2) solutions, play a critical role in overcoming these challenges. L2 solutions, lighten the load on the main chain, enabling faster and cheaper transactions. Especially on platforms like Ethereum, where high transaction prices and congestion are common problems, L2 solutions are essential to improve scalability. They enable wider adoption of blockchain technology through various decentralized applications (DApps), making the user experience more efficient. Scalability, therefore, is key to the sustainability and evolution of the blockchain ecosystem.

Source: cointelegraph

The link between scalability and block size

In blockchain technology, block size and scalability are interrelated and together affect the network’s ability to process an increasing number of transactions. For example, Bitcoin originally had a block size limit of 1MB, which has become too small over time due to the increased demand for transactions. To improve scalability, Bitcoin Cash, which originated as a fork of Bitcoin, increased the block size to 8MB, allowing for more transactions to be processed per block. However, increasing block size also comes with certain trade-offs, such as the need for more bandwidth and storage capacity, which can lead to centralization as only nodes with adequate resources can efficiently process larger blocks. Therefore, the challenge lies in finding the right balance between block size and preserving the decentralized nature of the network. Ethereum introduced the concept of sharding, which involves dividing the network into smaller parts, or shards, that autonomously process transactions. This approach decentralizes transaction processing and reduces dependence on the performance of individual nodes, thereby increasing the overall efficiency and scalability of the network. In such a model, the size of a single block becomes less important, while scalability is achieved through the combined bandwidth of multiple shards that together contribute to a higher transaction processing capacity of the network. This allows the blockchain to scale horizontally, which is crucial for supporting a wider range of applications and a larger number of users. However, in terms of decentralization itself, Bitcoin has reached the highest degree and it seems that we will never create a blockchain with a greater degree of decentralization.

Source: cointelegraph

Finding the optimal block size

Finding the optimal block size in the blockchain requires a multi-layered approach that balances the technical needs and preferences of the community. Development teams implement adaptive block size algorithms that automatically adjust according to current network conditions, increasing or decreasing the block size depending on demand. This dynamic adaptation ensures efficient use of resources and keeps the network functional. R&D is continuously working on innovations such as scaling solutions on Layer 2 (L2) networks, such as L2 networks for Ethereum or the Lightning network for Bitcoin. These methods allow for a large number of transactions without burdening the main chain, preserving decentralization and improving scalability. Community involvement is key; Decentralized governance models allow users to participate in decision-making about protocols, including block size. Open dialogue and consensus building ensure that decisions reflect the different interests within the community. Finally, data-driven analysis and continuous monitoring are essential to adjust the block size. Blockchain networks use user feedback and performance indicators for quick and timely adjustments, ensuring that changing user needs and technological advances are adequately adapted.

Source: cointelegraph

Conclusion

Achieving the optimal block size on the blockchain requires a complex approach that mostly involves technical factors. Technical solutions such as adaptive block size algorithms can dynamically adjust the block size according to the state of the network, ensuring efficient use of resources. At the same time, exploring new technologies such as second-level scaling solutions is important to address scalability issues without compromising decentralization. Community involvement through decentralized governance models allows users to collectively decide on changes to the protocol, including block size. Through open dialogues and data analysis, blockchain networks can continuously adjust block size to respond to changing user and technology demands. This comprehensive approach is crucial for achieving optimal block size that enables scalability, efficiency, and maintaining decentralization in blockchain systems. We hope that in today’s research on the correlation of block size and scalability, if you have any questions related to this, or any other topic, you can always contact us on our social networks (Twitter, Instagram).

Things you need to know about crypto exchanges

Introduction to crypto exchanges

Crypto exchanges are online platforms that enable buying and selling of cryptocurrencies. There are numerous types of crypto exchanges, from those that support fiat currencies (such as dollars or euros) to those that only offer crypto-on-crypto transactions. Some of the most famous and largest are Binance, Coinbase, Kraken, Huobi… However, exchange offices carry many risks. Over the years, numerous exchanges have experienced hacks, thefts, scams or bankruptcies that have resulted in the loss of billions of dollars in the value of user cryptocurrencies. Some of the most famous examples are QuadrigaCX, which is 2019. In 2022, it collapsed after the death of its founder, who was reportedly the only one with access to keys with $190 million worth of cryptocurrencies and FTX, which in 2022. In 2004, he filed for bankruptcy after experiencing a major liquidity crisis. These cases show that exchanges are not a safe place to store cryptocurrencies, and that users should put their money in their wallets, where only they themselves have access to money. In this blog, you will learn a few things you need to know about crypto exchanges. We will explain how to protect yourself from possible losses, choose the right exchange and how to properly store your cryptocurrencies on your own wallet. We hope that this blog will be useful and interesting, and that you will enjoy reading and learn something new.

Source: cointelegraph

third-party risk; Is the money not yours?

The first thing you need to know about crypto exchanges is that when you sign up for them, you agree that the money you keep on them is not yours, but belongs to the exchange office. This means that the exchange office can use this money as it pleases, whether it invests, borrows or spends it. It also means that there is a possibility that when you ask for your money, the exchange does not have it on it, because it lost or spent it. This is called a third-party risk and represents one of the biggest risks associated with crypto exchanges . That’s why it’s important not to keep too much money on exchanges, but only as much as you need to trade, and when you’re done trading, you withdraw money on your wallet. Third-party risk is particularly high in the crypto world, as exchanges are not regulated or supervised like traditional financial institutions. This means that they are not obliged to provide their funds, conduct audits, adhere to standards, which still do not exist, security and transparency are also at a low level, and exchangeoffices are still not obliged to compensate users in case of loss of money.

Source: cointelegraph

Frequent hacks

Hacking is one of the biggest problems and risks facing exchanges. Hacking is an unauthorized access or attack on the system or data of an exchange, with the aim of stealing, destroying or manipulating cryptocurrencies or other information. This can lead to huge losses for exchange users and owners, as well as to erode trust and reputation in the crypto industry. Over the years, a number of exchanges have been victims of hacking, which have resulted in the theft of billions of dollars in cryptocurrency value. According to an analysis, since 2012. by 2022 In 2001, at least 48 exchange offices were hacked, and a total of about $2.85 billion were stolen or lost. Only in 2022. In 2001, more than 20 hacks took place in which at least $10 million per attack were stolen. Some of the biggest and most famous are:

Gox (2014) – the first and largest exchange to lose about 850,000 bitcoins (about 7% of all bitcoins at the time), which was then worth about $450 million. The hack caused the price of bitcoin to fall and the exchange bankruptcy.
Binance (2019) – the largest and most popular exchange that lost about 7,000 bitcoins (about $40 million at the time), after hackers exploited vulnerabilities in security systems and user accounts. The exchange was able to compensate for the loss from its reserves and continue to operate normally, but it could have ended in a complete loss of money for the exchange office, the same as for users.
KuCoin (2020) – one of the latest victims of hacking, who lost about $280 million in various cryptocurrencies, after hackers gained access to her private keys. The exchange managed to recover most of the stolen funds by cooperating with other exchange offices and projects.

These hacks affect the price, volatility and perception of cryptocurrencies, as well as trust and security in the crypto industry. Also, they show the need for better regulation, monitoring and standardization of exchangeoffices, in order to ensure their transparency, accountability and protection.

Source: cointelegraph

How to choose the right exchange office

Choosing the right exchange to buy, sell and exchange cryptocurrencies is an important decision that can affect your experience and security in the crypto world. There are many different exchanges that offer different services, functionalities and pairs, so it is necessary to research and compare well before deciding on one. Here are some factors you should consider when choosing an exchange office:

Reputation: one of the most important factors when choosing an exchange office, because it shows how reliable, safe and high-quality the exchange office is. Before you register on an exchange office, check what other users say about it on the Internet, especially on forums, social networks and reviews. Also check if the exchange has a physical address, license, certificates or other evidence of legitimacy. Avoid exchanges that have a bad reputation, hack ing history, scams, or other problems.
Security: another key factor when choosing an exchange office, because you want to make sure that your data and assets are protected from theft, loss or damage. Check what security measures and technologies the exchange uses, such as HTTPS connection, two-factor authentication, cold wallet storage, encryption, audit, etc. Also check how the exchange resolves any incidents or disputes, and whether it has insurance or guarantee for its users. For example Binance and KuCoin successfully recouped money lost in the hacks.
Fees: Fees are the costs that an exchange charges for its services, such as trading, withdrawing or converting cryptocurrencies. Fees may vary depending on the type of transaction, amount, market or payment method. It is important to compare the fees of different exchangeoffices and find the one that offers the best price-quality ratio.
Liquidity: a measure of how easy it is to buy or sell a cryptocurrency on an exchange without affecting its price. Liquidity depends on the number and volume of users and transactions on the exchange. Higher liquidity means faster and more favorable trading, while lower liquidity means slower and more expensive trading. Liquidity can be checked by looking at the depth of the market (number of supply and demand) and the price range (the difference between the highest and lowest price) on the exchange.
Markets: Markets are pairs of cryptocurrencies that you can trade on an exchange. For example, BTC/USD is a market where you can buy or sell bitcoin for the US dollar. Different exchanges offer different markets, depending on which cryptocurrencies they support and which currencies they accept. It is important to choose an exchange office that offers markets that interest you and that have good liquidity. It is also important to check whether the exchange has restrictions or conditions for trading in certain markets, such as minimum or maximum amounts, identity verification or other procedures.
User experience: a measure of how easy and comfortable it is to use an exchange office. This includes design, functionality, speed, customer support and other aspects of the exchange. It is important to choose an exchange that offers you a simple and intuitive interface, a stable and fast platform, customer support and assistance, and additional features and tools that can make your trading easier and better. It is also important to check if the exchange has a mobile app or website that is adapted for different devices and browsers. You can check this by examining users of a particular exchange on reddit or some other place on the Internet.

These are some of the most important factors that you should consider when choosing an exchange office. However, no exchange is perfect and risk-free, so it is always advisable not to keep too much money on the exchange, but to transfer it to your own wallet, which gives you more control and security over your cryptocurrencies.

Source: cointelegraph

Cryptocurrency storage

Cryptocurrency storage is the process of storing and managing cryptocurrencies in a secure and convenient way. For storage, it is necessary to use a wallet, which is a device, application or service that provides access to and control over private keys for cryptocurrencies. Private keys are secret codes that prove ownership and allow cryptocurrencies to be sent and received. A wallet is like your personal cryptocurrency bank account, so it’s important that you choose it and use it carefully. There are many types of cryptocurrency wallets, which differ in security, functionality and availability. Some of the most common types of wallets are:

Paper wallet – a wallet consisting of a printed or written private key on paper. The paper wallet is very safe, because it is resistant to hacking and theft, but it is also very impractical, as it requires manually entering the key for each transaction.
Hardware wallet – a wallet consisting of a physical device that stores private keys on a secure chip. The hardware wallet is very secure, because it is isolated from the Internet and other devices, and is also very practical, because it can be connected to a computer or mobile phone for quick and easy use.
Software wallet – a wallet consisting of an application or program that stores private keys on a computer, mobile phone or website. It is very practical, because it allows easy and fast access and management of cryptocurrencies, but it is also less secure, because it is susceptible to hacking, viruses or data loss.

If you want to learn more about cryptocurrency wallets, you can read our blog special for the topic of wallets, where we will explain in more detail the advantages and disadvantages of different types of wallets, as well as give you tips on how to choose and use the best wallet for your needs. However, no matter which wallet you choose, remember that it is always better to keep your cryptocurrencies on your own wallet than on an exchange, as this will give you more control and security over your funds.

Source: cointelegraph

Conclusion

In this blog, you learned the most important things you need to know about crypto exchanges, platforms where you can buy, sell and exchange cryptocurrencies. Crypto exchanges are an indispensable part of the crypto world, but also very risky, so it is important that you be careful and informed before you start trading. We also gave you tips on how to choose and use the right exchange for your needs, as well as how to save your cryptocurrencies in a safe way, using your own wallet. We hope that this blog was useful and interesting to you, and that you learned something new about exchangeoffices. If you want to learn more about cryptocurrencies, you can follow our blog and visit us on our social networks (Twitter, Instagram), where you are free to ask questions.

Blockchain tools; How to make life easier in the crypt

What are crypto tools?

Crypto tools are different programs or websites that facilitate the use of cryptocurrencies and blockchain technology. Crypto tools have many opportunities and goals, such as securely sending and receiving money, obtaining data and insights, helping to build decentralized applications, facilitating monitoring trends… Some of the crypto tools you can use are mempool, defills, bitcoin explorer, and in today’s blog we will try to introduce you to the basic functions of these tools to make your journey in the world of cryptocurrencies easier for you.

Source: cointelegraph

Bitcoin explorer (blockchain.com)

Bitcoin explorer, is a key tool for exploring the depth and transparency of the Bitcoin blockchain. This explorer allows users to explore every transaction, block, and address within the Bitcoin network. Blockchain.com, it provides a comprehensive insight into the Bitcoin network. Users can track the journey of individual transactions, check the status of transaction confirmation, check the status of the address, and track the activity of miners, the overall speed of the network and much more. In addition to basic information, the explorer also provides a graphical representation of the entire block chain, monitoring of security and network activity. The usefulness of this tool extends beyond investors and traders. Developers, researchers, and enthusiasts often use Bitcoin Explorer to study network behavior, analyze transactions, and track various statistics. For example, analysts can track changes in activity over time, researchers can analyze the flow of Bitcoin between different addresses to detect specific trends, while developers can use these tools to track performance and discover the most active applications associated with the Bitcoin network. Ultimately, Bitcoin explorer enables transparency and blockchain records.

Source: cointelegraph

Defillama

DefiLlama is a decentralized analytics panel that monitors DeFi platforms and their decentralized applications, and uses TVL (Total Value Locked) to display information about which DeFi protocols are the largest and how they evolve over time. DefiLlama is one of the most basic and trusted web tools that allows you to learn more about DeFi protocols and blockchains, their growth and liquidity, so that you can make investment decisions based on real data. DefiLlama checks all data and is constantly developing new tools to help keep track of a lot of information. Some of the possibilities are:

View the state of the DeFi network in real time, including price, market capitalization, number of transactions, average fee and wait time.
Searching and analyzing individual blocks, transactions and addresses on different blockchains, such as Ethereum, Binance Smart Chain, Solana, Polygon…
Tracking the history and statistics of DeFi networks and protocols, such as TVL, number of users, number of decentralized applications, number of tokens, etc.
Comparing different DeFi protocols and categories, such as lending, exchange, derivatives, assets and others.

DefiLlama is a useful tool for anyone who is engaged in decentralized finance or are willing to learn and venture into the world of the same. Through this tool, you can get a lot of information about the status and functioning of decentralized networks and protocols, so that you can further verify your investment decisions with reliable data.

Source: cointelegraph

Coingecko or coinmarketcap

Coingecko and CoinMarketCap are indispensable tools in the world of cryptocurrencies, these sites provide deep insights and key information to everyone involved in cryptocurrencies. The sites are designed to provide a complete overview of thousands of different cryptocurrencies, including not only popular ones such as Bitcoin and Ethereum, but also those lesser known (over 10,000 cryptocurrencies). The main purpose of these pages is to display data from different sources and present users in the form of simple-to-understand charts. On Coingeck and CoinMarketCap, you can find information about cryptocurrency prices in real time, market capitalization, total trading volume, price changes over time, and more. In addition to basic data, these platforms offer detailed profiles of each cryptocurrency, its purpose, technological characteristics, the team behind the project and related resources such as white paper (Eng. white paper) and the official website. Why should we use this site? Well, access to the latest cryptocurrency prices and market information is crucial for investors, traders and anyone who follows this dynamic sector. These pages allow users to quickly track changes in the market and identify trends, which is of great importance for making informed decisions. Also, investors can use these platforms to explore different cryptocurrencies and gain a deeper understanding of their characteristics before deciding to invest. All these features make these platforms indispensable resources for anyone who wants to be well informed and successful in the world of cryptocurrencies.

Source: cointelegraph

Mempool

Mempool is a set of pending transactions pending confirmation in the Bitcoin network. Mempool.space is a website and application that allows visualization, research, and analysis of mempools and other aspects of the Bitcoin ecosystem. This tool offers a variety of options, such as:

Real-time view of mempool status, including size, number of transactions, average fee, and wait time.
View details about individual blocks and transactions, including height, timestamp, reward, fees, and number of transactions.
Display mempool history and statistics on fees, receipts, weight and hashrate.
View charts and tables on different indicators of the Bitcoin network, such as price, market capitalization, inflation, stocks and new coin emissions.
Display information about different types of Bitcoin scripts, such as multisig, timelock and taproot.
Display information about different types of Bitcoin protocols, such as BIPs, soft forks and hard forks.

Mempool.space is a useful tool for anyone who is dealing with Bitcoin or want to learn more about it. Through it we can find out a lot of information about the state and functioning of the Bitcoin network, as well as about ways to optimize our transactions. This tool is also an open project, as is Bitcoin, and is being developed and maintained for the benefit of the Bitcoin community.

Source: cointelegraph

Conclusion

In this blog, we talked about crypto tools, what they are, how to use them and what are their advantages. We mentioned some of the most popular and useful crypto tools that can help you better understand and monitor the state and functioning of crypto networks and protocols. These tools are useful for anyone who independently wants to deepen their knowledge of cryptocurrencies, or check the legitimacy of data on certain networks, that is, protocols. We hope you enjoyed reading today’s blog, and that you learned something new. We would like you to share your experience with crypto tools with us on our social networks (Twitter, Instagram), or to contact us if you have any other questions.

How a Bitcoin transaction works

What is a Bitcoin transaction?

A bitcoin transaction is a way of transferring value between users using bitcoin as a digital currency. A transaction consists of one or more inputs and outputs, which determine who sends and receives bitcoins, how much and under what conditions. These transactions are sent to the Bitcoin network, where they are processed and confirmed by computers involved in the maintenance and security of the network, the so-called Bitcoin miners. After the transaction is confirmed, it is written down in a block, which is part of the block chain . Blockchain is a public and irreversible record of all Bitcoin transactions ever made. Given that these transactions are public, they can be viewed on websites like [blockchain.com] or [blockexplorer.one].

Source: cointelegraph

What data does a Bitcoin transaction contain?

The Bitcoin transaction contains the following data:

The amount of bitcoin to be sent, expressed in satoshi (the smallest unit of Bitcoin)
Sender’s address, which is a string of 26 to 35 characters representing the sender’s public key
Recipient address, which is a string of 26 to 35 characters representing the recipient’s public key
Transaction fee, which is the amount of bitcoin paid to the network, i.e. the miner added by the block to the blockchain, for processing and confirming the transaction
Digital signature, which is cryptographic proof that the sender has the right to dispose of the bitcoin it sends
Other information, such as transaction version, creation time, number of receipts, transaction size, transaction weight, transaction ID and other technical details

Source: cointelegraph

How does a Bitcoin transaction work?

A bitcoin transaction is a data structure consisting of four parts: versions, inputs, outputs and inferences. A version is a number that indicates the format of the transaction. The entries are a list of references to previous transactions that were consumed as sources of bitcoin. Each entry contains the hash of the previous transaction, the output index in that transaction, the unlocking script, and the sequence. An unlock script is a series of instructions that prove that the sender has the right to spend bitcoins from a previous transaction. A sequence is a number that can be used to change the time of confirmation of a transaction. Exits are a list of addresses to which bitcoins are sent. Each output contains an amount of bitcoin in satoshi and a locking script. A locking script is a series of instructions that determine the conditions under which bitcoins can be spent in future transactions. A conclusion is a number that serves as proof-of-work and as an unpredictable factor that makes a transaction unique. The Bitcoin transaction is sent to the Bitcoin network, where it is processed and confirmed by computers involved in the maintenance and security of the network. These computers are called nodes and miners. Nodes are computers that receive, verify, and send transactions to other nodes. Miners are a special type of nodes that solve a cryptographic problem called a hash and create new blocks. Each block contains a header and body. The header is a set of block information, such as the version, the hash of the previous block, the hash of the Merkle tree containing all transactions in the block, the time of creation, the weight and the conclusion. The body is a set of transactions that are involved in a block. This new block is added to the end of the blockchain chain, and this process occurs every 10 minutes. For their work, miners receive a reward in the form of new bitcoins + a transaction fee paid by users to make their transaction acceptable. If you want to learn more about how bitcoin transactions work, you can read the Bitcoin whitepaper, which is the original document that presented the concept and technical details of Bitcoin.

Source: cointelegraph

How is the price determined for a Bitcoin transaction?

The price for a Bitcoin transaction is the amount of bitcoin paid to miners to process and confirm the transaction. The price is determined based on supply and demand in the market, as well as based on the size and complexity of the transaction. A transaction that has multiple inputs and outputs, or that uses more complex scripts, takes up more space in the block and therefore has a higher price. The price also changes depending on the state of the network and the number of transactions awaiting confirmation. When the network is congested, the price rises as transactions compete to enter the next block. When the network is free, the price drops because there is enough space for all transactions. The price is usually expressed in satoshi per byte (hour/w), where satoshi is the smallest unit of Bitcoin (0.00000001 BTC) and byte is a measure of transaction size. The average price for a Bitcoin transaction in the past 24 hours was about 25 hours/w. This means that a 250-byte transaction would cost about 6,250 satoshi, or about 0.0000625 BTC, or about 1.65 euros at the current exchange rate. The price may also vary depending on how quickly you want your transaction to be confirmed. If you want your transaction to be confirmed in the next block (which is created approximately every 10 minutes), you will have to pay a higher-than-average price. If you are willing to wait longer, you can pay a lower price than average.

Source: cointelegraph

Conclusion

In this blog, we explained what a Bitcoin transaction is, how it is sent, how it is confirmed and how its price is determined. Bitcoin transaction is an interesting and innovative way of transferring value through a decentralized and secure network called blockchain. We hope you found this blog useful and interesting. Thank you for reading and feel free to share your opinions and questions with us on our social networks (Twitter, Instagram).

Bitcoin Halving

How does Bitcoin Halving work?

The last halving of bitcoin took place on 11 May. May 2020, with the next one expected in 2024. – but what exactly is halving, how do we translate it into Croatian, how does it affect the price of cryptocurrency and what does it mean for miners? Find out in our new blog. Bitcoin halving, or as they would say in Croatia – the “halving” of bitcoin, is the name for one of the most important events in the history of Bitcoin.

In May 2020. The number of bitcoins (BTC) going into circulation every 10 minutes – known as block rewards, fell by half – from 12.5 to 6.25. Halving occurs repetitively every 210,000 blocks, which is approximately every four years, and before 2020. – happened twice. As the expected growth in value is associated with bitcoin halving, this event is closely monitored and awaited. Namely, halving reduces the number of new bitcoins entering circulation, while demand, in theory – remains the same. In the long run, this affects the growth of the value of bitcoin.

Halving in a couple of points

New bitcoins enter circulation as rewards for blocks, produced by the efforts of “miners” who use electronic equipment to earn or “mine” them;
Approximately every four years, the total number of bitcoins miners can potentially win halves;
2009. the system rewarded successful miners with a reward of 50 bitcoins every 10 minutes;
Three halves later, the reward dropped to 6.25 bitcoins paid out every 10 minutes;
The process will end when the number of bitcoins in circulation reaches 21 million;
It is a popular estimate that this will happen somewhere around 2140. (Various sources ï¿1/2 12/12/ 03/ 03/ 03) halving.

What is expected from the next halving?

There are many predictions about how the next halving will affect the value of this cryptocurrency. It depends on the halving itself, but also on the response of the market. According to the co-founder of PoWx – a non-profit crypto research organization – there will be fewer bitcoins available for purchase, in case miners have less to sell. Certainly, the periodic decline in the bitcoin minting rate (eng. Minting rate) could have a deeper significance for the functioning of this cryptocurrency – except for the short-term price increase. We must not forget that the blockchain reward is an important component of Bitcoin, and has the role of maintaining the security of this system without a central leader. As the award decreases in the coming decades, this will inevitably affect the functioning of the reward process itself.

How will halving affect the price of bitcoin?

The halving of bitcoin attracts so much attention mainly because many believe it will lead to an increase in price. The truth is that basically no one knows what’s really going to happen.

Bitcoin has seen three halves so far:

The 2012 halving showed how markets would respond to Nakamoto’s supply schedule. Until then, the Bitcoin community didn’t know how a sharp drop in rewards would affect the network. As it turned out then – the price began to rise shortly after the halving. The second halving of 2016 was expected, live was followed, and Blockchain.com introduced a “countdown” as well. Each halving has fueled strong speculation about how the event will affect the price of bitcoin. Day 16 July 2016, the day of the second halving, the price fell 10 percent to $610 but then returned to pre-halving levels. Although the impact of halving on the price was initially small – the market at the end of the year still showed reactions caused by the second halving. Some argue that the resulting increase in the value of bitcoin is actually a delayed result. Delayed effect of halving. The basic premise is that when bitcoin supply declines, the demand for bitcoin remains the same, pushing the price upwards. If we look at the price of bitcoin 365 days after the second halving, we can see that it has risen by 284%. If we look back at the latest halving, we can also see that the price of bitcoin continued to rise throughout the year, but this time the increase was of over 559%.

Who chose the Bitcoin distribution schedule?

The creators of Bitcoin under the pseudonym Satoshi Nakamoto disappeared about a year after Bitcoin was released into the world. Although we are talking in the plural, it is possible that it was also about the individual. Today, the creator or creators are not there to explain why they chose this formula for adding new bitcoins to circulation, but the first e-mails sent by the Nakamoto group, still reveal something to us. Shortly after the publication of Bitcoin’s “White Paper,” Nakamoto summarized the different ways in which their monetary policy could take place, that is, the schedule by which miners receive rewards for blocks. During development, they took into account the circumstances in which their policy could lead to deflation (when the purchasing power of the currency increases) or inflation (when the prices of goods and services that can be purchased with currency rise).

Either way – Nakamoto couldn’t have guessed then how many people would start using the new digital money. Also, there was a chance that no one would start using it. Of the overall communication, it is very little worked out why they chose the formula they chose, but we know this with certainty: “Coins somehow have to be initially distributed, and a constant rate seems like the best formula” – Satoshi Nakamoto.

Why do miners get rewards?

Bitcoin could not function without block rewards. As pseudonymous independent researcher Hasu said, there are prerequisites for the functioning of Bitcoin. The prerequisites deal with possession and answer the question – “who owns what and when?”, and are solved by cryptography. Only the owner of a private key, which is like a secret access code, can spend bitcoin. Without block rewards, the bitcoin network would be a mess. Hasu explains that if they had enough computing power, miners could attack the network in two ways:

double spending of coins;
stopping the transaction.

But what strongly encourages them not to try either because they would then risk their block of reward.

In other words, miners will lose money if they don’t follow the rules. The more computing power miners direct towardBitcoin, the harder it is to attack the network because an attacker would need to have a significant portion of this processing power, known as a hashrate, to carry out such an attack. The more money they can make through block rewards, the more mining power goes to Bitcoin, and thus the network itself is more protected.

What happens when the reward block becomes small or disappears?

Given that miners need an incentive to participate fairly in the network, periodic reward reductions could become a problem. Transaction fees, which users pay every time they send a transaction, are a potentially alternative way for miners to make money. Theoretically, these fees are an option, although in practice transactions without them could wait a long time for processing, in case the network is congested. The size of the fee is set by the user or the wallet software he uses. Fees are expected to become a more important source of compensation for miners as the block of rewards decreases. In a few decades when the reward becomes too small – the transaction fee will become the main compensation to miners. On the other hand, there is also a good chance that transaction fees will not be a sufficient reward. This means that transactions may have to become more expensive over time for the network to be secure.

Traditional currencies and central banks

In most state currencies, the central bank, such as the U.S. Federal Reserve, has tools at its disposal that allow it to add or remove dollars from circulation. If the economy is down, the Fed can increase circulation and encourage lending by buying securities from banks. Alternatively, if the Fed wants to reduce the amount of dollars in circulation – it can sell securities from its account. Good or bad, bitcoin is a little different from traditional currencies. For one thing – the supply schedule is almost carved in stone. Unlike the monetary policy of government currencies, which takes place through political processes and human institutions – bitcoin’s monetary policy is written in code shared across the network. The change would require tremendous coordination and agreement in the Bitcoin user community. Unlike most national currencies familiar to us like the dollar or the euro, bitcoin is designed with a fixed supply and predictable inflation schedule. There will always be only 21 million bitcoins. This predetermined number makes them rare, and it is this shortage along with their usefulness that greatly affects their market value.

Another uniqueness of Bitcoin

Bitcoin is programmed in such a way that the reward for the block decreases over time. This is another aspect in which Bitcoin deviates from the norm of centralized financial systems in which central banks control the money supply. Unlike Bitcoin’s reward for a halved block, the dollar’s offering has roughly tripled since 2000. The Nakamoto group hinted that Bitcoin was created for political reasons because of a controversial statement that reads like a headline from “The Times” magazine. It is thought that bitcoin, if widely and long-term accepted – could potentially reduce the power of banks and governments over monetary policy. In Bitcoin’s system, it is impossible to create central monopolistic power.

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What is Blockchain?

Blockchain is an ever-growing list of electronic records in real time, with each block containing a timestamp, information about the previous block in the chain, and data . The blockchain architecture is therefore resistant to data changes within the blockchain chain. The first blockchain prototype occurs in the early 1990s when scientist Stuart Haber and physicist W. Scott Stornetta applied cryptographic techniques in the blockchain chain to protect digital data and documents from potential abuses. This event further inspired many other developers and cryptographic enthusiasts, which eventually led to the creation of Bitcoin as the first decentralized digital “cash” system or simply – the first cryptocurrency. BItcoin’s “White Paper” was published in 2008. under the pseudonym Satoshi Nakamoto. The Bitcoin protocol, which has an immutable, distributed blockchain at its core – has since continued to inspire others to develop numerous other cryptocurrencies and tokens that are based on blockchain.

Blockchain technology

Blockchain technology is older than Bitcoin – it is a fundamental component of most cryptocurrency networks that acts as a decentralized, distributed and public digital ledger that permanently records all previously confirmed transactions in the blockchain. Transactions on the blockchain take place within a “peer-to-peer” network of globally distributed computers. Each computer represents a “node” in the network. “nodes” ) containing a copy of the blockchain, and contributing to the functioning and security of the entire network. This technology is called distributed ledger technology (DLT). Based on The DLT type of technology – Bitcoin is the first decentralized digital currency that does not require third-party mediation in order for transactions to take place. More about You can read Bitcoin on our blog, which guides you in detail through everything about this cryptocurrency, and explains its consensus mechanism in more detail. Also, on one of our previously published blogs, you can learn all about the differences between bitcoin and gold.

Designed to be resistant to modifications and fraud such as double spending, blockchain today enables instant transactions in minutes anywhere in the world. The data that is stored in most cases on the blockchain network is precisely the transactions of selling and buying cryptocurrencies, and we can say that the blockchain functions like a “digital ledger” that contains all the essential information about transactions such as participants, amounts, success. With bitcoin, we are talking about the so-called “Proof-of-Work” consensus mechanism, which is exactly what allows Bitcoin that its blockchain can continuously operate as a distributed network, even if some of the participants show unfairness or inefficient functionality. The algorithm on which consensus is based is important for the mining process of Bitcoin.

Blockchain Technology – Distributed ledger technology (DLT) Although it is designed to work as a distributed digital ledger on decentralized systems – blockchain can also be placed on centralized systems to ensure data integrity and kst to all users.

How does it work?

Let’s take Hansel and Gretel as an example and imagine that a transaction is taking place between them. For starters, Ivica buys from Marica a certain amount of bitcoin or some other cryptocurrency. After the transaction has been executed and confirmed – all the details of this purchase are recorded and added to the list. All lists containing transaction data are stored in one of the blocks in the chain, each of which has its own limit, that is – can not receive an infinite number of lists of transactions. This number depends on the potential of the individual network. When one block is filled, it connects to the previous block, whereby it becomes part of one long, chronologically complex chain. New transactions are further added to the list, which is further stored in the next empty block. Lists are stored in a block in such a way that the data cannot be changed, and that they provide chronological insight into transaction history.

Confirm transactions

The blockchain is powered by a network of computers, which means that every computer that uses blockchain simultaneously acts as its engine. To become part of the network, you need internet access and a computer. All computers, i.e. all participants in the chain, check the details of the transaction to determine if it is valid. One way to check transaki is with the help of explorers that can be tied to only one cryptocurrency, such as in the case of Bitcoin – Blockchain explorer, or for multiple cryptocurrencies – Blockchair explorer. Given that each computer can see transactions from previous blocks, participants can easily determine the validity of new transactions. After the computers approve the transaction, it is stored in the block and added to the chain, after which it can no longer be changed.

The main features of blockchain

Transparency: a database that all users of the blockchain network have access to;
Decentralization: unlike most other databases where data is stored in folders where it can be added, modified, deleted – Blockchain technology stores data in decentralized blocks, in chronological order;
Security: Data in the blockchain cannot be changed, and is cryptographically protected – which guarantees security to all users.

Benefits of Blockhain

Experts around the world consider blockchain technology revolutionary for the world of finance, gaming, entertainment, but also in the development of science. The main advantage of blockchain is the fact that it does not require the involvement of a third party in order for transactions to take place. If you are trading cryptocurrencies, you can invest in crypto without an advisor and without a bank that would process your payment slip per credit or debit card as a central entity in fiat transactions. With blockchain, you don’t need the approval of a bank or financial experts, and transactions can be made in just a few minutes.

In addition to simplicity, the absence of an intermediary also has a financial advantage because no commission is given to a third party, regardless of the number of transactions made. Blockchains are owned but also managed by users who act as a reliable and decentralized peer-to-peer database. Copies of all transactions on the blockchain are stored on a network of distributed nodes. Each transaction is checked before adding it to the block , and security is guaranteed because there is no single failure point in the peer-to-peer network.

With traditional databases, the decline of a centralized storage provider can bring all your data offline, which is not the case with blockchain. Verification takes place in a way that the blockchain uses a consensus mechanism to validate each transaction. After the transaction is confirmed, only then is it added to the data block in the form of a block. In this way, hackers are prevented from inserting false data.

Another advantage of blockchain technology is that it supports the creation of new types of decentralized applications, but also business models. You’ve certainly encountered the term “NFT” (Non fungible token) lately. It is an irreplaceable token, i.e. a cryptographically protected piece of blockchain that is designed to be unique. Its purpose is to preserve value, but also to easily verify, i.e. proof of ownership of other forms of digital or physical assets. Some of the examples are works of art, collectible uniques, and the like. NFTs are often created as irreplaceable and unique records on the ethereum blockchain, based on Ethereum smart contracts, but there are ALSO NFTs on other networks. In addition to irreplaceable tokens, blockchain is the foundation for the development of a whole generation of decentralized innovative applications (ENG). DAO) with wide application in finance, gaming, science.

Given that they do not have existing financial infrastructure, blockchain-based applications, contribute to the financial autonomy of people who are not bank users. According to the survey, as many as 1.7 billion people in the world currently do not have access to banking services. With blockchain technology, the world of financial trading and savings is becoming accessible to anyone with a smartphone and doing so throughout the day, 24/7. If you use blockchain-based apps, you don’t have to wait until morning or Monday for the bank to open, but through your smartphone, you can do everything yourself, without intermediaries because the blockchain network is always ready.

Disadvantages of Blockhain

In addition to all the advantages mentioned, of course – there are also a lot of disadvantages of blockchain. Although this technology has the potential and a wide range of applications, and can support the development of innovative applications and services, we must take into account that it is also very complex and new.

Limited network scalability

Network maintenance and a shortage of skilled engineers make blockchain technology expensive to develop and maintain, and therefore it is still not in the “mainstream” phase of application. Also, the speed of transactions is expected to increase in the future, and it currently amounts to less than 50 transactions per second with Bitcoin and Ethereum. Although the safest due to decentralization, crypto mining based on the “Proof-of-Work” mechanism is extremely harmful to the environment due to the consumption of large amounts of electricity, which is necessary in order to approve and add each block to the chain. Another disadvantage is related to encryption, which is the basis for network security, but if you lose your private key as a user – you also lose access to all your means. There are known cases in which users lost millions because their access to their blockchain account was disabled without a private key.

As blockchain technology matures, experts estimate its adoption will accelerate. Blockchain added value is projected to rise to $176 billion by 2025. Non-financial uses of technology, for example in science, are included in the value.

In what ways is blockchain technology applied?

Science and healthcare

According to PreScout’s report, drug development and supply chain management, clinical research management, and a personalized patient approach are the three areas with the greatest potential for blockchain adoption and expansion. When manufacturing drugs and managing the supply chain – blockchain can be very effective as a security solution. Specifically, origin identification and monitoring of drug development are two key areas that are in the non-blockchain world under the jurisdiction of centralized public health institutions. Here, blockchain can greatly provide security when storing data due to the inability to change records of batches of pharmaceutical ingredients in the manufacturing process. Current processes identifying the origin of the drug and monitoring the supply chain are fragmented due to silos that are created in databases, leaving room for human error, but also malfeasance.

One example of blockchain-health cooperation so far is between the FDA (Government Food and Drugs Administration) and IBM. In this collaboration, blockchain is being applied to identify, track prescription drugs, and distribute vaccines.

As for clinical trials – the benefits of applying blockchain technology – are even greater. As we encounter a large number of participants who include patients/respondents, sponsors, suppliers of medicines and medical devices, examiners, doctors and nurses, and various national regulatory authorities – there is great emphasis on the need for a high level of safety. Sensitive data, including patient health records and clinical trial outcomes, must remain completely private and safe, with the whole process being conducted transparently for all trial participants. Therefore, clinical trials are the perfect terrain for the application of blockchain technology – which allows for data records immutability, scalability, as well as different permission levels for different levels of data access.

The use of blockchain for the purpose of personalized medicine and individual approach to the patient is based on “smart contracts”. Here, smart contracts allow giving consent to manage health data and prescription medicines, manage patient requests, etc. The Prescrypt project, implemented by Deloitte in the Netherlands, uses blockchain technology where drug prescriptions are linked to blocks for secure communication, monitoring of use and analysis by healthcare professionals.

Real estate

Whether it’s property rights, the size and location of the property, the type of land – blockchain technology introduces greater transparency in the real estate industry, but also in transactions between contracting parties. It is estimated that in the future, all properties will be purchased on the blockchain. In fact, real estate blockchain is already becoming increasingly popular as a way for buyers, sellers and investors to communicate with each other. By using distributed ledger technology (DLT), trust is increased through greater transparency, and it is trust in the real estate sector that is imperative. Real estate blockchain also speeds up contract processes, saves time and reduces costs.

Vote

In Croatia, we are currently witnessing a major public debate, but also a much-needed revolution in the voting system. Although the application of blockchain is unlikely to happen soon – the benefits of using blockchain technology to improve transparency in democratic elections are evident. The most commonly mentioned arguments suggest that blockchain application could prevent potential voter fraud, and offer an easy way to count votes.

The Future of Blockchain

Although blockchain-based cryptocurrencies have persistently made headlines in recent years, and many have viewed decentralized finance (DeFi) systems as the ‘Wild West’ in the banking sector blockchain technology continues to evolve, and is finding wider application. The idea of maintaining the status quo in the world we know today is a farce, given that central banks around the world are struggling to develop their own offerings of cryptocurrencies that are pegged to fiat currency, for example the US dollar. Such cryptocurrencies are known as stablecoins that we will tell you about in one of our future blogs.

At the EU level, a bill to introduce a digital euro is being debated, while the USA is leading the way with a regulation on the plan for digital assets in the US, including the possibility of introducing a digital dollar. Also, major global online commerce chains such as Amazon, Alibaba, are sure to see the benefits of introducing blockchain technology, and will start accepting cryptocurrencies as payment for goods and services in order to increase the number of transactions per second. What is not in favor of blockchain is the environmental impact, i.e. excessive energy consumption, which is associated with ensuring a high level of security of all transactions on the blockchain. Combined with the discussion of climate change – this could slow the adoption of blockchain technology in the mainstream world.

We look forward to seeing how things develop further, and by then we hope for less volatility in the cryptocurrency market, as well as growth in value. In the following blogs, we will reveal more about interesting facts related to the development of blockchain technology, but also about other cryptocurrencies based on the blockchain protocol. In addition, we will introduce you to an interesting debate about whether blockhain really consumes so much energy or whether it is just a myth.

Until then, you have material to read, and we are here to answer your questions! Follow us and get back to us on Instagram. We look forward to your comment or inquiry. We may also meet on one of the Kriptomat.hr devices in the city, and discover the currently available locations through our web.

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