Anyone looking to become part of the currency network needs to install the already mentioned Bitcoin Core or one of the available alternatives, like Bither, Armory, or mSIGNA. These function as a so-called Bitcoin wallet; making it possible to send as well as receive Bitcoin, and to this end, also synchronize with the peer-to-peer network. To facilitate the first synchronization there needs to be sufficient bandwidth and storage space available, as the client server downloads files of a total size of more than 65 GB. Contained within these files is the communal public booking system, which forms the core of the Bitcoin network and is also referred to as a blockchain.
It is in this chain, whose integrity and chronological order is safeguarded via cryptography, that all confirmed reservations are saved. The client server then calculates the status of a Bitcoin account based on this information. The security concept of the open source system is characterized not just by the encryption of its database, as each individual transaction is also assigned its own special protection in the form of a digital signature. This is generated automatically during the sending of Bitcoins via a classified data block – the private key (aka. the seed). Each user has their own private key, which can be found in the wallet. On the one hand, the signature acts as proof that the transaction being undertaken corresponds to the correct Bitcoin address. At the same time, it also ensures that the transaction, once it has been dispatched, can be modified or amended by other users.
For a transaction to be confirmed and then disseminated amongst users, specific processes need to take place. These processes are also referred to under the general term mining. What happens during this handling process is that a transaction is signed, packaged into a block, and subsequently integrated into the blockchain. This is carried out with the help of special mining hardware and software, which has to be implemented to allow for the creation of a signature cryptographic hash functions (SHA256) and in principle, can be deployed by each participant. As a reward for this mining, the processor receives Bitcoins. At first glance, this might seem to be quite a lucrative reward. However, the hardware and operating costs are nearly on par with the income that can be gained from mining. This can be attributed to the large amount of competition in this area. More information on this topic, which is both interesting and fundamental to the Bitcoin network, can be found in this tutorial on weusecoins.com.