bitcoin algorithm – Bitcoints


Published on July 21st, 2015 | by bitcoin


bitcoin algorithm

Information about bitcoin algorithm


Bitcoin is a payment system invented by Satoshi Nakamoto, who published the invention in 2008 and released it as open-source software in 2009. The system is peer-to-peer; users can transact directly without needing an intermediary. Transactions are verified by network nodes and recorded in a public distributed ledger called the block chain. The ledger uses its own unit of account, also called bitcoin. The system works without a central repository or single administrator, which has led the US Treasury to categorize it as a decentralized virtual currency. Bitcoin is often called the first cryptocurrency, although prior systems existed. Bitcoin is more correctly described as the first decentralized digital currency. It is the largest of its kind in terms of total market value.
Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into the public ledger. This activity is called mining and the miners are rewarded with transaction fees and newly created bitcoins. Besides mining, bitcoins can be obtained in exchange for different currencies, products, and services. Users can send and receive bitcoins for an optional transaction fee.
Bitcoin as a form of payment for products and services has grown, and merchants have an incentive to accept it because fees are lower than the 2–3% typically imposed by credit card processors. Unlike credit cards, any fees are paid by the purchaser, not the vendor. The European Banking Authority and other sources have warned that bitcoin users are not protected by refund rights or chargebacks. Despite a big increase in the number of merchants accepting bitcoin, the cryptocurrency doesn’t have much momentum in retail transactions.
The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and media. Criminal activities are primarily centered around black markets and theft, though officials in countries such as the United States also recognize that bitcoin can provide legitimate financial services.


In mathematics and computer science, an algorithm (/ˈælɡərɪðəm/ AL-gə-ri-dhəm) is a self-contained step-by-step set of operations to be performed. Algorithms exist that perform calculation, data processing, and automated reasoning.
An algorithm is an effective method that can be expressed within a finite amount of space and time and in a well-defined formal language for calculating a function. Starting from an initial state and initial input (perhaps empty), the instructions describe a computation that, when executed, proceeds through a finite number of well-defined successive states, eventually producing “output” and terminating at a final ending state. The transition from one state to the next is not necessarily deterministic; some algorithms, known as randomized algorithms, incorporate random input.
The concept of algorithm has existed for centuries, however a partial formalization of what would become the modern algorithm began with attempts to solve the Entscheidungsproblem (the “decision problem”) posed by David Hilbert in 1928. Subsequent formalizations were framed as attempts to define “effective calculability” or “effective method”; those formalizations included the Gödel–Herbrand–Kleene recursive functions of 1930, 1934 and 1935, Alonzo Church’s lambda calculus of 1936, Emil Post’s “Formulation 1” of 1936, and Alan Turing’s Turing machines of 1936–7 and 1939. Giving a formal definition of algorithms, corresponding to the intuitive notion, remains a challenging problem.

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