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Review on Bitcoin by William Boaz
Bitcoin Review
The blockchain technology of Bitcoin allowed it to become the first truly de-centralized peer-to-peer payment network. What makes the blockchain unique is that all transactions are stored in a public, tamper-proof database that is open for anyone to read without sacrificing anonymity.
The network is run entirely by users, be that different types of nodes or miners, without 3rd party dependence. The driving force is validating blocks and thus confirming transactions.
The hashing algorithm used in Bitcoin is SHA256 and the consensus protocol of the network is called Proof of Work. The way it works is that to receive a reward, miners need to run countless calculations to find an answer to the cryptographic puzzle
Nodes are an integral part of any blockchain network. They store either a partial or full copy of the blockchain transaction history, depending on their role. All wallets that connect to the blockchain can be considered a node. In the Bitcoin network there are Light nodes and Full nodes:
Light Nodes – To operate they download a part of the blockchain on the device and keep it updated. Light nodes serve no validation purposes
Full Nodes – These are the most important ones for the network. To have a full node on the Bitcoin network, you will need to download the whole blockchain which is over 200GB currently. Full nodes are also called Full Validation Nodes. They are the ones that reach a final consensus on the validity of blocks from miners and thus allow the initiation of transactions
Bitcoin cryptocurrency is accepted worldwide and some online shopping websites.
Pros
- Bitcoin network is the public ledger providing anonymity, transparency, and immutability.
- Peer-to-peer transactions with no 3rd party as the middleman
- Low transaction fees – customizable by the user
Cons
- Transactions in the network can take as long as a few hours to confirm depending on the network traffic and amount of funds sent
- Limited transactions per second (3.3 to 7 transactions per second)
- Risk of lost funds due to malicious activity
