- Address : 1mtgoxNrDZgrs6zP1MdEToSNTAeeeU2VH
- Transaction : f4184fc596403b9d638783cf57adfe4c75c605f6356fbc91338530e9831e9e16
- Conflicting Transaction : d09a330fc8763b94ba8753824063830d9f80db9a097a9dfc02e1aeb66fe5406d
- Block : 481737
View Live Block : https://tradeblock.com/bitcoin/
Mining New: https://tradeblock.com/bitcoin/mining/
Imagine you go to a cafe and buy a coffee. The purchasing of a coffee implies a transaction where two goods have been exchanged.
In particular, the vendor hands you a beverage and the customer, give a token in exchange, which represents an accorded value (be it coins or bills).
http://tech.eu/wp-content/uploads/2014/03/Currency-Transaction.png
One property of physical currency that prevents – to some degree – fraudulent usage is its physical nature. When you pay with a coin or bill, the physical token gets transferred to a new pocket, the vendor’s, and there is a kind of validation that you were the true owner of the token since it came out of your pocket. The token can also be verified for its authenticity with certain instruments.
Digital currency attempts to replicate the previous transaction but the main difference is that the token exists only in digital form. For instance, imagine we scanned a five euro bill and named the digital image ‘five-euros.jpg’. Being digital has many benefits, but also comes with drawbacks, namely, that files are easily cloned and the copies are indistinguishable from the original.
This poses two big problems for its use as currency:
Firstly, there can be infinite digital copies of ‘five-euros.jpg’, which means potentially having two (or more) customers owning the same exact five euro bill image file and not being able to distinguish who the owner is.
Secondly, since the digital file can be copied many times over, theoretically, it’s possible to clone the bill and spend it as many times as desired – this is referred to as double spending (step 2 and 3).
http://tech.eu/wp-content/uploads/2014/03/Digital-Currency-Problems-379x260.png
http://tech.eu/wp-content/uploads/2014/03/Digital-Signature-validation-706x532.png
- A Guide to Bitcoin (Part I): A look under the hood
- A Guide to Bitcoin (Part II): A deep dive into the Bitcoin ecosystem
- A Guide to Bitcoin (Part III): What you need to know about wallets
- A Guide to Bitcoin (Part IV): A look at European Bitcoin startups
https://medium.com/@vrypan/explaining-public-key-cryptography-to-non-geeks-f0994b3c2d5