Bitcoin Lovers

While the actual process of mining is handled by the mining hardware itself, special software is needed to connect your miners to the blockchain and your mining pool as well, if you are part of a mining pool. The software delivers the work to the miners and receives the completed work from the miners and relays that information back to the blockchain and your mining pool. The software can run on almost any operating system, such as OSX, Windows, Linux, and has even been ported to work on a Raspberry Pi with some modifications for drivers depending on your mining setup.

Not only does the software relay the input and output of your miners to the blockchain, but it also monitors them and displays general statistics such as the temperature, hashrate, fan speed, and average speed of the miner.

There are a few different types of mining software out there and each have their own advantages and disadvantages, so be sure to read up on the various mining software out there.

A user can have one or more bitcoin addresses from which bitcoins are sent or received using either a website or downloaded software often called a "wallet" like a digital wallet. Users can obtain new bitcoin addresses as needed. Many bitcoin services provide addresses tied to a user's individual account to hold funds on the user's behalf.

The matching private key is often stored in a digital wallet or mobile device and protected by a password or other means of authentication. Each bitcoin transaction is signed by the private key of the user initiating the transaction.

Various vendors offer banknotes and coins denominated in bitcoins; what is sold is really a bitcoin private key as part of the coin or banknote. Usually, a seal has to be broken to access the key, while the receiving address remains visible on the outside so that the balance can be verified.

The Bitcoin network protocol operates to provide solutions to the problems associated with creating a decentralized currency and a peer-to-peer payment network. Key among them is the use of a blockchain to achieve consensus and to solve the double-spending problem.

A bitcoin is defined by a chain of digitally-signed transactions that began with its creation as a block reward through bitcoin mining. Each owner transfers bitcoins to the next by digitally signing them over to the next owner in a Bitcoin transaction. A payee can then verify each previous transaction to verify the chain of ownership.

The network timestamps transactions by including them in blocks that form an ongoing chain called the blockchain. Such blocks cannot be changed without redoing the work that was required to create each block since the modified block. The longest chain serves not only as proof of the sequence of events but also records that this sequence of events was verified by a majority of the Bitcoin network's computing power. As long as a majority of computing power is controlled by nodes that are not cooperating to attack the network, they will generate the longest chain of records and outpace attackers.

The network itself requires minimal structure to share transactions. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will. Upon reconnection, a node will download and verify new blocks from other nodes to complete its local copy of the blockchain.

Source : Wikipedia

Bitcoin is a cryptocurrency where the creation and transfer of bitcoins is based on an open-source cryptographic protocol that is independent of any central authority.Bitcoins can be transferred through a computer or smartphone without an intermediate financial institution.The concept was introduced in a 2008 paper by a pseudonymous developer known only as "Satoshi Nakamoto", who called it a peer-to-peer, electronic cash system.

The processing of Bitcoin transactions is secured by servers called bitcoin miners. These servers communicate over an internet-based network and confirm transactions by adding them to a ledger which is updated and archived periodically using peer-to-peer filesharing technology.In addition to archiving transactions, each new ledger update creates some newly minted bitcoins. The number of new bitcoins created in each update is halved every 4 years until the year 2140 when this number will round down to zero. At that time no more bitcoins will be added into circulation and the total number of bitcoins will have reached a maximum of 21 million bitcoins.To accommodate this limit, each bitcoin is subdivided down to eight decimal places; forming 100 million smaller units called satoshis.

In August 2013 Germany's Finance Ministry subsumed Bitcoins under the term "unit of account"—a financial instrument—though not as e-money or a functional currency.Although bitcoin is promoted as a digital currency, many commentators have criticized bitcoin's volatile exchange rate, relatively inflexible supply, high risk of loss, and minimal use in trade.

Source : Wikipedia