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19th Anniversary Souvenir 2023
1. Digital signature verification on the
transaction proving the source has the
cryptocurrency.
2. Verification of every transaction against the
source (public key) ensuring the amount of
cryptocurrency is sufficient enough.
Over this peer-to-peer network, one challenge
is to maintain the order of transactions ensuring that
there is no double-spending of cryptocurrency.
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The solution lies in the use of blockchain
technology. Blockchain is generated from
unordered transactions. Transactions are ordered or
placed in groups called blocks and these blocks are
interlinked via blockchain technology.
Blocks are formed based on the transactions that
happened at the same time. The blocks are chained
to each other in chronological order with each block
possessing the hash of the previous block.
One question still arises, "How to decide which
block should be the next in the blockchain?",
because there can be many blocks created by many
nodes simultaneously, and blocks can also arrive in
different orders at different points in the network.
Bitcoin finds the solution to this problem by
introducing a mathematical puzzle, also known as
proof of work. The acceptance of a block in the
blockchain is approved if the node generating the
block has computing resources good enough to
provide an answer to a mathematical puzzle. The
complexity of the mathematical puzzle can be
adjusted so that it takes about ten minutes for a node
to answer correctly and generate a block. In rare
cases where more than one block is generated and