The world of cryptocurrency has grown quickly and the leader is Bitcoin. For those who might not know, Bitcoin is a digital currency that operates using a distributed, decentralized network. There is no central power, which means there is nobody that controls it. While Bitcoin was invented by Satoshi Nakamoto, he is not the boss of Bitcoin. Instead, this currency operates under a single truth that is called the decentralized consensus. This is a very interesting ideal by which everyone who uses Bitcoin operates. In essence, Bitcoin has been so masterfully designed that it is to everyone’s benefit for them to operate Bitcoin via the rules of the game. There are a few important points regarding the decentralized consensus of Bitcoin that everyone should note.
An Agreement on a Single, Universal Truth
One of the most common questions that people ask about Bitcoin and its decentralized consensus is how it works. How is it that everyone who uses the Bitcoin network can agreeon one, single, universal “truth” about how the network works and who owns what? It isn’t like they trust each other more than they do in other situations. After all, most people who use the network are using the network with complete strangers. Remember that Bitcoin has no central authority; however, every node works as a public ledger. The public ledger is trusted as the authoritative network. This is what makes Bitcoin so unique. The blockchain is not created by a central authority but it does keep a record, making it the most transparent currency optoin in the world. Every node in the network operates on information that is provided to it by the network. The nodes work in concert, arriving at the same conclusion every time, ensuring that all of the information is accurate. So, how does the Bitcoin network have this decentralized consensus without any sort of central authority that is in charge?
The Main Invention of the Bitcoin Network: Consensus
First, it is important to take a close look at the greatest invention from the inventor of Bitcoin, Satoshi Nakamoto. He created the decentralized consensus by which the rest of the currency network operates. It has been dubbed emergent consensus because there is no explicit consensus achieved. THis means that there is no election or fixed moment when this consensus is reached. In contrast, the consensus simply act as an emergent artifact that follows the interaction of thousands of independent nodes. All of these nodes follow the same set of rules and all of them manage to arrive at the same conclusion. The various properties of Bitcoin, which includes currency, payments, transactions, and more, derive from this invention and follow the rules but do not operate on any sort of central authority. The fact that Bitcoin can work without this is one of the things that sets this currency model apart from the others. In essence, it is this decentralized consensus that make Bitcoin unique.
The Processes That Define the Decentralized Consensus of Bitcoin
The decentralized consensus of Bitcoin works because of four separate processes that all work independently of one another and yet arrive at the same conclusion every time. The first process is that the nodes conduct an independent verification of each transaction, which is carried out by every full node and is based on a comprehensive list of criteria. This verification is one of the most important jobs of the decentralized consensus of Bitcoin and the nodes arrive at the same answer, generating a consensus that leads to the next step.
Next, there is an independent aggregation of every transaction carried out on the network. They are transferred into new blocks by programs called mining nodes. Then, they are all coupled with demonstrated computation through a Proof-of-Work (PoW) Bitcoin algorithm. This is the second process and defines the transparency that makes up Bitcoin’s network. All of these processes are stored in this aggregation and can be viewed as a part of the public ledger.
After this, it is time to focus on how new blocks are made. Bitcoin miners make new blocks by solving computer algorithms. All of these blocks have to undergo an independent verification by every node. Then, these new blocks are assembled into a chain. If there is any problem with the new block, it is rejected from the chain. If the new block is verified, it is accepted into the chain. Then, the miners are paid a transaction fee.
The fourth and final process is called independent selection. This takes place by every node in the chain and uses the most cumulative computation that can be demonstrated through Proof-of-Work (PoW). It is these four processes that work together to create the decentralized consensus for which Bitcoin is so famous.
The Future of Bitcoin Is Bright
These four processes come together to define the decentralized consensus that is Bitcoin. Already, Bitcoin has made waves throughout the digital world and now traditional financial investors are starting to get interested in this novel technology. The decentralized consensus is an important part of what makes Bitcoin what it is and it is imporatnt for everyone to understand how this works before they get too far into the inner workings of Bitcoin. While the Bitcoin market fluctuates a lot on a day to day basis, one thing is certain. Bitcoin is here to stay. It has already proven its staying power and it will be interesting to see what happens next int he world of Bitcoin.