Block Chain

A block chain is a list of all the transactions that even occurred.

A block is a mechanical drive chain that is composed of side plates. However, when we are talking about block chains in the context of cryptocurrencies, such as Bitcoin, it takes on a whole new meaning all together. In the Bitcoin protocol, a block chain is a list of all the transactions that take place using Bitcoin. In addition to keeping track of all the Bitcoin transactions, a block chain also keeps track of new coins being generated.

Via the use of block chains, Bitcoin wallets can calculate their spendable balance, and new transactions can be verified to be spending bitcoins that are actually owned by the spender.

The block chain is broken down into blocks. A new block is generated every 10 minutes. This newly generated block includes the list of transactions from the last 10 minutes. The block chain is a very complex algorithm that must be solved in order to covert the list of transactions from data into legible data. As solving the entire block chain can possibly take years, it is much easier to solve it in blocks.

The process of solving blocks and generating bitcoins from blocks is called mining, and the people doing it are called miners. Furthermore, solving each block also generates 25 bitcoins as sort of transaction fees for the person solving them. The coins generated from mining per block will be halved to 12.5 in 2017, and continue to be halved every four years in an attempt to limit the creation of bitcoins. It is estimated that by 2140 there will be approximately 21 million bitcoins in existence. 

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