9.4 Key Concepts in Bitcoin's Technology
Proof of Work:
A mechanism that ensures security and consensus in the network by requiring miners to solve computationally intensive puzzles.
Cryptographic Time-Stamps:
Used to secure the blockchain by linking blocks in a chronological order.
Difficulty Adjustment:
A system that adjusts the complexity of mining puzzles to maintain a consistent block creation time.
Peer-to-Peer Network Architecture:
Bitcoin operates on a decentralized network where nodes communicate directly with each other, without a central authority.
Hash Functions and Merkle Trees:
Hash functions secure data by transforming it into a fixed-size string of characters. Merkle trees organize transactions in a block, allowing efficient and secure verification.
Public Key Cryptography:
A cryptographic system that uses pairs of keys (public and private) for secure communication and transaction validation.
Block Subsidy and Halvening:
Block subsidy is the reward miners receive for adding a new block. Halvening is an event that reduces the block subsidy by half, occurring approximately every four years.
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