How Did the Bitcoin Concept Begin?

The ideas goes back to a concept called HashCash which was meant as a deterrent to spam.   When an e-mail is sent another value must be sent with it.  When you take this value, add it to the message, and then take a cryptographic hash you must have a hash value with certain characteristics.

For instance, take a cryptographic hash using the SHA256 hashing algorithm of the term “message” (without quotes) and you get:

ab530a13e45914982b79f9b7e3fba994cfd1f3fb22f71cea1afbf02b460c6d1d

Now if the rules say you must have a hash that starts with a zero you can start adding stuff until you get a hash that works:

1message
daad0bc80059253928621a10365de153e335a18f03b9dc7e7e25897fb791f023

2message
6532f42bd1d6ccd00f47c133c3ca1a0fc852598e67c62eb31adab8ceb3aaa680

51message
0985e57510d017b177867168642543ab4f143333ad63782680e812251ab3141e

After going through the numbers sequentially 51 was the first one that worked.  As long as “51” is sent along with the message the receiver can quickly verify it meets the requirements by performing the hash and accept the message.  The added portion, in this case”51,” is called a “nonce.”

Bitcoin mining works by compiling the transactions, the value that depends on all previous blocks, and then finding a “nonce” that meets the criteria.

As more people mine Bitcoin the problem gets harder and harder so that a block is created every 10 minutes on average.  This is done by increasing the number of zeros.  So a has that starts with “0…” easy, one that starts with “00…” is a bit harder and so forth.

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