Taking a Look at the Bitcoin

1561 Words Jan 29th, 2018 6 Pages
Problem Overview
Since the creation of Bitcoin in 2009, cryptocurrencies have gained an increasing amount of media attention. Ever since Bitcoin first began trading, investors as well as miners have proclaimed the positive and negative aspects of the virtual currency, though the fluctuation in price of Bitcoin has been very difficult to determine. This research paper look analyzes some of the issues that must be addressed to ensure the future of Bitcoin.
Introduction
The first form of cyptocurrency, Bitcoins are the first type of digital currency that is both created and subsequently managed by cryptography, rather than a central authority (Kinsella 2013). The Bitcoin architecture was outlined in a research paper by Satoshi Nakamoto, which led to the creation of a decentralized network, allowing the peer-to-peer digital currency to be owned and traded (Smith 2013). After several years of development, Bitcoin was launched in 2009, and exists solely within the Block Chain (explained later).
Creation of Bitcoins
The architecture of Bitcoin utilizes a validation system, based on a sequence of recent transactions and numerical proofs of work, which are passed through an SHA-256 hashing algorithm (twice) (Smith 2013). The result of this is a ‘block’, which follows very precise mathematical criteria, and requires an exact numerical to solve. These required numericals are extremely difficult to calculate. This validation
Each block has a varying level of difficulty, in order for…

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