{"id":219,"date":"2014-06-17T23:32:00","date_gmt":"2014-06-17T23:32:00","guid":{"rendered":"http:\/\/blog.holytransaction.com\/bitcoin-dogecoin-and-blockchain\/"},"modified":"2022-02-25T20:50:38","modified_gmt":"2022-02-25T18:50:38","slug":"bitcoin-dogecoin-and-blockchain","status":"publish","type":"post","link":"https:\/\/holytransaction.com\/blog\/2014\/06\/bitcoin-dogecoin-and-blockchain.html","title":{"rendered":"Bitcoin, Dogecoin, and the Blockchain"},"content":{"rendered":"<div style=\"text-align: justify;\">The prevalent idea of modern day cryptographic currencies originated when Bitcoin launched in 2009. With <a href=\"https:\/\/holytransaction.com\/page\/what-is-bitcoin\">Bitcoin<\/a>, for the first time in history, the world had access to a completely decentralized medium of exchange. This medium of exchange reliably transfers value from one entity to another in a <i>hostile<\/i>, <i>trust less<\/i> environment by solving a problem that previously necessitated centralized entities, such as financial banks, to arbiter value exchanges. The main role of the centralized entity was to assure the recipient that the money has been taken from the sender, and given to the recipient, and the sender could no longer spend the same money (i.e., <b>double spend<\/b> it). The problem of double spending can be modeled under an abstract <b>Byzantine Generals&#8217; Problem<\/b> that focuses on achieving majority consensus in a decentralized network.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">The Byzantine Generals&#8217; Problem is a topic that deserves its own blog post. For now, let&#8217;s just remember that the problem of double spending was thought impossible to solve in a decentralized manner before Bitcoin solved it. This solution was implemented in what is now called <b>the Blockchain<\/b>.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<h3 style=\"text-align: justify;\">What is the Blockchain?<\/h3>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">In simple terms, the Blockchain is a <i>book of accounts<\/i> that is divided into batches of transactions, or <b>blocks<\/b>, which are naturally a collection of <b>transactions<\/b>. Bitcoin uses a number of technologies that came before it, including decentralized file sharing (see: <a href=\"https:\/\/en.wikipedia.org\/wiki\/BitTorrent\" target=\"_blank\" rel=\"nofollow noopener\">BitTorrent<\/a>), <a href=\"https:\/\/en.wikipedia.org\/wiki\/Public-key_cryptography\" target=\"_blank\" rel=\"nofollow noopener\">Public Key Cryptography<\/a>, and Proof of Work Hashing (see: <a href=\"https:\/\/en.wikipedia.org\/wiki\/Hashcash\" target=\"_blank\" rel=\"nofollow noopener\">Hashcash<\/a>). Bitcoin introduced a new technology: the Blockchain. Most subsequent cryptographic currencies, such as <a href=\"https:\/\/holytransaction.com\/page\/what-is-dogecoin\">Dogecoin<\/a>, use the same technology with minor changes (e.g., a different Proof of Work hashing algorithm).<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">The Blockchain facilitates reliable transfer of <i>units of account<\/i> (later on referred to as values) between certain <i>cryptographically valid entities<\/i>. In Bitcoin, the total units of account that will ever exist is 2.1 Quadrillion Satoshis, or 21 Million Bitcoin. In Dogecoin, this is 100 Billion Dogecoin until March 2015, and 5 Billion additional <a href=\"https:\/\/holytransaction.com\/page\/Dogecoin-%D0%BA%D0%BE%D1%88%D0%B5%D0%BB%D0%B5%D0%BA-%D1%81%D0%BE%D0%B7%D0%B4%D0%B0%D1%82%D1%8C-%D0%B7%D0%B0%D1%80%D0%B5%D0%B3%D0%B8%D1%81%D1%82%D1%80%D0%B8%D1%80%D0%BE%D0%B2%D0%B0%D1%82%D1%8C-%D0%BE%D1%82%D0%BA%D1%80%D1%8B%D1%82%D1%8C-online-%D0%BE%D0%B1%D0%BC%D0%B5%D0%BD\">Dogecoin<\/a> annually after that. Dogecoin and Bitcoin consist of two separate networks of peer-to-peer nodes. Each Bitcoin or <a href=\"https:\/\/holytransaction.com\/page\/Portefeuille-Dogecoin-porte-monnaie-cr%C3%A9er-en-ligne-change-enregistrer-franc%C3%A9s\">Dogecoin portefeuille<\/a>\u00a0tries to keep its local copy of the <i>book of accounts<\/i> up-to-date.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">In order to make use of the power of the Blockchain and its fast, decentralized, low-fee transactions, one must understand what constitutes a transaction:<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">A <b>transaction<\/b> is simply a cryptographically verifiable instruction from the sender to transfer value the sender owns to one or more valid recipients. The sender(s), and receiver(s), have cryptographically verifiable identities, known as <b>addresses<\/b> (see: <a href=\"https:\/\/en.wikipedia.org\/wiki\/Public-key_cryptography\" target=\"_blank\" rel=\"nofollow noopener\">Public Key Cryptography<\/a>).<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">In the Blockchain, here&#8217;s what a (simplified) transaction looks like:<\/div>\n<div style=\"text-align: justify;\">\n<p>&nbsp;<\/p>\n<pre>{\r\n    \"txid\": &lt;a unique transaction identifier&gt;\r\n    \"inputs\": &lt;an array of inputs&gt;\r\n    \"outputs\": &lt;an array of outputs&gt;\r\n    \"tx_hex\": &lt;transaction content as a hexcode string&gt;\r\n\r\n    \"blockhash\": &lt;a unique block identifier this transaction belongs to&gt;\r\n    \"time\": &lt;the time this transaction's block was processed&gt;\r\n    \"confirmations\": &lt;number of blocks that confirmed this transaction&gt;\r\n}<\/pre>\n<pre><\/pre>\n<\/div>\n<div style=\"text-align: justify;\">The very basic parts to understand in the above snippet are: <i>a transaction has inputs, and outputs<\/i>. The inputs are specifications of which values to transfer from the sender&#8217;s address(es), and the outputs are specifications of how much of the total input value each recipient&#8217;s address(es) receives. Inputs in this transaction were outputs in a previous transaction, with the exception of when the network <i>generates<\/i> new coins.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">New coins are generated by the Dogecoin network as rewards for <b>miners<\/b> for <i>solving<\/i> a block (<a href=\"https:\/\/chain.so\/tx\/DOGE\/6cfd5b542a9081001790ca24d826bc6ef8ec3adf5b1eefc0fe19387675154e3c\" target=\"_blank\" rel=\"nofollow noopener\">example<\/a>), i.e., <b>miners<\/b> work hard to find the correct <i>hash<\/i> for a batch of transactions, also known as a <b>block<\/b> (see: Hashcash, Proof of Work). If the total input values are <i>higher than<\/i> the total output values, the difference is paid to <b>miners<\/b> of the block as a <b>transaction fee<\/b>. Total input value is <i>never<\/i> less than the total output value in a single transaction.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">When a miner finds a new block, they <b>confirm<\/b> all the transactions contained within it as valid. However, a block does not exist on its own &#8212; it is linked to blocks previously solved in a chain of blocks all the way to the <b>Genesis Block<\/b>. The Genesis Block was created when Bitcoin or Dogecoin networks were created (see: <a href=\"https:\/\/chain.so\/block\/DOGE\/0\" target=\"_blank\" rel=\"nofollow noopener\">Dogecoin Genesis Block<\/a>). Therefore, where a block is solved, and appended to a <i>chain<\/i> of previously found blocks, it confirms the transactions within it, <i>as well as<\/i> the transactions in all the previous blocks in its chain. Hence the name: <b>Blockchain<\/b>.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">So, what is the Blockchain? In very concise terms, it is a chain of blocks!<\/div>\n<p>Open your free digital wallet <a href=\"https:\/\/holytransaction.com\/app#!\/signup\">here<\/a> to store your cryptocurrencies in a safe place.<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>The prevalent idea of modern day cryptographic currencies originated when Bitcoin launched in 2009. With Bitcoin, for the first time in history, the world had access to a completely decentralized medium of exchange. This medium of exchange reliably transfers value from one entity to another in a hostile, trust less environment by solving a problem [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,76,82,101,241],"tags":[764,771,793,919],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v19.6 (Yoast SEO v22.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bitcoin, Dogecoin, and the Blockchain -<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/holytransaction.com\/blog\/2014\/06\/bitcoin-dogecoin-and-blockchain.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bitcoin, Dogecoin, and the Blockchain\" \/>\n<meta property=\"og:description\" content=\"The prevalent idea of modern day cryptographic currencies originated when Bitcoin launched in 2009. 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