On the Internet, Bitcoin created a lot of hype. It was mocked, assaulted, accepted and eventually became part of our life. But Bitcoin isn’t all by itself. There are currently over 700 Altcoin implementations that use several crypto-currency algorithms and similar principles. Visit here to Invest in bitcoin for more information.
WHAT IS NEEDED TO CREATE BITCOIN?
Let us first break down the necessity of our new payment system without understanding your purpose for a decentralized, anonymous method of information exchange:
- All transactions over the Internet should be made
- We do not want a central body to process transactions
- Users should only be identifiable by virtual identity and anonymous
- A person can have as much virtual identity as he wants
- Controlled addition of the value provision (new virtual banknotes).
- Decentralized Internet Information Sharing
It is already possible to fulfil our list of two first needs, to remove a central authority to share information over the Internet. It’s a peer-to-peer network (P2P) you require. The sharing of information in P2P is akin to exchanging information with relatives and friends. You probably heard about BitTorrent, one of P2P’s most popular file share protocols. The basic principle is that to support your new cryptocurrency, called Topcoin, and you can implement or use one of the current P2P open-source protocols.
ALGORITHM OF HASHING
We need to grasp how cryptographic hashing works to understand digital identities. Hashing is how data of any arbitrary size is mapped to data of a fixed size. In other words, hacking means taking some information that can be read and creating something meaningless.
A decent hashing algorithm needs some requirements:
- The hashing algorithm output length must be determined
- Even the tiniest change in input data has to create considerable output differences
- The same input is always the same.
- The output value for the calculation of the information cannot be reversed
- The HASH value calculation should not be calculated intensively and quickly
Looking at the statistics, you will find a restricted number (yet vast) of possible HASH values simply because the length of our HASH is limited. However, our Hash method (call it Politician256) should be as reliable as it only generates a duplicate hash value for various inputs as often as a monkey in a zoo succeeds in typing Hamlet on a typewriter correctly!
All you need to do when signing a document is to add your signature to the document text. A comparable digital signature: you only have to add your personal information to the paper you sign. Suppose you understand that the hack algorithm adheres to the rule that changes to the data input must make a substantial output difference. In that case, the value HASH generated for the document original differs from the value HASH created for the document’s signature attached.
A digitally signed document combines the original form with the HASH value generated for the paper with your data included. And that is how we get at your virtual identity, defined as the data you added on the report before the HASH value was established. Next, make sure that your signature is impossible to copy and no one in your name can perform any transactions. The best approach to secure your signature is by keeping it for yourself and by providing another way of validating the paper you have signed. Again, we may rely on readily available technology and algorithms. We must employ public-service encryption, sometimes called asymmetric encryption.
Both tickets have a mathematical association of some kind and are mutually dependent. The mechanism you employ to produce these keys ensures that every private key has a unique public resolution. As their names suggest, information is personal, and you will only keep data for yourself, while the information you give is a public key. You can be confident no one else can produce the identical HASH value for that document if you have your private key (your identification) and the original document as the signature algorithm input data for creating a HASH value if you retain your key secret.
HOW TO SEND BITCOIN/CASH
You are ready to transfer information to your colleagues provided you have developed P2P communication, a mechanism to create digital identities and have supplied users with ways to sign documents using their private keys.
All that remains to be done is to digitally sign the transaction record using the private key and send it to your network peers. Everyone will be informed then that somebody (your virtual identity) sends money to others. Your work is accomplished. Your prescription won’t be paid until you confirm that the entire network has 100 coins so that this transaction may be executed. Your pharmacist will receive the cash and provide you with the medicines only after your transaction has been confirmed.
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