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RE: Crypto Basics - What is Blockchain Technology?
Thanks for the post. What I don't understand yet, is how does the system know that the person making a transaction, really is who he says he is (i.e. the owner of an x amount of BC)? Another question, I often hear people mention that BC is finite, and will become more and more scarce (and because of that more expensive). However, if you can note an amount of BC in several decimals, does that concept still apply? Thanks!
An answer to your first question: Basically, when you receive X amount of BTC, that transaction is recorded on the public Bitcoin ledger. This ledger is shared throughout the network; there are thousands of copies. The ledgers are verified using a cryptographic hashing algorithm. Therefore, the system knows that you own X amount of BTC because it is recorded on the public ledger, which is unhackable. 2nd question: yes it does still apply. This is because you still have the same amount of BTC in circulation. For example, you can divide the number 1 into 2 halves (0.5, 0.5) or quarters (0.25, 0.25, 0.25, 0.25) but in the end, it still adds up to one: 0.5 + 0.5 = 1; 0.25 + 0.25 + 0.25 +0.25 = 1. Therefore, the scarcity isnt affected.