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Everything You Wanted To Know About Bitcoin Addresses

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An address is a string of alphanumeric characters which identifies a bitcoin wallet. Users can use addresses to send and receive cryptocurrency. Addresses are usually identifiers for their public keys, and are recorded on the blockchain.

Addresses might have a protocol name at the beginning of them, such as “bitcoin:1aF398Csd3hF…..”. This allows browsers to open the correct wallet program to send a payment to this address when it is clicked on.

Some cryptocurrencies can use the address and its public key to cryptographically sign a message, which proves that the message originated from the owner of that address.

Bitcoin

In Bitcoin, addresses are the base58 or the bech32 encoding of a 160-bit hash of its public key. You can not extract the public key using only the address. One of the reasons why the public key is hashed to save storage space on the blockchain.

There are three different types of addresses: The P2PKH address beginning with a “1”, the P2SH address beginning with a “3”, and the P2WPKH address beginning with “bc1q”. The P2PKH and P2SH addresses are base58-encoded addresses, while P2WPKH addresses are encoded with bech32.

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Do you know what a Bitcoin client is?

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Bitcoin Core or Bitcoin client is a full node that stores the blockchain on users’ computers and validates transactions. This program is a memory of Satoshi Nakamoto and makes the Bitcoin function possible. This program is made to identify valid blocks in which there are network transactions.

What is a Bitcoin client?

The unofficial logo of the Bitcoin Core client

Bitcoin client or (Bitcoin Core) is responsible for the entire protocol and full implementation and the mother of all bitcoin implementations. Using this program helps the bitcoin blockchain to stay completely decentralized. As a result, there is a difference between this blockchain and other network blockchains.

The program was originally written under the name Bitcoin-Qt by Wladimir van der Laan using source code published by Satoshi Satoshi. As a result, Bitcoin Core is responsible for the entire Bitcoin protocol and its client implementation, which has become the reference on which other developed clients rely.

What sets Bitcoin apart from forks?

Examples of hard forks are BCH (Bitcoin Cash) and BTG (Bitcoin Gold), increasing every year. The origin of the separation of these hard forks is the main bitcoin network. So here Bitcoin client helps to distinguish Hardforkers who have a network very similar to Bitcoin from the main blockchain blocks. People create hard forks when they disagree with the principles of the bitcoin network. It is also possible to create forks of other forked cryptocurrencies.

Who develops Bitcoin Core?

There are almost 100 active contributors to the Bitcoin Core repository on Github. Many people are working on upgrading Bitcoin clients. Core developers are not a focused group of people. Core developers are people from all over the world who each decide how to contribute to the Bitcoin code. As a result, there is no project manager to guide developers in building or building code. However, there is a team of lead developers who make the most important decisions about Bitcoin Core.

Using testnet, a test network is provided for developers to implement their changes there. In the end, anyone can submit their ideas as a (Core developer) to develop bitcoin code, even Satoshi Nakamoto.

What is a Bitcoin Core wallet?

An early version (0.10.0) of the Bitcoin Core client

This wallet actually implements a Full Node of the protocol mentioned in the White Paper. Also, it’s the official Bitcoin wallet. It stores all network transactions in the blockchain. This wallet has a lot of security and creates excellent privacy for users. To download this wallet, you only need to enter the main site. You can use the Bitcoin Core wallet after downloading and syncing.

History of Bitcoin Core

Development of this software started from version 0.1.0 that Satoshi created and was only available for Windows. But Satoshi abandoned the development of Bitcoin Core in 2010, and then others continued to develop it. In version 0.5.0 in 2011, the name of this software is Bitcoin-QT.

Finally, in version 0.9.0, it was renamed Bitcoin Core, and after passing several versions, this software became software with desirable and improved capabilities. In version 0.11.2, the developers created conditions to avoid high network costs. So in version 0.12.1, developers made changes to locktime in the Bitcoin client.

Bitcoin client features

  • Compatible with a variety of operating systems such as Windows and Mac, etc.
  • The Bitcoin client implements Full Nodes.
  • It it used to use wxWidgets but Satoshi removed this dependency in 2010.
  • Create transaction lists as CSV files and display transaction lists in realtime
  • Has different languages such as German and Chinese
  • having an easy user interface

Bitcoin client and its future

As a result of people marketing the Bitcoin Core client to enthusiasts and miners, it is the most widely used client for Bitcoin. Currently, there are many opportunities for further development of this software submitted in the form of BIPs (Bitcoin Improvement Proposals).


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What Are Transaction Fees In Bitcoin and Ethereum?

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What Are Transaction Fees Bitcoin Ethereum

What are Bitcoin transaction fees ?

For everyone making transactions in bitcoin, you would have wondered what are these bitcoin transaction fees all about. Sometimes the fees are very high and sometimes quite low, why did all this happen? I will explain to you here.

Every bitcoin transaction must be added to the blockchain, the official public ledger of all bitcoin transactions, to be considered completed or valid. The work of validating transactions and adding them to the blockchain is done by miners, powerful computers that make up and connect to the network. Miners spend vast amounts of computing power and energy doing this for a financial reward: with every block (a collection of transactions not exceeding 1 MB in size) added to the blockchain comes a bounty called a block reward, as well as all fees sent with the transactions that miners included in the block.

For this reason, miners have a financial incentive to prioritize the validation of transactions that include a higher fee. For someone looking to send funds and get a quick confirmation, the appropriate fee to include can vary greatly, depending on several factors. While the fee does not depend on the amount you’re sending, it does depend on network conditions at the time and the data size of your transaction.

Network Conditions

Because a block on the bitcoin blockchain can only contain up to 1 MB of information, miners can include a limited number of transactions in any given block. During times of congestion, when a large number of users are sending funds, there can be more transactions awaiting confirmation than there is space in a block.

When a user decides to send funds and the transaction is broadcast, it initially goes into the memory pool (mempool for short) before being included in a block. From this mempool, miners choose which transactions to include, prioritizing the ones with higher fees. If the mempool is full, the fee market may become a competition: users will compete to get their transactions into the next block by including higher and higher fees. Eventually, the market will reach a maximum equilibrium fee that users are willing to pay, and the miners will work through the entire mempool in order. At this point, once traffic has decreased, the equilibrium fee will go back down.

Transaction Size

Again since a block on the bitcoin blockchain can contain no more than 1 MB of information, transaction size is an important consideration for miners. Smaller transactions are easier to validate; larger transactions take more work and take up more space in the block. For this reason, miners prefer to include smaller transactions. A larger transaction will require a larger fee to be included in the next block.

The formula to calculate a transaction size by hand is quite complicated, but your wallet will automatically do this for you and suggest an appropriate fee.

So this was all about the Bitcoin transaction fee. But in Ethereum transactions, how must have heard or read about Gwei, and what is gas? We will talk about that now.

What Is Gas in Ethereum transactions?

Gas refers to the fee, or pricing value, required to successfully conduct a transaction or execute a contract on the Ethereum blockchain platform. Priced in small fractions of the cryptocurrency ether (ETH), commonly referred to as gwei and sometimes also called nanoeth, the gas is used to allocate the Ethereum virtual machine (EVM) resources so that decentralized applications such as smart contracts can self-execute in a secured but decentralized fashion.

The exact price of the gas is determined by supply and demand between the network’s miners – who can decide to process a transaction if the gas price does not meet their threshold – and users of the network who seek processing power.

Some key points

  • On the Ethereum blockchain, gas refers to the cost necessary to perform a transaction on the network.
  • Miners set the price of gas based on supply and demand for the computational power of the network needed to process smart contracts and other transactions.
  • Gas prices are denoted in small fractions of ether called gwei.
  • The value of gas for internal processing, which is distinct from how ether tokens value the actual valuation of the cryptocurrency, disaggregates the value layer and the processing layer of the Ethereum platgorm.

Ethereum developers introduced gas to maintain a distinct value layer that solely indicates the consumption towards computational expenses on the Ethereum network. Having a separate unit for this purpose allows for a practical distinction between the actual valuation of the cryptocurrency (ETH) and the computational cost of using Ethereum’s virtual machine (EVM). There, gas refers to the Ethereum network transaction fees, not the gasoline for your car.

Gas fees are payments made by users to compensate for the computing energy required to process and validate transactions on the Ethereum blockchain. “Gas limit” refers to the maximum amount of gas (or energy) that you’re willing to spend on a particular transaction. A higher gas limit means doing more work to execute a transaction using ETH or a smart contract.

To draw an analogy, running a real-world car for X miles may require Y gallons of fuel. Or moving X amount of money from your bank account to your friend’s credit card may cost you Y dollars in a processing fee. In both cases, X indicates the utility value, while Y indicates the cost of performing the car trip or financial transaction.


Similarly, a contract or transaction on Ethereum may be worth 50 ETH (x), and the gas price to process this transaction at that particular time might be, say, 1/100,000 ETH (Y).

Ethereum miners, who perform all the important tasks of verifying and processing transactions on the network, are awarded this particular fee in return for their computational services. If the gas price limit is too low, miners can choose to ignore such transactions. As such, the price of gas fluctuates (priced in ETH) with supply and demand for processing power.

Ethereum Virtual Machine (EVM)

The EVM can run smart contracts that can represent financial agreements such as options contracts, swaps, or coupon-paying bonds. People can also use it to execute bets and wagers, fulfill employment contracts, act as a trusted escrow to purchase high-value items, and maintain a legitimate decentralized gambling facility. These are just a few examples of what is possible with smart contracts, and the potential to replace all sorts of legal, financial, and social agreements is exciting.

Within the Ethereum ecosystem, ETH exists as the internal cryptocurrency, which is used to settle the outcomes of smart contracts executed within the protocol. ETH can be mined for and traded on cryptocurrency exchanges with bitcoin and fiat currencies such as U.S. dollars and is also used to pay for computational effort employed by nodes on its blockchain.

Soon, however, Ethereum plans to move to a Proof of Stake (PoS) based blockchain. In this model, miners would no longer exert computational power but instead rely on a consensus model according to how many coins a node holds.

Before you leave, why don’t you learn more topics like transaction fees at our Academy? We have guides for nearly every blockchain concept.

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