Introduction to SolidCoin
From SolidCoin Wiki
What is SolidCoin?
SolidCoin is a cryptographic currency. This means this it is a form of money sent entirely through computer systems using encryption technology. Crypto Currencies allow you to send and receive payments, securely through the Internet--without having to go through a central authority like a bank or government agency.
How does SolidCoin work?
There are 3 key components to SolidCoin:
- The software client
- The encrypted wallet that is used by the software client
- The block chain.
The Software Client
The software client is your front-end interface to sending and receiving SolidCoin payments. You use the client to view your current SolidCoin balance, and to send and receive payments.
Your wallet is the key to the encryption in SolidCoin. With your wallet, you can create SolidCoin addresses to receive payments. When you create a SolidCoin address, your wallet also stores the encryption key to that address. With the encryption key, you will be able to receive and spend any payments made to that SolidCoin address.
The Block Chain
The block chain is a continuous ledger of every payment ever made to any SolidCoin address. The SolidCoin software client downloads the block chain and reads all the transactions made. Any payments made to your SolidCoin addresses, with the matching wallet encryption key for that address, will show up in your client. As you receive and spend SolidCoins, your client will record the transactions in the block chain and keep a running tally of the total amount of coins in your wallet.
Where do SolidCoins come from?
SolidCoins are originally generated by mining. Mining is the process of hashing the latest block and adding it to the block chain. Current transactions are not "official" transactions until they are added to the block chain. Miners are computers that read in the current block of transactions and hash them into the block chain. As a reward for spending their time and energy, miners are awarded a certain number of SolidCoins for every block that they add to the chain. After SolidCoins are mined, they are spent and re-spent just like any other currency. Example: You send coins to a merchant to buy an item. Then the merchant, pays its employees. The employees buy other goods, etc.
Where does the block chain come from?
The block chain is stored on every client, and is shared with every other client in a peer-to-peer fashion. When a new block is added to the chain one client will inform the other, which then informs others... until the entire network of SolidCoin clients is updated with the new block. In this fashion, the block chain is stored on every client, but nowhere in particular.