Intro to Bitcoin

What is BTC?

Transactions

The Process

The BTC Network

A global, borderless money that anyone with an internet connection can use

It is not tied to any fiat (Government-owned, commodity tied) currency

Many different actors use BTC (savers, merchants) for various purposes (payments, savings, remittances)

User A creates and signs transaction A -> B

The BTC Nodes check if :

A has the transaction money

The transaction is authentic

The transaction is then passed along to its neighbours / peers

Each Node updates its own copy of the BTC blockchain with the new payment info

The Network notifies B of their BTC

The BTC transaction is a piece of data specifying

The amount to move

The BTC address to move the money to

A digital Signature

Created from the transaction + a huge secret number, called the private key

Each Node checks if the transaction is valid

It does by consulting its local copy of the blockchain that:

The BTC that A spends exists

A's digital signature is valid

If the checks pass, a Node fwds the transaction to its peers in the BTC Network

This is called Relaying

The Blockchain

Contains historic info on all previous transactions

A Block is a message containing the Order in which several simultaneous transactions occur

The Blockchain is append only == only expands from its end

The Order is given by a Node which takes the lead

Such a node is rewarded with newly minted BTC and transaction fees paid by the transaction it includes in the block

Taking the lead involves solving hard problems => considerable time and electricity

Such Nodes are called Miners

Wallets

Apps which allow their users to access the BTC Network

They can serve several purposes, such as

Sending and receiving transactions

Manage the user's private keys

Private keys are used to:

Generate BTC addresses

Create digital signatures

Ownership

BTC transactions aren't tied to people, but to public keys

These keys are stored in the form of longs strings of numbers

Proof of existence

Digital documents have fingerprints

These fingerprints are cryptographic hash functions which anyone can calculate from their document

Creating a new document w/ the same fingerprint is impossible

You "anchor" the document in the blockchain

These payments are public order