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