Introduction
Bitcoin is a decentralized digital cryptocurrency created by pseudonymous developer Satoshi Nakamoto. The first paper on Bitcoin, also referred to as the original Bitcoin paper, was published by Nakamoto in 2008. It provides a brief description of the concepts and architecture schematics of the Bitcoin protocol.
Key Features:
- Decentralized digital currency
- Public ledger (blockchain) for transaction transparency
- Proof-of-work consensus mechanism
Architecture
Central to Bitcoin's architecture is a public ledger called the blockchain, which stores all processed transactions in chronological order. Transactions are processed by a network of miners in a process called mining.
Blocks Structure:
Each block consists of:
- Header (containing metadata)
- Payload (containing transactions)
| Field | Type | Description |
|---|---|---|
| nVersion | int | Block format version |
| HashPrevBlock | uint256 | Hash of previous block |
| HashMerkleRoot | uint256 | Root of Merkle tree |
| nTime | unsigned int | Timestamp |
| nBits | unsigned int | Target for proof of work |
| nNonce | unsigned int | Nonce for proof of work |
vtx | VarInt | Number of transactions
vtx[] | Transaction | Transaction vector
Transaction Types
There are two primary transaction types in Bitcoin:
1. Regular Transactions
Used to transfer existing Bitcoins between users.
2. Coinbase Transactions
Special transactions that introduce new Bitcoins into the system (miner rewards).
Bitcoin Ownership
Bitcoin utilizes cryptographic primitives for secure transaction authorization:
Asymmetric Cryptography:
- Public/private key pairs
- Digital signatures for authentication
Proof of Work:
- Regulates coin supply
- Rewards miners
- Ensures block integrity
Standard Transaction Types:
- Pay-to-Pubkey (P2PK)
- Pay-to-PubkeyHash (P2PKH)
- Pay-to-ScriptHash (P2SH)
- Multisig
- Nulldata
Blockchain Structure
The blockchain provides:
- Chronological ordering of transactions
- Prevention of double-spending
- Decentralized consensus
Mining Process:
- Collect transactions
- Verify transactions
- Select most recent block
- Solve proof-of-work puzzle
- Broadcast solution
FAQ
Q: What is the purpose of the nonce in Bitcoin mining?
A: The nonce provides variability for miners to solve the proof-of-work puzzle by allowing different hash computations.
Q: How are Bitcoin addresses created?
A: Bitcoin addresses are hashes of public keys with built-in checksums, encoded in Base58 format.
Q: What's the difference between P2PKH and P2SH addresses?
A: P2PKH addresses are hashes of public keys, while P2SH addresses are hashes of redemption scripts, offering more flexibility in spending conditions.
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