Revision as of 04:53, 13 December 2019

Welcome to the Bitcoin wiki. Here we aim to provide a correct and up-to date set of information on the Bitcoin network and its features and functionality.

What is Bitcoin?

Bitcoin is a peer to peer cash system created by Dr Craig Wright under the pseudonym Satoshi Nakamoto and released as open-source software in 2009. It does not rely on a central server to process transactions or store funds. The leaderless structure of the network famously solves The Byzantine Generals Problem allowing disconnected entities to follow a common direction without receiving instruction. New bitcoins are issued to miners as rewards for competing to extend the ledger. Over time the competition awards coins in decreasing amounts, using an algorithm which will see the last new coins created in around 2140.

Bitcoin is made up of the following four elements:

Bitcoins

Bitcoins are the native unit of account. The base unit of exchange is Satoshis and 100,000,000 satoshis is referred to as one Bitcoin. Satoshis are held in script puzzles called Unspent Transaction Outputs or UTXOs. These are monetary outputs from Bitcoin Transactions which are held by miners in a quick access database called the UTXO set. During the spending process, UTXOs being used in a transaction are destroyed and the solution to their puzzle script is recorded.

The Bitcoin Public Ledger

Valid transactions that are broadcast on The Bitcoin Network are committed to the Bitcoin public ledger by Bitcoin miners. The ledger is built in Blocks which are discovered every 10 minutes on average and linked together forming a Block chain. The ledger is structured as a Directional Acyclic Graph (DAG) allowing the history of all Bitcoins to be traced back to the Coinbase transactions where they were discovered. Transactions can be exchanged peer to peer, allowing them to be modified in payment channels however once they have been committed to the ledger they are recorded immutably and cannot be un-done.

The Bitcoin network

The Bitcoin ledger is held on a distributed network of nodes who compete with each other to extend it by adding blocks. The miners who participate in building the network are incentivized to be directly connected to as many of the other block winning miners as possible to ensure blocks they discover are accepted as fast as possible. This leads to miners forming a Small World Network which trends towards a Nearly Complete Graph where all miners are connected to all other miners. Miners receive transactions from peers and from other miners on the network and propagate them to make all other known miners aware of every new transaction. This defeats the double spending problem ensuring that global consensus can be reached on the validity of a transaction within roughly 2 seconds. The miners use hash based proof of work to compete for the right to extend the ledger, and as a means to vote on the network rules.

The Bitcoin protocol: The Bitcoin protocol is the underlay of a the whole system. The protocol defines the scripting language that is used to define transactions, the formatting of transactions and blocks, the rate at which new bitcoins are issued as rewards for adding to the ledger, and the mathematical rules outlining the target for the difficulty algorithm which tries to keep the network generating new blocks at an average rate of 10 minutes each. The protocol defines the rules of network operation without setting any bounds on its scale. Miners compete to offer better service to fee paying users by scaling their own capabilities.

History of Bitcoin

Bitcoin until today

More on the basics

What Is Bitcoin?

In-depth concepts

Tools and utilities

Building on Bitcoin

Quick Links

Techniques	Second Layer Protocols	Products and Tools
Advanced Bitcoin Scripting Digital Signatures (ECDSA) Payment Channels R-Puzzles SVAlias The Metanet	GearSv Run Tokenized B://, C://, D://, BCAT etc	ElectrumSV Handcash Moneybutton Nakasendo Planaria Relay

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 ==What is Bitcoin?==
-'''Bitcoin''' is a peer to peer cash system created by Dr Craig Wright under the pseudonym [[Satoshi Nakamoto]] and released as open-source software in 2009. It does not rely on a central server to process transactions or store funds. New bitcoins are issued to miners as rewards for competing to extend the ledger. Over time the competition awards coins in decreasing amounts, using an algorithm which will see the last new coins created in around 2140.
+'''Bitcoin''' is a peer to peer cash system created by Dr Craig Wright under the pseudonym [[Satoshi Nakamoto]] and released as open-source software in 2009. It does not rely on a central server to process transactions or store funds. The leaderless structure of the network famously solves [[The Byzantine Generals Problem]] allowing disconnected entities to follow a common direction without receiving instruction. New bitcoins are issued to miners as rewards for competing to extend the ledger. Over time the competition awards coins in decreasing amounts, using an algorithm which will see the last new coins created in around 2140.
-Bitcoin is made up of the following elements:
+Bitcoin is made up of the following four elements:
-# Bitcoins: the network's unit of account. The base unit of exchange is [[Satoshis]]. 100,000,000 satoshis is referred to as one Bitcoin. Satoshis are held in script puzzles called [[UTXO|UTXOs]]. Monetary outputs from transactions are held in a quick access database called the UTXO set. UTXOs are destroyed when their puzzle script is solved in a transaction. The transaction puts these satoshis in a pool which are then distributed to the transaction outputs. Any satoshis left  are taken by miners as a fee for putting the transaction onto the ledger. UTXOs can be created that have zero value in satoshis. Miners do not need to keep these in the UTXO set and as such may prune them from the database.
+===Bitcoins===
-# The ledger: When UTXOs are spent in transactions, they represent contracts of exchange. Transactions are exchanged peer to peer, and can be updated or used to exchange data in secure peer to peer payment channels before being committed to the ledger.
+Bitcoins are the native unit of account. The base unit of exchange is [[Satoshis]] and 100,000,000 satoshis is referred to as one Bitcoin. Satoshis are held in script puzzles called [[UTXO|Unspent Transaction Outputs]] or UTXOs. These are monetary outputs from [[Bitcoin Transactions]] which are held by miners in a quick access database called the UTXO set. During the spending process, UTXOs being used in a transaction are destroyed and the solution to their puzzle script is recorded.
-# The network: The Bitcoin ledger is held in multiple distributed nodes who compete with each other to extend it by adding blocks. To be accepted as an extension to the ledger, blocks must contain valid transactions and must balance to the last satoshi. The miners who participate in building the network are incentivised to be directly connected to as many of the other block winning miners as possible. The miners form a small world network, which is a network where very dense connections are formed, The center of the small world trends towards forming a nearly complete graph where all miners are connected to all other miners. Miners receive transactions from peers and from other miners on the network and propagate them to make all other known miners aware of every new transaction. This defeats the double spending problem ensuring that global consensus can be reached on the validity of a transaction within roughly 2 seconds. The miners use hash based proof of work to compete for the right to extend the ledger, and as a means to vote on the network rules.
-# The protocol: The Bitcoin protocol is the underlay of a the whole system. The protocol defines the scripting language that is used to define transactions, the formatting of transactions and blocks, the rate at which new bitcoins are issued as rewards for adding to the ledger, and the mathematical rules outlining the target for the difficulty algorithm which tries to keep the network generating new blocks at an average rate of 10 minutes each. The protocol defines the rules of network operation without setting any bounds on its scale. Miners compete to offer better service to fee paying users by scaling their own capabilities.
+===The Bitcoin Public Ledger===
+Valid transactions that are broadcast on [[The Bitcoin Network]] are committed to the Bitcoin public ledger by [[Mining|Bitcoin miners]]. The ledger is built in [[Blocks]] which are discovered every 10 minutes on average and linked together forming a [[Block chain]]. The ledger is structured as a Directional Acyclic Graph (DAG) allowing the history of all Bitcoins to be traced back to the [[Coinbase]] transactions where they were discovered. Transactions can be exchanged peer to peer, allowing them to be modified in payment channels however once they have been committed to the ledger they are [[Irreversible Transactions|recorded immutably]] and cannot be un-done.
+===The Bitcoin network===
+The Bitcoin ledger is held on a distributed network of nodes who compete with each other to extend it by adding blocks. The miners who participate in building the network are incentivized to be directly connected to as many of the other block winning miners as possible to ensure blocks they discover are accepted as fast as possible. This leads to miners forming a [[Small World Network]] which trends towards a [[Nearly Complete Graph]] where all miners are connected to all other miners. Miners receive transactions from peers and from other miners on the network and propagate them to make all other known miners aware of every new transaction. This defeats the double spending problem ensuring that global consensus can be reached on the validity of a transaction within roughly 2 seconds. The miners use hash based proof of work to compete for the right to extend the ledger, and as a means to vote on the network rules.
+# The Bitcoin protocol: The Bitcoin protocol is the underlay of a the whole system. The protocol defines the scripting language that is used to define transactions, the formatting of transactions and blocks, the rate at which new bitcoins are issued as rewards for adding to the ledger, and the mathematical rules outlining the target for the difficulty algorithm which tries to keep the network generating new blocks at an average rate of 10 minutes each. The protocol defines the rules of network operation without setting any bounds on its scale. Miners compete to offer better service to fee paying users by scaling their own capabilities.
 ==History of Bitcoin==

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