Welcome to the Bitcoin Wiki
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. 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 of the maximum 2,099,999,997,690,000 Satoshis created in around 2140. Bitcoins are a unit of account that represent each 100,000,000 Satoshis.
Bitcoin is made up of the following 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 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.
- 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.
- 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.
History of Bitcoin
More on the basics
In-depth concepts
- Transactions
- Blocks
- The Bitcoin Network
- Mining and Consensus
- Wallets and key management
- Simplified Payment Verification (SPV)
Tools and utilities
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 |