Bitcoin & Blockchain Technology
A blockchain is one of the technologies that Bitcoin uses. It is a database that contains the entire history of Bitcoin transactions.
The Bitcoin network consists of tens of thousands of nodes that are running Bitcoin software. What do these nodes do and why are they important?
The Lightning Network facilitates instant, near-feeless payments for Bitcoin. These payments happen on a secondary network instead of Bitcoin’s blockchain.
Blockchain supports distributed networks, and its unique characteristics enable use-cases that were previously impossible. Blockchain allowed Bitcoin, a decentralized monetary system, to scale.
The Double Spend problem describes the difficulty of ensuring digital money is not easily duplicated. Bitcoin offers a trustless solution to the double spend problem, and third parties such as banks attempt to solve it as well.
Bitcoin has a variety of data types, most of which are represented by alphanumeric strings. These strings may seem indistinguishable at first, but each data type has a unique identifying marker.
Understand what is Bitcoin Core, the original and most popular open-source software that implements the Bitcoin protocol.
Bitcoin addresses are places on the blockchain that users can send and receive bitcoin to. Bitcoin wallets generate and control addresses.
Taproot is an upgrade to Bitcoin which introduced Schnorr signatures, Pay-to-Taproot (P2TR) outputs, and new scripting capabilities. P2TR outputs offer great privacy improvements and enable Merkelized Alternative Script Types, a way for bitcoin to be locked to multiple scripts at once.
Running a Bitcoin node allows you to query your Bitcoin balance and interact with the Bitcoin network without trusting third parties. Running a Bitcoin node is easy and affordable, and many services offer plug-and-play Bitcoin nodes.
In decentralized systems, a fork is a change to a protocol’s ruleset, usually reflected as a change in the source code. A fork can be a soft fork or a hard fork. Soft forks maintain backwards compatibility, while hard forks do not.
A smart contract is a digital agreement that is automatically executed and based on predefined criteria. Bitcoin’s scripting language enables powerful smart contracting features and additional smart contracts can be enabled on layers on top of Bitcoin.
Partially Signed Bitcoin Transactions (PSBTs) are a standardized format for communicating Bitcoin transactions before they are ready to be broadcast. The PSBT standard enables multiple parties on different devices to create and sign the same transaction sequentially.
A Bitcoin Improvement Proposal (BIP) is a formal proposal to change Bitcoin. The BIP process organizes the Bitcoin community in the absence of a centralized leader. BIPs can propose changes to Bitcoin's consensus layer, community standards, or the development process.
A blockchain is a database used to store information in batches, called blocks. Bitcoin, a monetary network, uses a blockchain as a ledger to organize its data, including a full history of transactions. Blockchains are only useful for supporting decentralized, trustless systems.
Schnorr signatures offer advantages over ECDSA in several areas. The introduction of Schnorr signatures to Bitcoin will improve privacy, scalability, and flexibility. Schnorr signatures are expected to be added to Bitcoin via the Taproot upgrade, which will be activated in the near future.
Segregated Witness, or SegWit, is an upgrade to Bitcoin that was activated in 2017 to fix transaction malleability and increase block capacity.
The Byzantine Generals Problem is a game theory problem, which describes the difficulty decentralized parties have in arriving at consensus without relying on a trusted central party. Bitcoin uses a Proof-of-Work mechanism and a blockchain to solve the Byzantine Generals Problem.
A node is an integral part of the Bitcoin network. Nodes enforce Bitcoin’s rule set and thus control Bitcoin. An individual should run a node to verify their bitcoin ownership trustlessly and ensure that other members follow the rules of the network.
Bitcoin uses a distributed ledger to publically record all transactions on the network. Proof-of-Work provides an objective way for Bitcoin users to agree on the state of the ledger.
A pull system is a payment system where the payee is the originator of the transaction, while a push system allows only the payer to originate a transaction. Pull systems rely on trusted third parties and incur higher costs.
Cryptography is a field of math which encompasses a variety of different methods for maintaining digital security and privacy. Bitcoin uses cryptography in several ways to ensure its security.
At face value, CBDCs seem harmless and full of potential benefits for society, but in practice, they carry enormous risks for human freedom and flourishing that are rarely discussed.
Bitcoin vaults will make self-custody significantly safer, by allowing users to intervene in case of a security breach.