the bitcoin whitepaper was originally published on October 31, 2008 by an individual or group of people calling themselves satoshi nakamoto on a crypto mailing list on a platform called metzdowd. Wild theories and myths surround the real identity of the creators of bitcoin: several well-known people in the world of cryptocurrencies have claimed to be satoshi nakamoto or know them.
the concept behind bitcoin is based on cryptography, the study of secure communication technologies and the development of protocols that prevent the public or third parties from reading private information.
Reading: Bitcoin whitepaper explained
the summary
Starting the first page of the bitcoin whitepaper is the post abstract which contains a summary describing the content and purpose of the whitepaper.
Essentially, the purpose of bitcoin is to develop computer technology to allow various parties to send online payments directly to each other (“peer-to-peer cash system”) without the need for a financial institution such as a bank. First of all, it goes without saying that the underlying system for such transactions would have to meet a number of security requirements.
As the proposed transaction will be conducted cashless and online, the issue of double spending would need to be addressed. double spending is the potential weakness in a digital cash system: the possibility that the same unit of value (the token) will be spent twice if someone duplicates or counterfeits a token.
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The prerequisites for this type of decentralized cash system to work are
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cooperation between the parties running the system (network structure)
make sure previous records can never be changed (immutability) and
agreement on the validity of transactions according to certain rules (consensus)
in other words: all parties must agree on the rules and cooperate according to those rules while ensuring that the records are valid according to these agreed rules, as well as immutable.
introduction: where does bitcoin come from?
The introductory paragraph of the bitcoin whitepaper describes why the creator believes a trustless cash system is needed in the first place. The main reason given is that traditional payment systems used in commercial settings that operate through financial institutions such as banks have a number of flaws.
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On the one hand, traditional payments often involve high transaction and mediation costs that can arise if there is a dispute over a transaction, for example if a transaction needs to be reversed.
Second, traditional payment systems are prone to fraud, and third, they always require a trusted third party. The bitcoin whitepaper proposes a system where third parties, if any, such as escrow services for major transacting parties, can be easily implemented, but only if necessary, by triggering some kind of coded action.
transactions
An electronic currency is basically a chain consisting of digital signatures. Electronic currencies are actually lines of protected computer code that exist relative to the previous code on the line before them. you cannot hold electronic currencies in your hands like a traditional currency, they only exist online.
Let’s say a bitcoin owner wants to make a transaction. if the owner triggers a transaction to transfer the coin to the next owner, this bitcoin value is broadcast to the network.
The owner triggers the transfer of the coin to the next owner by digitally signing a hash, the unique fingerprint, of the previous transaction to encrypt the hash. The encryption behind bitcoin uses two mathematically related keys: a public key and a private key. they are related but not identical.
The public key is needed to encrypt the transaction along with the owner’s private key to create the digital signature; it is similar to a bank account number, while the private key is similar to the access code of a bank account. therefore, the public key is also the address of the recipient, to which the owner wishes to send bitcoins.
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