Understand Bitcoin

Understand Bitcoin

It is often said that Bitcoin is everything you don't understand about money combined with everything you don't understand about computers. There's nothing to relate it to, as Satoshi remarked

Bitcoin is different things to different people. Not only that, but what we mean when we say "bitcoin" depends on context, among other things


Breaking apart this loop is what 21 Ways is about. However, it's almost impossible to talk about Bitcoin in any meaningful way without a brief discussion of the building blocks that make Bitcoin work.

First of all, understanding how public-key cryptography and digital signatures work is absolutely essential. While Bitcoin seems magical, its nuts and bolts are anything but. Key generation, message signing, and message verification are mathematical operations



Hash functions are another essential building block. They are crucial to identify and verify information in a decentralized system. In Bitcoin, they are used for mining, generating addresses, identifying redeem scripts, identifying transactions, blocks, and more.



The problem with regular computer networks is a political one. Traditional computer networks usually follow the client-server model, which puts one server in charge as the central authority of the network. The solution? Make everyone an equal participant by design: peer-to-peer.



Once these building blocks and Bitcoin's operation are properly understood, it becomes clear that this often-used picture is an oversimplification, to put it mildly.


A more accurate picture would be the following: sats are in locked vaults floating in the sky. If you know the magic spell, you can open your lock and create new vaults that you can seal with someone else's lock. Sats do not exist outside of vaults.


Confusing? No doubt. But it gets easier as you study and get comfortable with these concepts. In the end, Bitcoin is a network that is incredibly hard to corrupt and keeps everyone and everything honest—producing a truthful ledger, recording who owes what to whom


All The credit should go to : u/dergigi

Link To his twitter : https://twitter.com/dergigi

submitted by /u/Reahvenz
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