Technical Foundations

Understanding the revolutionary technology that powers Bitcoin - from cryptographic principles to consensus mechanisms.

Bitcoin Whitepaper

Read the original Bitcoin whitepaper by Satoshi Nakamoto that started it all.

Proof of Work

Bitcoin's consensus mechanism requires miners to solve complex mathematical problems, creating a competitive process that secures the network through computational work.

Target = maxTarget / difficulty
hash(block_header) <= Target

Blockchain Structure

Each block contains:

Block header
Previous block hash
Merkle root
Timestamp
Nonce
Transaction data

Mining Algorithm

SHA-256 hash function is used twice (double-SHA256) to generate block hashes. Miners must find a nonce that produces a hash below the target difficulty.

hash = SHA256(SHA256(blockHeader))

Transaction Structure

Bitcoin transactions use the UTXO (Unspent Transaction Output) model, where each transaction consumes previous outputs and creates new ones.

tx_hash = SHA256(
  version
  input_count
  inputs
  output_count
  outputs
  locktime
)

Public Key Cryptography

Bitcoin uses elliptic curve cryptography (secp256k1) for creating key pairs. Public keys are used to generate addresses, while private keys sign transactions.

Network Protocol

Bitcoin's P2P network uses a gossip protocol for transaction and block propagation, with each node maintaining connections to multiple peers.

"Bitcoin uses a simple but powerful scripting system for transactions."

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