The Bitcoin whitepaper, titled “Bitcoin: A Peer-to-Peer Electronic Cash System” by Satoshi Nakamoto, was published in October 2008. It is nine pages long and outlines how Bitcoin works as a decentralized digital currency without relying on banks or trusted third parties.
Here’s what is written inside, broken down by sections:
1. Abstract
Introduces the idea of a purely peer-to-peer version of electronic cash, allowing online payments to be sent directly from one party to another without going through a financial institution. It explains how digital signatures and a network-based solution prevent double spending.
2. Introduction
Critiques traditional financial systems, emphasizing the need for trust in third parties (banks), which increases costs and risks. Proposes a cryptographic solution to eliminate trust by using a decentralized network.
3. Transactions
Explains how transactions are structured: coins are a chain of digital signatures. Each owner transfers coins by signing a hash of the previous transaction and the public key of the next owner.
4. Timestamp Server
Introduces the concept of a timestamp server, which generates proof of the order of transactions by hashing blocks of transactions and publishing the hash widely.
5. Proof-of-Work
Explains how proof-of-work secures the network by requiring computational effort to produce blocks. This prevents tampering because altering any block would require redoing the proof-of-work for all subsequent blocks.
6. Network
Describes the steps nodes follow:
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New transactions are broadcast.
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Nodes collect transactions into a block.
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Nodes work to solve proof-of-work.
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When solved, the block is broadcast.
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Nodes accept the block if all transactions are valid.
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The longest chain (with the most proof-of-work) is considered valid.
7. Incentive
Explains how miners are incentivized: they receive new bitcoins and transaction fees, aligning individual interests with network security.
8. Reclaiming Disk Space
Describes pruning old transactions by discarding spent outputs to save storage while preserving security.
9. Simplified Payment Verification (SPV)
Outlines how lightweight clients can verify payments without downloading the full blockchain, relying on proof-of-work and alerts from full nodes.
10. Combining and Splitting Value
Explains how transactions can have multiple inputs and outputs, allowing flexibility (e.g., sending exact change back to oneself).
11. Privacy
Notes that Bitcoin is pseudonymous, not fully anonymous. Privacy is preserved by using new public keys for each transaction.
12. Calculations (Security Analysis)
Analyzes the probability of an attacker catching up with the honest chain, showing that it becomes exponentially harder as more blocks are added.
13. Conclusion
Summarizes Bitcoin as a system for electronic transactions without trust, secured by proof-of-work, and resilient against attacks through decentralized consensus.
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