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The Bitcoin white paper - Conclusion

The BSV Academy’s free introduction to Bitcoin Theory course covers the design of Bitcoin as a system as prescribed by Satoshi Nakamoto. This course is open to anyone who is interested in Bitcoin and is the beginner course in this series. Some technical experience would be helpful to complete the course, however, it is open to anyone regardless of experience.

The course goes through the Bitcoin white paper section by section elaborating on the concepts contained within each. This is the concluding section of the course and focuses on some of the main lessons learnt so far.

To make it as effortless as possible for you to have access to this educational material, we are publishing the entire course here on our blog. Stay tuned for a section-by-section release, and remember that you are still welcome to enrol in the BSV Academy to gain a certificate of completion to add to your resume.

Conclusion: The Bitcoin white paper

We have proposed a system for electronic transactions without relying on trust. We started with the usual framework of coins made from digital signatures, which provides strong control of ownership, but is incomplete without a way to prevent double-spending

- Satoshi Nakamoto, Bitcoin white paper

system for electronic transactions

To solve this, we proposed a peer-to-peer network using proof-of-work to record a public history of transactions that quickly becomes computationally impractical for an attacker to change if honest nodes control a majority of CPU power.

- Satoshi Nakamoto, Bitcoin white paper

peer-to-peer network using proof-of-work

The network is robust in its unstructured simplicity. Nodes work all at once with little coordination. They do not need to be identified, since messages are not routed to any particular place and only need to be delivered on a best-effort basis.

- Satoshi Nakamoto, Bitcoin white paper

Robust network with coordinated nodes

Nodes can leave and rejoin the network at will, accepting the proof-of-work chain as proof of what happened while they were gone.

- Satoshi Nakamoto, Bitcoin white paper

Acceptance of valid blocks, enforced consensus mechanism

They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism.

- Satoshi Nakamoto, Bitcoin white paper

Conclusion on the proposed system of control of custody via a global ledger

In this white paper, Satoshi has proposed a system that creates a system for managing control of custody via a global ledger which is stored as a series of time-stamped blocks that group valid transaction records together. The nodes who build the ledger compete in an honest competition where the highest performing nodes represent investments of several hundred million dollars at this point in time, this investment has a demonstrated history of exponential growth, and can be expected to grow much larger in the future.

They collaboratively construct the chain of blocks using a consensus model that requires nodes to be present and aware of the network at all times. The system requires constant participation which is managed by arranging nodes in a highly distributed yet densely connected small-world network. Nodes can drop off the network and rejoin at will, and it remains robust.

Nodes follow the chain of blocks that they believe to be the honest and correct history of the network. When nodes see blocks that contain double spends, it is their prerogative to choose which chain they believe to be honest. This is typically the chain which contains the transaction that the node saw first, however, nodes will jump forward if the rest of the network agrees that the other transaction was first.

Nodes are incentivised also to enforce the rules of the network using hashpower. This is a process that happens between nodes which have adequate hash to discover new blocks and can be used to manage all disputes on how the network should function.

Micha Sprick, Editor
Micha Sprick