What is the Bitcoin White Paper?
💡 Daily Reminder: Stay humble, stack sats
Bitcoiners,
Exactly 14 years ago today, Satoshi Nakamoto published a white paper to a cryptography-focused email list that described what Bitcoin was and how it worked.
Here is a background and overview of the white paper so you can better understand the document that changed money as we know it forever.
Background & Overview
The Bitcoin white paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System" was published on October 31st, 2008.
The goal of the white paper was to publicly announce a new electronic cash system that creator(s) Satoshi Nakamoto has quietly been working on. The white paper begins with defining the problems that exist with creating a digital cash system and then uses simple language to translate complex technical concepts into easy-to-understand terminology. The 9-page document concludes with a recap of the technical aspects working together and finishes with a list of 8 total references.
The original white paper is hosted on thousands of web domains all over the internet so the document cannot be entirely removed or altered.
The Problem
The fundamental problem defined in the white paper was establishing:
A way to digitally send payments
A way to process payments without help from a 3rd party
The Solution
Satoshi Nakamoto proposed a peer-to-peer system based on cryptographic proof to remove the need for a 3rd party to process a transaction such as banks are used today.
The solution involves many components that work together. Here is a brief explanation of each component:
Section 2: Transactions - A digital signature chain representing coins used to transact value.
Section 3: Timestamp Server - Records all necessary information from the transaction and publicly announces it to the network.
Section 4: Proof-of-Work - A way for miners to compete to be the first to verify the transactions on the blockchain.
Section 5: Network - The sequential steps outlined to run the network and process transactions.
Section 6: Incentive - The incentives behind nodes to support the network and play by the rules.
Section 7: Reclaiming Disk Space - Implementing a data structure scheme called a Merkle Tree in order to conserve disk space.
Section 8: Simplified Payment Verification - A way for users to verify transactions without downloading the entire blockchain.
Section 9: Combining and Splitting Value - A way for bitcoin to be split into smaller values and transacted in smaller parts.
Section 10: Privacy - A way to retain privacy in a system that is public.
Section 11: Calculations - Proving how nearly impossible it is for an attacker to manipulate the blockchain with probability calculations.
Final Thoughts
Bitcoin is one of the most impactful pieces of computer engineering ever created and the white paper is worth your time to get a glimpse of how it works.
Read the white paper in full to better understand each of these components.
Happy Monday,
-Pod
If you find any value in The Bitcoin Letter, please subscribe and tell a friend. By subscribing, you will be sent easy to understand information about Bitcoin along with any relevant news daily. That’s it. IT IS FREE AND I WILL NOT SPAM YOU!
BUY BITCOIN RIGHT NOW
I personally use Swan Bitcoin to purchase Bitcoin! Use the link below to get $10 free dollars worth of Bitcoin. Takes less than 5 minutes to sign up and I get a small commission :)
Eric Podwojski
Founder, Bitcoin EDU
Twitter:Â @epodrulz
Disclaimer: This should go without saying: This is not financial advice. This is not investment advice. I write this newsletter for education and entertainment. Act accordingly.
