Satoshi Nakamoto's white paper on Bitcoin, published in 2008, details a decentralised electronic cash system that uses a blockchain infrastructure to enable secure, peer-to-peer transactions without the need for intermediaries like banks or payment processors. However, the white paper not only introduces the concept of Bitcoin, but also details how this new technology can be built using blockchain.
The white paper describes the blockchain as a public ledger that records all transactions in a network. Each block in the chain contains a timestamp and a cryptographic hash of the previous block, creating a chain of blocks that cannot be tampered with or altered without consensus from the network participants.
The white paper explains that the blockchain allows for trust to be established between network participants without the need for a central authority to validate transactions. Instead, all participants in the network are responsible for validating transactions and maintaining the integrity of the blockchain.
The white paper also discusses the use of proof-of-work (PoW) as a consensus mechanism to ensure that all participants in the network agree on the validity of transactions. PoW involves participants in the network competing to solve complex mathematical problems, with the first participant to solve the problem being rewarded with newly minted bitcoins and the right to add a new block to the blockchain.
The key blockchain prerequisites
To better understand blockchain, it is important to understand the prerequisites for implementing a blockchain system, including:
Network Infrastructure: A blockchain system requires a reliable and secure network infrastructure to operate effectively. The network infrastructure should be designed to support the high volume of transactions that occur in blockchain systems.
Nodes: Nodes are the individual computers or servers that make up the blockchain network. Nodes are responsible for verifying transactions and maintaining the integrity of the blockchain. Nodes need to be robust enough to handle the processing power required to validate transactions and store blockchain data.
Consensus Mechanisms: Consensus mechanisms are the protocols that determine how the blockchain network reaches an agreement on the validity of transactions. There are several consensus mechanisms, such as Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS), each with its infrastructure requirements. Bitcoin SV relies on Proof of Work.
Storage: Blockchain systems generate a large amount of data that needs to be stored securely. Depending on the type of blockchain, storage requirements can range from a few gigabytes to several terabytes of data. Therefore, adequate storage infrastructure is essential for blockchain systems.
Security: Security is a critical infrastructure requirement for blockchain systems. The network must be designed with robust security measures to prevent cyber-attacks and protect the integrity of the data stored on the blockchain.
The original Bitcoin
Overall, the Bitcoin white paper provides a clear and concise explanation of how a blockchain infrastructure works to enable a peer-to-peer electronic cash system capable of microtransactions.
While Bitcoin has had many competing development groups over the years, Bitcoin SV however has distilled the Bitcoin protocol back to its purest form, and locked its protocol in stone, keeping the key economic systems and functionality described in the Bitcoin white paper whilst combining it with state-of-the-art technology, allowing thousands of enterprises and developers to safely build upon it.
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 section focuses on the concept of Proof-of-Work and why it is integral to the Bitcoin SV blockchain.
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.