Mastering Bitcoin

to mine for bitcoins, using his engineering skills to supplement his income. This story will examine the “industrial” base of bitcoin, the specialized equipment used to secure the bitcoin network and issue new currenc

Bitcoin Core keeps a full copy of the transaction ledger (blockchain), with every transaction that has ever occured on the bitcoin network since its inception in 2009.

You can download the Reference Client, also known as Bitcoin Core from bitcoin.org. The reference client implements all aspects of the bitcoin system, including wallets, a transaction verification engine with a full copy of the entire transaciton ledger (blockchain) and a full network node in the peer-to-peer bitcoin network.

As the blocks pile on top of each other, it becomes exponentially harder to reverse the transaction, thereby making it more and more trusted by the network.

Mining creates new bitcoins in each block, almost like a central bank printing new money. The amount of bitcoin created is fixed and diminishes with time
Mining creates trust by ensuring that transactions are only confirmed if enough computational power was devoted to the block that contains them. More blocks mean more computation which means more trust.

The destination key is called an encumberance, it imposes a requirement for a signature for the funds to be redeemed in future transactions

Transactions move value from transaction inputs to transaction outputs. An input is where the coin value is coming from, usually a previous transaction’s output

the total number (21,000,000) of all bitcoins that will ever be mined.

The bitcoin network can transact in fractional values, e.g. from millibitcoins (1/1000th of a bitcoin) down to 1/100,000,000th of a bitcoin, which is known as a Satoshi.

A blockchain explorer is a web application that operates as a bitcoin search engine, in that it allows you to search for addresses, transactions and blocks and see the relationships and flows between them.

Popular blockchain explorers include:

blockchain.info
blockexplorer.com
biteasy.com