book

Mastering Bitcoin, 2nd Edition

by Andreas M. Antonopoulos

June 2017

Beginner to intermediate

411 pages

11h 3m

English

O'Reilly Media, Inc.

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Writing the Bitcoin BookIntended AudienceWhy Are There Bugs on the Cover?Conventions Used in This BookCode ExamplesUsing Code ExamplesBitcoin Addresses and Transactions in This BookO’Reilly SafariHow to Contact UsContacting the AuthorAcknowledgmentsEarly Release Draft (GitHub Contributions)
What Is Bitcoin?History of BitcoinBitcoin Uses, Users, and Their StoriesGetting StartedChoosing a Bitcoin WalletQuick StartGetting Your First BitcoinFinding the Current Price of BitcoinSending and Receiving Bitcoin
Transactions, Blocks, Mining, and the BlockchainBitcoin OverviewBuying a Cup of CoffeeBitcoin TransactionsTransaction Inputs and OutputsTransaction ChainsMaking ChangeCommon Transaction FormsConstructing a TransactionGetting the Right InputsCreating the OutputsAdding the Transaction to the LedgerBitcoin MiningMining Transactions in BlocksSpending the Transaction
Bitcoin Development EnvironmentCompiling Bitcoin Core from the Source CodeSelecting a Bitcoin Core ReleaseConfiguring the Bitcoin Core BuildBuilding the Bitcoin Core ExecutablesRunning a Bitcoin Core NodeConfiguring the Bitcoin Core NodeBitcoin Core Application Programming Interface (API)Getting Information on the Bitcoin Core Client StatusExploring and Decoding TransactionsExploring BlocksUsing Bitcoin Core’s Programmatic InterfaceAlternative Clients, Libraries, and ToolkitsC/C++JavaScriptJavaPHPPythonRubyGoRustC#Objective-C
IntroductionPublic Key Cryptography and CryptocurrencyPrivate and Public KeysPrivate KeysPublic KeysElliptic Curve Cryptography ExplainedGenerating a Public KeyBitcoin AddressesBase58 and Base58Check EncodingKey FormatsImplementing Keys and Addresses in C++Implementing Keys and Addresses in PythonAdvanced Keys and AddressesEncrypted Private Keys (BIP-38)Pay-to-Script Hash (P2SH) and Multisig AddressesVanity AddressesPaper Wallets
Wallet Technology OverviewNondeterministic (Random) WalletsDeterministic (Seeded) WalletsHD Wallets (BIP-32/BIP-44)Seeds and Mnemonic Codes (BIP-39)Wallet Best PracticesUsing a Bitcoin WalletWallet Technology DetailsMnemonic Code Words (BIP-39)Creating an HD Wallet from the SeedUsing an Extended Public Key on a Web Store
IntroductionTransactions in DetailTransactions—Behind the ScenesTransaction Outputs and InputsTransaction OutputsTransaction InputsTransaction FeesAdding Fees to TransactionsTransaction Scripts and Script LanguageTuring IncompletenessStateless VerificationScript Construction (Lock + Unlock)Pay-to-Public-Key-Hash (P2PKH)Digital Signatures (ECDSA)How Digital Signatures WorkVerifying the SignatureSignature Hash Types (SIGHASH)ECDSA MathThe Importance of Randomness in SignaturesBitcoin Addresses, Balances, and Other Abstractions
IntroductionMultisignaturePay-to-Script-Hash (P2SH)P2SH AddressesBenefits of P2SHRedeem Script and ValidationData Recording Output (RETURN)TimelocksTransaction Locktime (nLocktime)Check Lock Time Verify (CLTV)Relative TimelocksRelative Timelocks with nSequenceRelative Timelocks with CSVMedian-Time-PastTimelock Defense Against Fee SnipingScripts with Flow Control (Conditional Clauses)Conditional Clauses with VERIFY OpcodesUsing Flow Control in ScriptsComplex Script ExampleSegregated WitnessWhy Segregated Witness?How Segregated Witness WorksSoft Fork (Backward Compatibility)Segregated Witness Output and Transaction ExamplesUpgrading to Segregated WitnessSegregated Witness’ New Signing AlgorithmEconomic Incentives for Segregated Witness
Peer-to-Peer Network ArchitectureNode Types and RolesThe Extended Bitcoin NetworkBitcoin Relay NetworksNetwork DiscoveryFull NodesExchanging “Inventory”Simplified Payment Verification (SPV) NodesBloom FiltersHow Bloom Filters WorkHow SPV Nodes Use Bloom FiltersSPV Nodes and PrivacyEncrypted and Authenticated ConnectionsTor TransportPeer-to-Peer Authentication and EncryptionTransaction Pools

IntroductionStructure of a BlockBlock HeaderBlock Identifiers: Block Header Hash and Block HeightThe Genesis BlockLinking Blocks in the BlockchainMerkle TreesMerkle Trees and Simplified Payment Verification (SPV)Bitcoin’s Test BlockchainsTestnet—Bitcoin’s Testing PlaygroundSegnet—The Segregated Witness TestnetRegtest—The Local BlockchainUsing Test Blockchains for Development
IntroductionBitcoin Economics and Currency CreationDecentralized ConsensusIndependent Verification of TransactionsMining NodesAggregating Transactions into BlocksThe Coinbase TransactionCoinbase Reward and FeesStructure of the Coinbase TransactionCoinbase DataConstructing the Block HeaderMining the BlockProof-of-Work AlgorithmTarget RepresentationRetargeting to Adjust DifficultySuccessfully Mining the BlockValidating a New BlockAssembling and Selecting Chains of BlocksBlockchain ForksMining and the Hashing RaceThe Extra Nonce SolutionMining PoolsConsensus AttacksChanging the Consensus RulesHard ForksHard Forks: Software, Network, Mining, and ChainDiverging Miners and DifficultyContentious Hard ForksSoft ForksCriticisms of Soft ForksSoft Fork Signaling with Block VersionBIP-34 Signaling and ActivationBIP-9 Signaling and ActivationConsensus Software Development
Security PrinciplesDeveloping Bitcoin Systems SecurelyThe Root of TrustUser Security Best PracticesPhysical Bitcoin StorageHardware WalletsBalancing RiskDiversifying RiskMultisig and GovernanceSurvivabilityConclusion
IntroductionBuilding Blocks (Primitives)Applications from Building BlocksColored CoinsUsing Colored CoinsIssuing Colored CoinsColored Coins TransactionsCounterpartyPayment Channels and State ChannelsState Channels—Basic Concepts and TerminologySimple Payment Channel ExampleMaking Trustless ChannelsAsymmetric Revocable CommitmentsHash Time Lock Contracts (HTLC)Routed Payment Channels (Lightning Network)Basic Lightning Network ExampleLightning Network Transport and RoutingLightning Network BenefitsConclusion
Bitcoin - A Peer-to-Peer Electronic Cash SystemIntroductionTransactionsTimestamp ServerProof-of-WorkNetworkIncentiveReclaiming Disk SpaceSimplified Payment VerificationCombining and Splitting ValuePrivacyCalculationsConclusionReferencesLicense
Bitcore’s Feature ListBitcore Library ExamplesPrerequisitiesWallet Examples using bitcore-lib
Key Utility (KU)Transaction Utility (TX)
Examples of bx Command Use

Content preview from Mastering Bitcoin, 2nd Edition

Quick Glossary

This quick glossary contains many of the terms used in relation to bitcoin. These terms are used throughout the book, so bookmark this for a quick reference.

address: A bitcoin address looks like 1DSrfJdB2AnWaFNgSbv3MZC2m74996JafV. It consists of a string of letters and numbers. It’s really an encoded base58check version of a public key 160-bit hash. Just as you ask others to send an email to your email address, you would ask others to send you bitcoin to one of your bitcoin addresses.
bip: Bitcoin Improvement Proposals. A set of proposals that members of the bitcoin community have submitted to improve bitcoin. For example, BIP-21 is a proposal to improve the bitcoin uniform resource identifier (URI) scheme.
bitcoin: The name of the currency unit (the coin), the network, and the software.
block: A grouping of transactions, marked with a timestamp, and a fingerprint of the previous block. The block header is hashed to produce a proof of work, thereby validating the transactions. Valid blocks are added to the main blockchain by network consensus.
blockchain: A list of validated blocks, each linking to its predecessor all the way to the genesis block.
Byzantine Generals Problem: A reliable computer system must be able to cope with the failure of one or more of its components. A failed component may exhibit a type of behavior that is often overlooked—namely, sending conflicting information to different parts of the system. The problem of coping with this type ...