Mastering Bitcoin, 3rd Edition

Chapter 1. Introduction

Bitcoin is a collection of concepts and technologies that form the basis of a digital money ecosystem. Units of currency called bitcoin are used to store and transmit value among participants in the Bitcoin network. Bitcoin users communicate with each other using the Bitcoin protocol primarily via the internet, although other transport networks can also be used. The Bitcoin protocol stack, available as open source software, can be run on a wide range of computing devices, including laptops and smartphones, making the technology easily accessible.

Tip

In this book, the unit of currency is called “bitcoin” with a small b, and the system is called “Bitcoin,” with a capital B.

Users can transfer bitcoin over the network to do just about anything that can be done with conventional currencies, including buying and selling goods, sending money to people or organizations, or extending credit. Bitcoin can be purchased, sold, and exchanged for other currencies at specialized currency exchanges. Bitcoin is arguably the perfect form of money for the internet because it is fast, secure, and borderless.

Unlike traditional currencies, the bitcoin currency is entirely virtual. There are no physical coins or even individual digital coins. The coins are implied in transactions that transfer value from spender to receiver. Users of Bitcoin control keys that allow them to prove ownership of bitcoin in the Bitcoin network. With these keys, they can sign transactions to unlock ...