Bitcoin - Beyond the basics
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The document provides an overview of Bitcoin, detailing its early history, current development practices, and the mechanics of transactions and mining. It explains concepts such as p2p networking, blocks, the blockchain, and transaction contracts, emphasizing their complexities. Additionally, it addresses scalability issues and the potential future developments in the Bitcoin ecosystem.
Bitcoin - Beyond the basics
- 2. What is a Bitcoin? ● Lots of misconceptions ● Terrible analogies ● Forget what you heard ● Mostly Elegant ● Often simple
- 3. Early History ● Whitepaper on metzdowd.com Oct 31, 2008 ● Release 0.1 on Jan 9, 2009 – Windows only, – No CLI. – Used wxWidgets, BerkeleyDB & Boost – Compiled using MVS ● Maintainership by Gavin Andresen & Jeff Garzik in mid-2010
- 4. Current Release ● Splitting the 'ball of spaghetti' into pieces ● Gavin turned over to Jeff earlier this year ● Intent of development is to restrict new features keep the code stable ● Now uses Qt for the GUI, LevelDB for storage ● 'testnet' vs 'mainnet' ● Most Integers are little endian. Only IP or port number are big endian
- 5. Modules ● P2P network ● Mining ● GUI / Interface ● Blockchain ● Transactions ● Contracts ● Wallet Management ● Payment Processing
- 6. Structures and Algorithms ● Hashes (SHA-256 & RIPEMD-160) ● Public Keys vs Public Key hashes ● ECDSA / secp256k1 ● Merkle Trees ● Bloom Filters
- 7. Bitcoin's P2P network ● Connects to the seed servers via DNS ● Downloads a list of (up to) 1000 peers ● Prior versions used IRC (<0.6) ● Listens on TCP/8333 ● Messages are received and relayed via peers ● Synchronizes to latest state via 'inv'
- 8. What is a Transaction? ● Contains most of the protocol's complexity ● Inputs and Outputs ● Code aka Contracts. ● Sometimes 'data' ● Currently Unspent output is 'UTXO' ● Miner Tips are unallocated inputs ● Sometimes, a 'coinbase'
- 9. Transactions Up-Close TXID: 'B' Input 1 of 1: From: TX 'A' (Bob) Input Amt.: 5 BTC Output 1 of 1: To: Charlie's Key Output Amt: 4 BTC Miner Tip: 1 BTC CoinBase TXID 'A' Base: 25 BTC Mined by: Bob To: Bob's Key TXID: 'C' Input 1 of 1: From: TX 'A' (Bob) Input Amt.: 7 BTC Output 1 of 1: To: Alice's Key Output Amt: 6.5 BTC Miner Tip: 0.5 BTC UTXO's / Balances Miner Bob: 13 BTC Charlie: 4 BTC Alice: 6.5 BTC Miner Tips: 1.5 BTC
- 10. So Many Transactions! TXID 'B' TXID 'C' (Multiple Inputs) CoinBase TXID 'A' Non-Contiguous! Block #300 (Oldest) Block #301 Block #302 Block #303 (Newest)
- 11. Transactions are contracts ● A 'spend' isn't specifically an action. ● All transactions are contracts ● Forth-like, stack-based (no registers), not turing complete ● Stack is little-endian, variable-length integers, MSB controls 'sign' ● False is zero, True is non-zero ● Transaction valid if no errors and the topmost stack int is true ● Miners 'validate' transaction/contract scripts for 'truth' ● All peers validate
- 12. About those contracts... ● Approximately 100 instructions available ● Only a dozen are typically used ● 'Standard' vs non- standard ● Only four contract 'templates' ● Mistakes are final
- 13. What is a Block? ● Mined Transactions ● 250-600 transactions typically ● 750 KiB max (currently) ● One Coinbase transaction ● Hashed header of prior block ● Merkle root of mined transactions ● Nonce
- 14. Blocks Up-close Transaction A Transaction B Transaction C Transaction D Transaction E Transaction F Block #299 Header Transaction G Hashed Fields: Version Future-planning hashPrevBlock Identify Neighbor hashMerkleRoot Validates transactions Time Generation Timestamp Target Bits Difficulty. Lower is harder. Nonce Proof of work / Entropy Non-Hashed Fields: Magic No Type-Identification Blocksize malloc() and sanity Transaction count Sanity/speed opt.
- 15. What is the Blockchain ? ● Ordered blocks ● Contains *every* transaction on the Bitcoin network ● Approximately 305k blocks at 18 GiB at the time of writing ● Block Height is a measure of absolute time and distance. ● Block depth is a measure of relative time/distance since 'now' ● 0.9 supports header-only/SPV-mode at 80 bytes per header (23 MiB total) ' ● 'Pruning' non-UTXO's is an option down the line
- 16. What does a miner do? ● Prevents Double-spends, and creates money! ● Appends transactions from the transaction 'mempool' for tips. ● Establishes a valid hash for the block header ● Announces a successful block to the network ● Difficulty adjusted every 2016 blocks/two-weeks ● Block header hashes are contingent on prior block state. Race restarts from scratch each block.
- 17. The Blockchain in action 300 301 302 303 304 305 306 Time and Block Height Failed Block No Reward Wasted Time Wasted Miner Money Alternate Ordering / History Approximately Seventy Minutes. Exactly Seven Blocks. = Successful Block 25 BTC Award=
- 18. What is a Bitcoin? 100,000,000 Satoshis What is a Bitcoin?
- 19. What is a Satoshi? ● An unspent output value (UTXO) ● Addressed to your public key hash ● In a transaction ● In a block ● In the blockchain
- 20. The near future ● x.509 and http integration ● NFC via 'bonds' ● BIP 70 (instant conf) ● More contracts ● Sidechains ● Look at the BIPs!
- 21. Notes on Scalability ● Visa handles 4,000 tps on average 10tps peak, Paypal handles 46 tps ● Bitcoin averages 1 tps ● Current constraints are artificially imposed ● Biggest current constraint is in hash verification time on blocks/transactions ● Current estimates suggest a 'desktop cpu' can validate ~4k tps ● That's 2 MiB of network traffic per second ● The blockchain will get large ● Satoshis biggest fears were that the network grows too quickly. ● Not because of the technology.
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