LIBRARY / BITCOIN DECODED
Bitcoin, from first principles.
A practical introduction to Bitcoin, transactions, supply, mining and Lightning.
What is Bitcoin?
Bitcoin is a peer-to-peer electronic payment system. Its native asset is bitcoin (BTC). A distributed network records transactions in a blockchain, while full nodes validate them against shared rules. No central institution operates the whole network.
Read the primary source ↗How do transactions work?
A wallet creates a transaction spending existing unspent outputs and signs it with the appropriate keys. Peers relay valid transactions. Miners compete using proof of work to propose blocks, and nodes verify those blocks. Confirmation is probabilistic: additional blocks make historical replacement more costly.
Read the primary source ↗Why does supply matter?
Under Bitcoin’s current consensus rules, the block subsidy halves every 210,000 blocks and issuance approaches 21 million BTC. A satoshi is one hundred millionth of a bitcoin. Scarcity describes issuance; it does not guarantee price or demand.
Read the primary source ↗Mining and nodes: different jobs.
Miners use computation to compete for block creation and receive the block subsidy and transaction fees. Nodes enforce validity. A miner cannot make an invalid transaction acceptable to nodes merely by finding proof of work. Block intervals vary; the target average is about ten minutes.
Read the primary source ↗Where does Lightning fit?
The Lightning Network uses payment channels to enable payments without recording each individual payment on the base chain. Opening and closing channels involves Bitcoin transactions. Liquidity, routing and the chosen wallet’s custody model affect the experience.
Read the primary source ↗What Bitcoin does not promise.
Public transactions do not guarantee anonymity. Fees and confirmation time vary. Prices can change substantially. Payments generally cannot be reversed by a central operator. Understand the technology and your custody arrangement before using it.
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