Understanding Bitcoins: a Series

Originally published on Medium

If you’re anything like me, your interest was also caught in the bitcoin hype, and you’ve probably read dozen of these type of articles, with catchy titles suggesting you’ll understand how bitcoins work, and which more often than not end up using the same metaphors, the same vague statement, and leaving you more confused than you were before.

I have found even the self-proclaimed technical posts rarely went into anything more than basic parables to explain the concepts. Don’t get me wrong, metaphors and simplifications are an important part of any vulgarisation, but the key to a good example is to find the right level of simplification, whilst losing the least amount of fundamental and useful information, which I will try my best to do. But at the same time, if a single article could explain how bitcoins work, could they really be that interesting and great?

So what is bitcoin? Bitcoin is a decentralised currency, in which (nearly) all of the information is shared through a network composed of anyone with a computer who wishes to join, and built in such a way and with such rules that everything is secure while simultaneously being shared, privacy-friendly while simultaneously being public, and many more such apparently paradoxical properties. Those are nice words and all, but how exactly does it all work? How do I know if someone paid me? What does it even mean to own bitcoins? These are the type of questions which confused me and prompted me to do further research.

Therefore, a few weeks ago I decided I would read through Satoshi’s whitepaper, navigate the sea of articles, forum posts, explanations, and read source code from the various implementations, to finally get a proper understanding of the inner workings of the bitcoin so that you don’t have to (well, mainly to finally be satisfied myself, but that’s a side note).

Throughout this quest, I have found bitcoins, and more generally the whole underlying blockchain concept, to be a lot more complicated than all of these vague articles make it be. I was continuously baffled by the small details and problems which I had not even imagined before, and by how they were solved. Therefore, I intend on trying to share this knowledge in this series, so that you can have a better, more in-depth grasp, of what exactly is going on, and also see the weirdness and peculiarities which metaphors tend to hide so well.

In this series, I will cover all the core concepts, and share what I have found to be the most interesting ideas and innovations, in increasing order of complexity. These will go from defining a transaction, blocks and the chain, addresses and public keys, and so on, to the more complex Merkle trees, transaction propagation, block verification, and more. I will keep this list up to date with links to the articles, so that it can act as an index of sorts.

My goal is to provide articles which will both explain how the bitcoin work in layman’s terms, while also providing, where necessary, extra information as to keep it technically complete. As such, your participation in the comment section is more than welcome, both to add information and to ask about unclear details, since it will help fill the gaps which I will undoubtedly leave behind.

In order not to leave this article be an information-less introduction, I have already published the first chapter, A Basic Introduction to Bitcoin Transactions, which is a first non-technical presentation including topics such as how are bitcoins stored, and what it means to “own” bitcoin, which you can find here.

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