1 Summary and Goals

You probably have a basic idea of what Bitcoin is supposed to be, a kind of digital cash that can be bought, sold, and exchanged entirely online outside any one government’s control. But what does that actually look like at a low level, and what were the big challenges that needed to be solved?

We will spend many weeks of this class understanding these questions in detail, but the goal of this unit is to give you a high-level picture of how the Bitcoin network operates and what a blockchain is supposed to do.

2 Required reading

• Bitcoin whitepaper by Satoshi Nakomoto

This is the original document that started what we now know as Bitcoin, published perhaps pseudonymously in 2008. It lays out what goes Bitcoin aims to achieve and how it does it at a technical level.

Reading this paper will be hard work because you don’t (yet) have the background to understand everything there. So, it’s okay if you don’t understand every detail of what you see. But forcing yourself to read through a technical document like this, getting some overall understanding even if the technical details are confusing, is a very useful skill to have.

A good technique is: just read straight through one time without stopping to think too much or look anything up. This should give you some very vague overview, and also highlight what key concepts seem to come up again and again that you don’t understand. Then read a second time and try to fill in just a few more details.

Remember, we will spend the next few weeks understanding how the Bitcoin network works in full detail, so it’s okay if things are fuzzy right now. But it’s crucial that you spend some time to try reading this in order to give context to what we will work on in the following units!

3 Take-aways

Here are some questions you should be able to answer after doing this reading:

• What is the overall goal of Bitcoin?
• What is the ``double-spend’’ problem?
• Who runs the bitcoin network? Who is in charge of it?
• What is contained in each block?
• What’s stopping me from making my own bitcoin blockchain and cancelling everyone else’s money?
• What is the incentive for a miner to include other people’s transactions in a block?