@ -8,6 +8,16 @@ This repository contains the complete [first edition](https://github.com/bitcoin
If you know how to make a pull request to contribute a fix, please write the correction and use a pull request to submit it for consideration against the [develop branch](https://github.com/bitcoinbook/bitcoinbook/tree/develop). Otherwise, please submit an issue, explaining the error or comment. If you would like to contribute extensive changes or new material, please coordinate with the author first. Contact forms can be found on his website https://antonopoulos.com/
# Reading this book (Where is the PDF?)
To read this book, see book.asciidoc. Click on each of the chapters to read in your browser. This is not as convenient as reading a PDF or an ebook on your e-reader. Convenience costs money (see below).
The 2nd edition of "Mastering Bitcoin" is available under a CC-BY-NC-ND license, not a CC-BY-SA license.
It is deliberately not available as a PDF. Why? Because a PDF is a "derivative" product, which is what the ND prohibits. That's because the publisher (O'Reilly Media) is a for-profit publisher and puts considerable resources behind distributing the book. The book will eventually (within a year of publication) be released under a CC-BY-SA license, at which point PDF and translations will be allowed. Until then, making PDF copies violates the license and hurts the publisher's (and the author's) ability to make a living. Furthermore, if you make it so the publisher can't recoup their investment, they will delay the release into CC-BY-SA.
Please don't create or distribute PDFs until the license is changed to CC-BY-SA. It is rare for a publisher to agree to even a CC-BY-NC-ND license. Don't make it harder for free culture by violating even that, already generous, license.
# Published
"Mastering Bitcoin (Second Edition): Programming the Open Blockchain" is now available in paperback and e-book formats by many book sellers, worldwide:
@ -47,7 +47,7 @@ When cryptography started becoming more broadly available and understood in the
((("Nakamoto, Satoshi")))((("distributed computing")))((("bitcoin", "history of")))Bitcoin was invented in 2008 with the publication of a paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System,"footnote:["Bitcoin: A Peer-to-Peer Electronic Cash System," Satoshi Nakamoto (https://bitcoin.org/bitcoin.pdf).] written under the alias of Satoshi Nakamoto (see <<satoshi_whitepaper>>). Nakamoto combined several prior inventions such as b-money and HashCash to create a completely decentralized electronic cash system that does not rely on a central authority for currency issuance or settlement and validation of transactions. ((("Proof-of-Work algorithm")))((("decentralized systems", "consensus in")))((("mining and consensus", "Proof-of-Work algorithm")))The key innovation was to use a distributed computation system (called a "Proof-of-Work" algorithm) to conduct a global "election" every 10 minutes, allowing the decentralized network to arrive at _consensus_ about the state of transactions. ((("double-spend problem")))((("spending bitcoin", "double-spend problem")))This elegantly solves the issue of double-spend where a single currency unit can be spent twice. Previously, the double-spend problem was a weakness of digital currency and was addressed by clearing all transactions through a central clearinghouse.
The bitcoin network started in 2009, based on a reference implementation published by Nakamoto and since revised by many other programmers. The implementation of the Proof-of-Work algorithm (mining) that provides security and resilience for bitcoin has increased in power exponentially, and now exceeds the combined processing power of the world's top supercomputers. Bitcoin's total market value has at times exceeded $35 billion US dollars, depending on the bitcoin-to-dollar exchange rate. The largest transaction processed so far by the network was $150 million US dollars, transmitted instantly and processed without any fees.
The bitcoin network started in 2009, based on a reference implementation published by Nakamoto and since revised by many other programmers. The implementation of the Proof-of-Work algorithm (mining) that provides security and resilience for bitcoin has increased in power exponentially, and now exceeds the combined processing power of the world's top supercomputers. Bitcoin's total market value has at times exceeded $135 billion US dollars, depending on the bitcoin-to-dollar exchange rate. The largest transaction processed so far by the network was $400 million US dollars, transmitted instantly and processed for a fee of $1.
Satoshi Nakamoto withdrew from the public in April 2011, leaving the responsibility of developing the code and network to a thriving group of volunteers. The identity of the person or people behind bitcoin is still unknown. ((("open source licenses")))However, neither Satoshi Nakamoto nor anyone else exerts individual control over the bitcoin system, which operates based on fully transparent mathematical principles, open source code, and consensus among participants. The invention itself is groundbreaking and has already spawned new science in the fields of distributed computing, economics, and econometrics.
@ -92,7 +92,7 @@ Each of these stories is based on the real people and real industries currently
==== Choosing a Bitcoin Wallet
((("security", "wallet selection")))Bitcoin wallets are one of the most actively developed applications in the bitcoin ecosystem. There is intense competition, and while a new wallet is probably being developed right now, several wallets from last year are no longer actively maintained. Many wallets focus on specific platforms or specific uses and some are more suitable for beginners while others are filled with features for advanced users. Choosing a wallet is highly subjective and depends on the use and user expertise. It is therefore impossible to recommend a specific brand or project of wallet. However, we can categorize bitcoin wallets according to their platform and function and provide some clarity about all the different types of wallets that exist. Better yet, moving money between bitcoin wallets is easy, cheap, and fast, so it is worth trying out several different wallets until you find one that fits your needs.
((("security", "wallet selection")))Bitcoin wallets are one of the most actively developed applications in the bitcoin ecosystem. There is intense competition, and while a new wallet is probably being developed right now, several wallets from last year are no longer actively maintained. Many wallets focus on specific platforms or specific uses and some are more suitable for beginners while others are filled with features for advanced users. Choosing a wallet is highly subjective and depends on the use and user expertise. It is therefore impossible to recommend a specific brand or wallet. However, we can categorize bitcoin wallets according to their platform and function and provide some clarity about all the different types of wallets that exist. Better yet, moving keys or seeds between bitcoin wallets is relatively easy, so it is worth trying out several different wallets until you find one that fits your needs.
[role="pagebreak-before"]
Bitcoin wallets can be categorized as follows, according to the platform:
@ -73,11 +73,11 @@ A description for the payment: "Purchase at Bob's Cafe"
Alice uses her smartphone to scan the barcode on display. Her smartphone shows a payment of +0.0150 BTC+ to +Bob's Cafe+ and she selects Send to authorize the payment. Within a few seconds (about the same amount of time as a credit card authorization), Bob sees the transaction on the register, completing the transaction.
In the following sections we will examine this transaction in more detail. We'll see how Alice's wallet constructed it, how it was propagated across the network, how it was verified, and finally, how Bob can spend that amount in subsequent transactions.
In the following sections, we will examine this transaction in more detail. We'll see how Alice's wallet constructed it, how it was propagated across the network, how it was verified, and finally, how Bob can spend that amount in subsequent transactions.
[NOTE]
====
((("fractional values")))((("milli-bitcoin")))((("satoshis")))The bitcoin network can transact in fractional values, e.g., from millibitcoin (1/1000th of a bitcoin) down to 1/100,000,000th of a bitcoin, which is known as a satoshi. Throughout this book we’ll use the term “bitcoin” to refer to any quantity of bitcoin currency, from the smallest unit (1 satoshi) to the total number (21,000,000) of all bitcoin that will ever be mined.
((("fractional values")))((("milli-bitcoin")))((("satoshis")))The bitcoin network can transact in fractional values, e.g., from millibitcoin (1/1000th of a bitcoin) down to 1/100,000,000th of a bitcoin, which is known as a satoshi. Throughout this book, we’ll use the term “bitcoin” to refer to any quantity of bitcoin currency, from the smallest unit (1 satoshi) to the total number (21,000,000) of all bitcoin that will ever be mined.
====
You can examine Alice's transaction to Bob's Cafe on the blockchain using a block explorer site (<<view_alice_transaction>>):
((("transactions", "defined")))In simple terms, a transaction tells the network that the owner of some bitcoin value has authorized the transfer of that value to another owner. The new owner can now spend the bitcoin by creating another transaction that authorizes transfer to another owner, and so on, in a chain of ownership.
((("transactions", "defined")))In simple terms, a transaction tells the network that the owner of some bitcoin value has authorized the transfer of that value to another owner. The new owner can now spend the bitcoin by creating another transaction that authorizes the transfer to another owner, and so on, in a chain of ownership.
((("change, making")))((("change addresses")))((("addresses", "change addresses")))Many bitcoin transactions will include outputs that reference both an address of the new owner and an address of the current owner, called the _change_ address. This is because transaction inputs, like currency notes, cannot be divided. If you purchase a $5 US dollar item in a store but use a $20 US dollar bill to pay for the item, you expect to receive $15 US dollars in change. The same concept applies with bitcoin transaction inputs. If you purchased an item that costs 5 bitcoin but only had a 20 bitcoin input to use, you would send one output of 5 bitcoin to the store owner and one output of 15 bitcoin back to yourself as change (less any applicable transaction fee). Importantly, the change address does not have to be the same address as that of the input and for privacy reasons is often a new address from the owner's wallet.
((("change, making")))((("change addresses")))((("addresses", "change addresses")))Many bitcoin transactions will include outputs that reference both an address of the new owner and an address of the current owner, called the _change_ address. This is because transaction inputs, like currency notes, cannot be divided. If you purchase a $5 US dollar item in a store but use a $20 US dollar bill to pay for the item, you expect to receive $15 US dollars in change. The same concept applies to bitcoin transaction inputs. If you purchased an item that costs 5 bitcoin but only had a 20 bitcoin input to use, you would send one output of 5 bitcoin to the store owner and one output of 15 bitcoin back to yourself as change (less any applicable transaction fee). Importantly, the change address does not have to be the same address as that of the input and for privacy reasons is often a new address from the owner's wallet.
Different wallets may use different strategies when aggregating inputs to make a payment requested by the user. They might aggregate many small inputs, or use one that is equal to or larger than the desired payment. Unless the wallet can aggregate inputs in such a way to exactly match the desired payment plus transaction fees, the wallet will need to generate some change. This is very similar to how people handle cash. If you always use the largest bill in your pocket, you will end up with a pocket full of loose change. If you only use the loose change, you'll always have only big bills. People subconsciously find a balance between these two extremes, and bitcoin wallet developers strive to program this balance.
((("outputs and inputs", "locating and tracking inputs")))Alice's wallet application will first have to find inputs that can pay for the amount she wants to send to Bob. Most wallets keep track of all the available outputs belonging to addresses in the wallet. Therefore, Alice's wallet would contain a copy of the transaction output from Joe's transaction, which was created in exchange for cash (see <<getting_first_bitcoin>>). A bitcoin wallet application that runs as a full-node client actually contains a copy of every unspent output from every transaction in the blockchain. This allows a wallet to construct transaction inputs as well as quickly verify incoming transactions as having correct inputs. However, because a full-node client takes up a lot of disk space, most user wallets run "lightweight" clients that track only the user's own unspent outputs.
((("outputs and inputs", "locating and tracking inputs")))Alice's wallet application will first have to find inputs that can pay the amount she wants to send to Bob. Most wallets keep track of all the available outputs belonging to addresses in the wallet. Therefore, Alice's wallet would contain a copy of the transaction output from Joe's transaction, which was created in exchange for cash (see <<getting_first_bitcoin>>). A bitcoin wallet application that runs as a full-node client actually contains a copy of every unspent output from every transaction in the blockchain. This allows a wallet to construct transaction inputs as well as quickly verify incoming transactions as having correct inputs. However, because a full-node client takes up a lot of disk space, most user wallets run "lightweight" clients that track only the user's own unspent outputs.
If the wallet application does not maintain a copy of unspent transaction outputs, it can query the bitcoin network to retrieve this information using a variety of APIs available by different providers or by asking a full-node using an application programming interface (API) call. <<example_2-2>> shows a API request, constructed as an HTTP GET command to a specific URL. This URL will return all the unspent transaction outputs for an address, giving any application the information it needs to construct transaction inputs for spending. We use the simple command-line HTTP client _cURL_ to retrieve the response.
@ -285,4 +285,4 @@ As Bob spends the payments received from Alice and other customers, he extends t
.Alice's transaction as part of a transaction chain from Joe to Gopesh
image::images/mbc2_0210.png["Alice's transaction as part of a transaction chain"]
In this chapter, we saw how transactions build a chain that moves value from owner to owner. We also tracked Alice's transaction, from the moment it was created in her wallet, through the bitcoin network and to the miners who recorded it on the blockchain. In the rest of this book we will examine the specific technologies behind wallets, addresses, signatures, transactions, the network, and finally mining.((("", startref="BCover02")))((("", startref="DCSover02"))) ((("", startref="UCcoffee02")))
In this chapter, we saw how transactions build a chain that moves value from owner to owner. We also tracked Alice's transaction, from the moment it was created in her wallet, through the bitcoin network and to the miners who recorded it on the blockchain. In the rest of this book, we will examine the specific technologies behind wallets, addresses, signatures, transactions, the network, and finally mining.((("", startref="BCover02")))((("", startref="DCSover02"))) ((("", startref="UCcoffee02")))
@ -15,7 +15,7 @@ One way to think about the blockchain is like layers in a geological formation,
=== Structure of a Block
((("blocks", "structure of")))((("blockchain (the)", "block structure")))A block is a container data structure that aggregates transactions for inclusion in the public ledger, the blockchain. The block is made of a header, containing metadata, followed by a long list of transactions that make up the bulk of its size. The block header is 80 bytes, whereas the average transaction is at least 250 bytes and the average block contains more than 500 transactions. A complete block, with all transactions, is therefore 1,000 times larger than the block header. <<block_structure1>> describes the structure of a block.
((("blocks", "structure of")))((("blockchain (the)", "block structure")))A block is a container data structure that aggregates transactions for inclusion in the public ledger, the blockchain. The block is made of a header, containing metadata, followed by a long list of transactions that make up the bulk of its size. The block header is 80 bytes, whereas the average transaction is at least 400 bytes and the average block contains more than 1900 transactions. A complete block, with all transactions, is therefore 10,000 times larger than the block header. <<block_structure1>> describes the structure of a block.
[[block_structure1]]
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@ -57,7 +57,7 @@ The nonce, difficulty target, and timestamp are used in the mining process and w
Note that the block hash is not actually included inside the block's data structure, neither when the block is transmitted on the network, nor when it is stored on a node's persistence storage as part of the blockchain. Instead, the block's hash is computed by each node as the block is received from the network. The block hash might be stored in a separate database table as part of the block's metadata, to facilitate indexing and faster retrieval of blocks from disk.
A second way to identify a block is by its position in the blockchain, called the pass:[<span role="keep-together"><em>block height</em>. The first block ever created is at block height 0 (zero) and is the</span>] pass:[<span role="keep-together">same block that was previously referenced by the following block hash</span>] +000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f+. A block can thus be identified two ways: by referencing the block hash or by referencing the block height. Each subsequent block added "on top" of that first block is one position "higher" in the blockchain, like boxes stacked one on top of the other. The block height on January 1, 2017 was approximately 446,000, meaning there were 446,000 blocks stacked on top of the first block created in January 2009.
A second way to identify a block is by its position in the blockchain, called the pass:[<span role="keep-together"><em>block height</em>. The first block ever created is at block height 0 (zero) and is the</span>] pass:[<span role="keep-together">same block that was previously referenced by the following block hash</span>] +000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f+. A block can thus be identified in two ways: by referencing the block hash or by referencing the block height. Each subsequent block added "on top" of that first block is one position "higher" in the blockchain, like boxes stacked one on top of the other. The block height on January 1, 2017 was approximately 446,000, meaning there were 446,000 blocks stacked on top of the first block created in January 2009.
Unlike the block hash, the block height is not a unique identifier. Although a single block will always have a specific and invariant block height, the reverse is not true—the block height does not always identify a single block. Two or more blocks might have the same block height, competing for the same position in the blockchain. This scenario is discussed in detail in the section <<forks>>. The block height is also not a part of the block's data structure; it is not stored within the block. Each node dynamically identifies a block's position (height) in the blockchain when it is received from the bitcoin network. The block height might also be stored as metadata in an indexed database table for faster retrieval.
Andreas M. Antonopoulos
6 years ago