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myarbrough@oreilly.com 2014-11-21 04:55:04 -08:00
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@ -34,7 +34,7 @@ Although these earlier digital currencies worked, they were centralized and, as
Bitcoin represents the culmination of decades of research in cryptography and distributed systems and includes four key innovations brought together in a unique and powerful combination. Bitcoin consists of:
* A decentralized peer-to-peer network (the bitcoin protocol)
* A public transaction ledger (the block chain)
* A public transaction ledger (the blockchain)
* A decentralized mathematical and deterministic currency issuance (distributed mining)
* A decentralized transaction verification system (transaction script)
@ -158,7 +158,7 @@ Alice was introduced to bitcoin by a friend and so she has an easy way of gettin
[[sending_receiving]]
==== Sending and Receiving Bitcoins
((("bitcoin","sending/receiving", id="ix_ch01-asciidoc1", range="startofrange")))Alice has created her bitcoin wallet and she is now ready to receive funds. Her wallet application randomly generated a private key (described in more detail in <<private_keys>>) together with its corresponding bitcoin address. At this point, her bitcoin address is not known to the bitcoin network or "registered" with any part of the bitcoin system. Her bitcoin address is simply a number that corresponds to a key that she can use to control access to the funds. There is no account or association between that address and an account. Until the moment this address is referenced as the recipient of value in a transaction posted on the bitcoin ledger (the block chain), it is simply part of the vast number of possible addresses that are "valid" in bitcoin. Once it has been associated with a transaction, it becomes part of the known addresses in the network and Alice can check its balance on the public ledger.
((("bitcoin","sending/receiving", id="ix_ch01-asciidoc1", range="startofrange")))Alice has created her bitcoin wallet and she is now ready to receive funds. Her wallet application randomly generated a private key (described in more detail in <<private_keys>>) together with its corresponding bitcoin address. At this point, her bitcoin address is not known to the bitcoin network or "registered" with any part of the bitcoin system. Her bitcoin address is simply a number that corresponds to a key that she can use to control access to the funds. There is no account or association between that address and an account. Until the moment this address is referenced as the recipient of value in a transaction posted on the bitcoin ledger (the blockchain), it is simply part of the vast number of possible addresses that are "valid" in bitcoin. Once it has been associated with a transaction, it becomes part of the known addresses in the network and Alice can check its balance on the public ledger.
Alice meets her friend Joe, who introduced her to bitcoin, at a local restaurant so they can exchange some US dollars and put some bitcoins into her account. She has brought a printout of her address and the QR code as displayed in her bitcoin wallet. There is nothing sensitive, from a security perspective, about the bitcoin address. It can be posted anywhere without risking the security of her account.
@ -194,7 +194,7 @@ If Alice has a smartphone or laptop with her, she will also be able to see the t
.Confirmations
****
((("confirmation of transactions")))At first, Alice's address will show the transaction from Joe as "Unconfirmed." This means that the transaction has been propagated to the network but has not yet been included in the bitcoin transaction ledger, known as the block chain. To be included, the transaction must be "picked up" by a miner and included in a block of transactions. Once a new block is created, in approximately 10 minutes, the transactions within the block will be accepted as "confirmed" by the network and can be spent. The transaction is seen by all instantly, but it is only "trusted" by all when it is included in a newly mined block.
((("confirmation of transactions")))At first, Alice's address will show the transaction from Joe as "Unconfirmed." This means that the transaction has been propagated to the network but has not yet been included in the bitcoin transaction ledger, known as the blockchain. To be included, the transaction must be "picked up" by a miner and included in a block of transactions. Once a new block is created, in approximately 10 minutes, the transactions within the block will be accepted as "confirmed" by the network and can be spent. The transaction is seen by all instantly, but it is only "trusted" by all when it is included in a newly mined block.
****
Alice is now the proud owner of 0.10 bitcoin that she can spend. In the next chapter we will look at her first purchase with bitcoin, and examine the underlying transaction and propagation technologies in more detail.(((range="endofrange", startref="ix_ch01-asciidoc1")))(((range="endofrange", startref="ix_ch01-asciidoc0")))