[preface] == Preface === Writing the Bitcoin Book I first stumbled upon bitcoin in mid-2011. My immediate reaction was more or less "Pfft! Nerd money!" and I ignored it for another 6 months, failing to grasp its importance. This is a reaction which I have seen repeated among many of the smartest people I know, which gives me some consolation. The second time I came across bitcoin in a mailing list discussion, I decided to read the white paper written by Satoshi Nakamoto, to study the authoritative source and see what it was all about. I still remember the moment I finished reading those 9 pages, when I realized that bitcoin was not simply a digital currency, but a network of trust that could also provide the basis for so much more than just currencies. That realization: "This isn't money, it's a de-centralized trust network", started me on a 4-month journey to devour every scrap of information about bitcoin I could find. I became obsessed and enthralled, spending 12 or more hours each day glued to a screen, reading, writing, coding and learning as much as I could. I emerged from this state of fugue, more than 20 lbs lighter from lack of consistent meals, determined to dedicate myself to working on bitcoin. Two years later, after creating a number of small startups to explore various bitcoin-related services and products, I decided that it was time to write my first book. Bitcoin was the topic that had driven me into a frenzy of creativity, consumed my thoughts and is the most exciting technology I have encountered since the Internet. It was now time to share my discovery of this amazing technolgy and my passion with a broader audience. This is the bitcoin book. === Intended Audience This book is mostly intended for coders. If you can use a programming language, this book will teach you how how cryptographic currencies work, how to use them and how to develop software that works with them. The first few chapters are also suitable as an in-depth introduction to bitcoin for non-coders - technically-minded people or those trying to understand the inner workings of bitcoin and cryptocurrencies. The examples are illustrated in Python and on the command-line of a Unix-like operating system such as Linux. === Early-Release Note The early release version of the book is a *raw and rough draft* and will change regularly. New chapters will be added as they are drafted and there will be plenty of changes to the content, examples and diagrams. There will be factual and technical errors in the early release and some of the examples may not work or refer to obsolete versions of the code. Nevertheless, I hope you will enjoy the content and find it useful. I also hope that you will take the opportunity to "fork" the source code of the book and provide feedback by creating a pull request or submitting a patch. I present this work in the spirit of Cunningham's Law, named after the inventor of the wiki, Ward Cunningham: .Cunningham's Law _The best way to get the right answer on the Internet is not to ask a question, it's to post the wrong answer_ I hope you can help me find and publish the "right answer" by the time this book is ready to print. === Conventions Used in This Book The following typographical conventions are used in this book: _Italic_:: Indicates new terms, URLs, email addresses, filenames, and file extensions. +Constant width+:: Used for program listings, as well as within paragraphs to refer to program elements such as variable or function names, databases, data types, environment variables, statements, and keywords. **`Constant width bold`**:: Shows commands or other text that should be typed literally by the user. _++Constant width italic++_:: Shows text that should be replaced with user-supplied values or by values determined by context. 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You can have as many as you like, share them so people can send you coins. bitcoin:: ((("bitcoin"))) The name of the currency unit (the coin), the network and the software block:: ((("block"))) A grouping of transactions, marked with a timestamp, and a fingerprint of the previous block. The block header is hashed to find a proof-of-work, thereby validating the transactions. Valid blocks are added to the main blockchain by network consensus. blockchain:: ((("blockchain"))) A list of validated blocks, each linking to its predecessor all the way to the genesis block. confirmations:: ((("confirmations"))) Once a transaction is included in a block, it has "one confirmation". As soon as _another_ block is mined on the same blockchain, the transaction has two confirmations etc. Six or more confirmations is considered final. difficulty:: ((("difficulty"))) A network-wide setting that controls how much computation is required to find a proof-of-work. difficulty target:: ((("target difficulty"))) A difficulty at which all the computation in the network will find blocks approximately every 10 minutes. difficulty re-targetting:: ((("difficulty re-targetting"))) A network-wide re-calculation of the difficulty which occurs once every 2106 blocks and considers the hashing power of the previous 2106 blocks. fees:: ((("fees"))) An excess amount included in each transaction as a network fee or additional reward to the miner who finds the proof-of-work for the new block. Currently 0.5 mBTC minimum. hash:: ((("hash"))) A digital fingerprint of some binary input. genesis block:: ((("genesis block"))) The first block in the blockchain, used to initialize the crypto-currency miner:: ((("miner"))) A network node that finds valid proof-of-work for new blocks, by repeated hashing network:: ((("network"))) A peer-to-peer network that propagates transactions and blocks to every bitcoin node on the network. proof-of-work:: ((("proof-of-work"))) A piece of data that requires significant computation to find. In bitcoin, miners must find a numeric solution to the SHA256 algorithm that meets a network wide target, the difficulty target. reward:: ((("reward"))) An amount included in each new block as a reward by the network to the miner who found the proof-of-work solution. It is currently 25BTC per block. secret key (aka private key):: ((("secret key"))) ((("private key", see="secret key"))) The secret number that unlocks bitcoins sent to the corresponding address. transaction:: ((("transaction"))) In simple terms, a transfer of bitcoins from one address to another. More precisely, a transaction is a signed data structure expressing a transfer of value. Transactions are transmitted over the bitcoin network, collected by miners and included into blocks, made permanent on the blockchain. wallet:: ((("wallet"))) Software that holds all your addresses. Use it to send bitcoin and manage your keys.