Understanding Bitcoin

[rachellitt]

Reading through bitcoin.pdf, my summary of parts 7-12 is as follows:

In order to save disk space, transactions in a block can be rehashed into a merkle tree once spent or completed, they can then be discarded from the tree in order to compact the block. Only the root hash is needed to be kept inside the block's hash.

In order to simplify payment verification, the user does not need to run a full network node, they only need to verify that they have the longest running proof-of-work chain. As long as the network has more honest nodes than dishonest attacker nodes, this is possible.

Privacy is achieved in a different way to the traditional banking model. Although the system neccesitates the public announcement of transactions, the identity of the parties can be kept anonymous

As long as there are more honest nodes than dishonest nodes, attackers can never keep up with the system. This increases exponentially as the number of blocks the attacker needs to keep up with increases.

Bitcoin is a new system that doesn't rely on a trusted third party or banks.

[jackg]

I don't think your intentions are clear here: are you trying to see if you've got this right or are you offering this for other people to learn from?

All are true except for paragraph 2 also as I think you might want to state if this is referring to pruning or the chainstate (as I'm. Thinking it's chainstate bit you might want to make that clear).

[rachellitt]

 > are you trying to see if you've got this right or are you offering this for other people to learn from?

Exactly! Just trying to figure it all out so rephrasing it in my own words. Thanks for the info btw! If you have any sources you'd recommend to learn more I would greatly appreciate it

[Zilon]

In as much as bitcoin does not require a third party nor a banking system to perform a transaction. I believe its even more secure and safer for people to transact without fear of loosing what he/she struggle to accumulate over the years. Bitcoin with a trust wallet has a more secured system compared to our traditional system of banking.

[Jating]

Isn't it what "Pruning" is all about? reduce the disk space? but it is not automatic by default,

To enable block pruning set prune=<N> on the command line or in bitcoin.conf, where N is the number of MiB to allot for raw block & undo data. A value of 0 disables pruning. The minimal value above 0 is 550.

https://bitcoin.org/en/release/v0.12.0#wallet-pruning

So you will not have the entire blockchain on your local machine at any given time.

"Bitcoin is a new system that doesn't rely on a trusted third party or banks."

-I really don't understand, this is pretty obvious.

[KenPope]

Bitcoin was the first cryptocurrency to successfully record transactions on a secure, decentralized blockchain-based network. Each Bitcoin is basically a computer file which is stored in a 'digital wallet' app on a smartphone or computer

[oktana]

You're right about that; in as much as Bitcoin does not rely on a trusted third party or banks,
it also allows you to make use of it without submitting a bunch of documents for verification.
Adding to that, one can send money to anyone across the world without going through long and boring protocols.

[farrellronald]

However didn't really understand your intension, this is one of the most important rule:
A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet.

[jackg]

Bitcoin was the first cryptocurrency to successfully record transactions on a secure, decentralized blockchain-based network. Each Bitcoin is basically a computer file which is stored in a 'digital wallet' app on a smartphone or computer

The computer "file" analagy confuses me, your bitcoin is stored on the blockchain. Your control of that bitcoin is dependent on having a compound of a few numbers that make up the public and private key.

[mk4]

Exactly! Just trying to figure it all out so rephrasing it in my own words. Thanks for the info btw! If you have any sources you'd recommend to learn more I would greatly appreciate it

It really depends on what you're interested in learning though.

• Bitcoin basics for the typical non-super-tech-savvy person https://www.coindesk.com/learn
• Why Bitcoin in general is important(book) https://theinternetofmoney.info/
• Basic Bitcoin security https://notyourkeys.org

[BrewMaster]

A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet.

this definition is a little misleading because a transaction doesn't have to be "between wallets". it can be inside one wallet (from one address to another inside that wallet) or it can even be to the same address (like spam attacks).
also the proof is not just mathematical, it is mostly in form of an unlocking mechanism through scripts that "unlocks" the coins that are being spent. for example the HTLC contracts.

[AniviaBtc]

You're right about that; in as much as Bitcoin does not rely on a trusted third party or banks,
it also allows you to make use of it without submitting a bunch of documents for verification.
Adding to that, one can send money to anyone across the world without going through long and boring protocols.

That's the beauty of being a decentralized currency, you can do bitcoin transactions freely compared to those who need to use a third party or banking.

Sometimes bitcoin is not reliable in times of need but it is really worth it to invest and still some governments are not engaging to it due to the fact that it is decentralized in its nature. That's the reason why we need to understand and be patient with bitcoin, it is not an instant money, it is not in a mainstream but soon it will.