I read the entire Bitcoin whitepaper so you don't have to (but you should!)

Hey all! So what is in the Bitcoin whitepaper?It is supposed to be a "Peer-to-Peer Electronic Cash System". It's a system meant for payments and exchanging value.IntroductionThis is the rationale of the whole thing: third parties seek rent on your transactions, so lets cut them out, so that transactions are cheap. They are also irreversible, so merchants/services are more protected in this system.This is achieved by combining a chain of digital signatures with computing power invested into proof of work.\2. TransactionsThis is the first half of the equation.Say you own a coin. To spend it you need to digitally sign, with your private key, that you want to spend it.This ensures a number of desirable properties. No one other than you can spend your coin. The coin can't be spent twice.\3. Timestamp ServerEvery 10 minutes or so the system as a whole batches the transactions that happened in those minutes into a block and finalizes them. None of the transactions that are finalized can be spent ever again.The blocks are orderly organized into a chain (wink wink).\4. Proof-of-WorkA distributed timestamp system is implemented by competition of peers. They draw tickets on a lottery, in proportion to their computing power, and the one that wins gets to finalize the current block. It's made so that it cannot be changed afterwards.The difficulty of finding a winning ticket in the lottery is dynamic and based on how much computing power was on it recently.\5. NetworkThis is short and sweet and I cant but copy it in it's entirety:1) New transactions are broadcast to all nodes. 2) Each node collects new transactions into a block.3) Each node works on finding a difficult proof-of-work for its block. 4) When a node finds a proof-of-work, it broadcasts the block to all nodes. 5) Nodes accept the block only if all transactions in it are valid and not already spent. 6) Nodes express their acceptance of the block by working on creating the next block in the chain, using the hash of the accepted block as the previous hash.\6. IncentiveThe first transaction in each block is special, it's the "coinbase" transaction that creates new coins. This is the reward part of the lottery. This does away with central authorities.Transactions also pay a fee. The fees of all the transactions in a block is part of the reward, so a node will want to include as much as possible.Once the coinbase incentive goes to zero, the transaction fees will support the security of the system.\7. Reclaiming Disk SpaceNodes can choose to prune old transactions, once they're spent and buried with enough blocks. NB: This has never been implemented and is overcomplicated for the goal. You can skip this paragraph.\8. Simplified Payment VerificationA user can verify payments without running a full node, with a mathematical procedure, and using only minimal disk space. "usinesses that receive frequent payments will probably still want to run their own nodes".\9. Combining and Splitting ValueBeing able to send only one set amount per transaction is boring, so a transaction can contain multiple inputs (to combine value) and multiple outputs (to split it). This makes payments easier.\10. PrivacyIn a bank, you can't see other peoples accounts. OTOH the blockchain is a public ledger, so care should be taken to not link your online identity with your private keys/transactions. Don't reuse keys.\11. CalculationsThis proves that Proof of Work works as long as no single party has over 50% of computing power. Skippable, unless that's your thing.\12. Conclusion"We have proposed a system for electronic transactions without relying on trust". "The network is robust in its unstructured simplicity". "They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them". "Any needed rules and incentives can be enforced with this consensus mechanism".No, really: it's just some 6 pages of text in mostly plain English. You should definitely have a readTo sum it up, it's peer to peer electronic cash, which is built upon digital signatures and a decentralized network doing proof of work, and a handful of other clever tricks to make it all go along. via /r/CryptoCurrency https://ift.tt/3pE26r4