What is Bitcoin?

As outlined in the previous chapter, Bitcoin is a peer-to-peer electronic cash system based on blockchain technology. Technically speaking, Bitcoin is a protocol maintaining the blockchain data structure and ensuring consensus between different network parties (senders, recipients, miners, and so on). This protocol defines the ruleset for validating transactions, Bitcoin mining, and avoiding counterfeiting or double spending.

Bitcoin is referenced as a cryptocurrency because it uses cryptography to control the creation and transfer of money. Specifically, it uses digital signatures (based on ECDSA public key encryption) to process and verify the transactions, and cryptographic hash functions (SHA-256) to secure the blockchain (integrity, mining process, and so on).

This book's scope isn't about presenting the Bitcoin protocol in fine detail; instead, we will introduce the necessary concepts for building higher-level services. If you are eager to learn about Bitcoin in depth, you can refer to the official documentation at https://en.bitcoin.it/wiki/Protocol_documentation.