Chapter 01 · The Bitcoin breakthrough

Bitcoin, under the hood

8 min

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# block 0001

Bitcoin is three things at once: software, a network, and a currency. Three simple words. And yet, explaining how these three pieces hold together, without any bank, any government, anyone in charge, is where most explanations fall apart. Let's try not to fall apart.

Software, a network, a currency. Together, they let anyone, anywhere, anytime send and receive value. No middleman. Just the one who sends, and the one who receives.

# block 0002

Wow... it's all of that at once?

Bingo! That's exactly why Bitcoin can be so confusing at first. Let's break it down.

Bitcoin is a free and open-source software that runs on a computer. Anyone can read the code, improve it, share it, run it.

By running this software you become a full participant of the Bitcoin network, called a node.

1Computer

2Bitcoin software

1+2= a network node

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The Bitcoin network is nothing more than thousands of nodes connected to each other, spread all around the world. This is what we call a decentralized network: no central entity controlling the entire system.

Node A

Node B

Node C

Node D

Node E

Node F

Bitcoin Network

And what do all these nodes connected to the network make possible? The transfer of a currency called bitcoin.

And there you go, the three concepts are now clear.

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How do Bitcoin nodes work?

All nodes run the same software and follow the same rules. Together, they keep the Bitcoin network alive by maintaining it and making it work.

The superpowers of simple nodes0/3 explored

Click and reveal each one

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There are several types of nodes:

Simple nodes (the ones you just saw).
And mining nodes (the ones you're about to discover).

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How it works - Mining nodes

Mining nodes are regular nodes, but with one extra superpower.

The superpowers of mining nodes0/1 explored

Click and reveal the last superpower

The creation of new bitcoins isn't unlimited: it's cut in half roughly every four years and will stop for good at a total of 21 million bitcoins. This core mechanic has a name, and a chapter of its own: .

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When a miner wins the competition, they propose a new block, a group of transactions, to be added to Bitcoin's history.

This proposal is then broadcast to all the other nodes on the network.

Each node independently verifies that everything follows Bitcoin's rules:

Are the transactions valid?
Are the protocol rules being followed?

If everything is correct, the new block is accepted and added to its own copy of the history. Otherwise, it is rejected.

This collective and independent verification is what makes Bitcoin so robust: no one trusts anyone, but everyone verifies.

# block 0008

Simple nodes and mining nodes working in synergy

No single entity controls Bitcoin.

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There you have it. You now grasp the foundations of Bitcoin: a decentralized network where nodes keep the rules and miners secure the system in exchange for bitcoin.

No bank to validate the transactions. No government to run the network. No middleman to authorize your payment. Just code, electricity, and rules that everyone can verify.

But one crucial question still hangs in the air: why would we need a currency that nobody controls?

To understand it, we'll have to revisit the crises that shaped our era and discover what Bitcoin brings to the table.