BITCOIN WAS JUST THE BEGINNING The original Bitcoin Whitepaper describes a form of peer-to-peer currency where participants prove that they are trustworthy by wasting computational energy. The core goal of the Bitcoin Protocol in the early stages was to provide a way for a network of untrusting peers to exchange value with minimal risk and maximum anonymity. The primary issue with such a system was known as the double spend problem. If peers are to keep track of the value each other hold, then how is it possible to prevent simultaneous spending of the same monies?
In order to resolve this problem, Satoshi Nakomoto proposed that the new transactions would only lock once a majority of nodes agreed on them. In practice, this means that Bitcoin transactions take about 10 minutes to process. Ethereum operates differently, which enables new possibilities, such as smart contracts, and flexible asset structures.
In the Bitcoin protocol, the blockchain is the single unchangeable record, shared by every peer, which allows anonymous users to trust one another. A Bitcoin exists only as a sum of credits attributed to a certain peer and registered to that blockchain. A blockchain is just a set of records which are structured to provide maximum accountability without compromising privacy.
In Bitcoin, the block is the batch of transactions which are locked every ten minutes. The block time is the ten minute window, and we refer to the competition between nodes to prove trustworthiness by wasting energy as Proof-of-Work. In the next lesson, we’ll explore how this concept evolved in the years following 2008.