Bitcoin
Bitcoin (BTC) is the first decentralized digital currency, or cryptocurrency. The Bitcoin network is peer-to-peer and transactions take place directly between users, without an intermediary. Transactions are verified by a network of nodes and included in a public ledger, called a blockchain, through a process called mining. Bitcoin was invented by an unknown person or group of people under the pseudonym Satoshi Nakamoto, and released as open-source software in 2009.
How to use Bitcoin with Trezor
| Firmware Support | Trezor Safe Family, Model T ,Model One, |
|---|---|
| Available in Trezor Suite | Yes |
| Third-party Wallets | Electrum, Mycelium, Exodus |
Trezor was originally designed as the safest hardware wallet for holding bitcoin, with support for alternative cryptocurrencies coming in later updates. The easiest way to use bitcoin with your Trezor is via our Trezor Suite desktop application; you can also track your balances on the go with our mobile application Trezor Suite Lite. It is also possible to use your Trezor with third-party wallets such as Electrum.
Trezor Suite
Bitcoin is integrated with Trezor Suite, therefore it is possible to use it in the standard interface.
- Plug in your Trezor device.
- Download and install Trezor Suite; alternatively, you can use Trezor Suite for web.
- Navigate to the Accounts page, and select Bitcoin in the 'My accounts' side menu.
Learn more about managing your accounts in Trezor Suite.
History
Bitcoin has several predecessors which had the same goal but weren't successful. Most of them had an impact on Bitcoin technology.
B-money
B-money was an early proposal created by Wei Dai for an "anonymous, distributed electronic cash system," according to his essay published in November 1998. Satoshi Nakamoto referenced b-money when creating Bitcoin.
Hashcash
Hashcash is a proof-of-work system used to limit email spam and denial-of-service attacks, and it is also used in Bitcoin (and other cryptocurrencies) as part of the mining algorithm. Hashcash was proposed in 1997 by Adam Back.
Bit gold
Nick Szabo designed Bit gold in 1998 as a decentralized digital currency. Bit gold was never implemented but has been called "a direct precursor to the Bitcoin architecture." In the Bit gold structure, a participant would dedicate computer power to solving cryptographic puzzles.
Some other technological innovations had a big impact on creating Bitcoin, such as the design of a secure timestamping service with minimal trust requirements, Merkle's Protocols for public key cryptosystems, and many more.
See also The Bitcoin whitepaper
Technology
Blockchain
A blockchain is a shared database secured by cryptography, which stores all bitcoin transactions with timestamps that have been updated since its beginning. It is possible to distinguish it from the classic database with its immutability—it is not possible to change data already stored in it—and decentralization—the database is stored in many locations around the world, making its accuracy easy to audit. Block creation also allows Bitcoin software to determine when a particular bitcoin was spent, which is needed to prevent double-spending.
Proof of Work
A proof of work is a piece of data that is difficult (costly and time-consuming) to produce but easy for others to verify, and which satisfies certain requirements. Producing a proof of work can be a random process with a low probability, requiring a lot of trial and error before a valid proof of work is generated.
Bitcoin uses the Hashcash proof-of-work system for block generation. In order for a block to be accepted by network participants, miners must complete a proof of work that covers all the data in the block. The difficulty of this work is adjusted to limit the rate at which new blocks can be generated by the network to one every 10 minutes.
Mining
Mining is a record-keeping service done through the use of computer processing power. Miners keep the blockchain consistent, complete, and unalterable by repeatedly grouping newly broadcast transactions into a block, which is then broadcast to the network and verified by recipient nodes.
Each block contains an SHA-256 cryptographic hash of the previous block, thus linking it to the previous block and giving the blockchain its name.
Supply
The successful miner who finds a new block is rewarded with newly created bitcoins and transaction fees. For every block, new bitcoins are created, but this reward decreases over time in a previously determined process called Bitcoin halving. Eventually, the reward will decrease to zero, and the limit of 21 million bitcoins will be reached in 2140.