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

Trezor was originally designed as the safest hardware wallet for holding your 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.
• In each of your Bitcoin accounts, you can send, receive, view, sign & verify transactions.

History

Before Bitcoin

In the late 1990s and early 2000s, a group of developers known as the cypherpunks were exploring ways to create a digital form of money that didn’t rely on governments or banks. Among them was Wei Dai, who proposed b-money in 1998: a concept for “an anonymous, distributed electronic cash system.” Though never implemented, b-money introduced key ideas that would later influence Bitcoin.

Around the same time, Hashcash, developed by Adam Back in 1997, used a proof-of-work mechanism to combat email spam. This same mechanism became central to Bitcoin’s mining algorithm.

Then came Bit gold, designed by Nick Szabo. Like Bitcoin, it used cryptographic puzzles and timestamped records to secure a decentralized digital currency. Although Bit gold was never launched, it’s often called a direct precursor to Bitcoin.

Satoshi Nakamoto & the birth of Bitcoin

In 2008, an unknown figure using the name Satoshi Nakamoto joined the cypherpunks mailing list and shared a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. By combining the innovations of b-money, Hashcash, and Bit gold, with a few critical improvements, Satoshi launched Bitcoin on January 3rd, 2009.

Other breakthroughs also contributed to Bitcoin’s architecture, including secure timestamping, Merkle trees for cryptographic proof, and public key cryptosystems. But Bitcoin was the first to bring them all together into a functioning, decentralized network.

Technology

Blockchain

The Bitcoin blockchain is a shared, tamper-proof record of all bitcoin transactions. Each transaction is grouped into a block and secured using cryptography. Once added, data in a block can’t be changed or removed. Copies of the blockchain are stored on thousands of computers around the world, making it easy to verify that everything matches. Each block includes a timestamp, which helps the network track exactly when each bitcoin was spent. This prevents people from trying to use the same coins more than once - a problem known as double-spending. In short, the blockchain keeps the Bitcoin network secure without relying on a central authority.

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.