The First Blockchain
Bitcoin, created by Satoshi Nakamoto in 2008, was the first practical implementation of blockchain technology.
It solved a fundamental problem: how can strangers agree on a shared transaction history without trusting anyone?
Bitcoin introduced Proof of Work to make the blockchain economically secure.
Transactions
A Bitcoin transaction is a signed message that says:
“I, owner of address X, send Y bitcoins to address Z.”
The owner proves ownership with a digital signature using their private key. Anyone can verify it with the public key.
No banks. No middlemen. Just cryptography.
The UTXO Model
Bitcoin doesn’t track balances. It tracks unspent transaction outputs (UTXOs).
Think of it like cash. You don’t have “a balance of $50”. You have specific bills: a $20, two $10s, and two $5s.
When you spend, you consume entire UTXOs and create new ones:
| Input | Output |
|---|---|
| Your $20 bill | $15 to merchant |
| $5 back to you (change) |
Every transaction consumes old UTXOs and creates new ones.
Block Structure
Each Bitcoin block contains:
| Field | Purpose |
|---|---|
| Previous hash | Links to the prior block |
| Merkle root | Single hash of all transactions |
| Timestamp | When the block was created |
| Nonce | The mining puzzle solution |
| Transactions | The actual payment data |
The Merkle root is a hash tree that lets you verify any transaction belongs to the block without downloading all of them.
Mining and Proof of Work
Here’s the clever part. To add a block, you must find a nonce such that:
hash(block + nonce) starts with N zeros
This is hard. You have to try billions of random nonces until one works. It takes about 10 minutes of global computing power to find one.
Why This Works
Mining costs real money (electricity, hardware). An attacker trying to rewrite history would need to:
- Redo the proof of work for the tampered block
- Redo it for every block after
- Do this faster than the honest network adds new blocks
Unless you control 51%+ of the network’s computing power, this is economically impossible.
The 51% Attack
If an attacker controls more than half the mining power, they could rewrite history.
This is called a 51% attack. It’s theoretically possible but:
- Bitcoin’s network is massive
- The attack costs billions in hardware and electricity
- Success would crash Bitcoin’s value, destroying the attacker’s investment
The attack is possible but economically self-defeating.
Decentralization
There’s no central Bitcoin server. Thousands of nodes worldwide each store the full blockchain.
When a miner finds a valid block:
- They broadcast it to the network
- Every node independently verifies it
- If valid, they add it to their chain
No single point of failure. No authority to corrupt.