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The Bitcoin White Paper was first published by Satoshi Nakamoto in 2008 and addressed questions related to the concept and goals of Bitcoin and blockchain technology. Satoshi Nakamoto has introduced Bitcoin as a digital currency in the Farsi Bitcoin white paper, which provides peer-to-peer money transfer without the need for a third party.
Bitcoin is one of the most valuable digital currencies in the world, which is able to turn the digital world upside down with new technologies. Bitcoin blockchain was able to pave the way for other blockchains that have bigger goals in mind.
The Bitcoin White Paper included an article by Satoshi Nakamoto that became a reference for blockchain professionals for Bitcoin development. In the following, I have presented various parts of the Bitcoin white paper and I have also put the download link of the Bitcoin white paper pdf for you dear ones.
What is the Farsi Bitcoin White Paper?
A white paper is an authoritative and research-based document that provides analysis and expert information and insight of an author or organization about a problem or a solution to a problem.
Sellers and companies use these articles as part of their strategy in B2B business marketing models. Satoshi Nakamoto, the creator of Bitcoin, published an article on metzdowd.com three months before the launch of this digital currency and the introduction of blockchain.
Based on this article, he stated that he is working on an electronic payment financial system that works peer-to-peer without third-party intervention. Digital signatures have provided Nakamoto’s goal;
If a third party is still needed to prevent a double spend attack, the main benefits of this method will be lost.
In the continuation of the Farsi Bitcoin white paper, he stated that to solve this problem, he uses a peer-to-peer network that puts a time stamp on the transactions; This is done by hashing transactions in the active chain of the proof-of-work consensus algorithm and creates stagnation that can only be changed by redoing the proof-of-work mechanism.
Read more: Proof of Work Algorithm and how POW works
The longest chain not only works as a proof of the sequence of events, but also a proof of the largest pool and CPU computing power. As long as the control of a major part of the CPU power is under the control of the nodes that do not participate in the attack on the network, these nodes will form the longest chain and overtake the attackers.
A peer-to-peer network requires a uniform structure. Messages in this network are published based on agreements and nodes have the possibility to leave the network or join it at their own discretion, while the longest chain considers the proof-of-work mechanism as proof and evidence of the events that happened in their absence.
Bitcoin whitepaper content
Satoshi Nakamoto decided to design a decentralized system and eliminate middlemen with blockchain, based on two problems and weaknesses of the payment system of financial institutions, which were high and numerous fees, as well as the need for authentication.
The Persian Bitcoin white paper started with these problems and then a solution was presented.
The content of the Bitcoin whitepaper focuses more on how the Bitcoin blockchain works than anything else. This white paper can be used as a reference for Bitcoin developers and mining software.
Introduction
In the introduction of the Bitcoin white paper, after describing the weaknesses of the current financial systems, Nakamoto said:
We need a crypto-based, peer-to-peer electronic payment system instead of relying on middlemen. This system should allow the parties to do the transaction directly without the need for an intermediary.
He goes on to explain that in this Bitcoin white paper, a peer-to-peer solution with timestamps is presented to solve the problem of double spending of the cryptocurrency. Nakamoto says that in this system, as long as all the network nodes have an honest activity, security is established and the power of their processors protects the network against possible attacks.
Transactions
In the transactions section of the Bitcoin whitepaper, Satoshi adds:
According to our definition, a coin is a string of digital signatures. Each owner of the coin who transfers it must sign the hash created from the previous transaction with his private key along with the public key of the next person who owns the coin or the recipient.
The receiver receives all the previous information along with the coin. This person will be able to check the authenticity of the transactions by checking the digital signatures of the previous owners of the coin.
However, the problem of spending the currency twice has not been solved yet. In fiat currency and common currencies, this problem has been solved by financial institutions. We need to know that the previous owner of the coin did not send it to someone else before us.
Nakamoto mentions in the Bitcoin white paper that:
The only way to not approve a transaction twice is to be aware of all previous transactions. Achieving this without the need for third-party approval requires public announcement of transactions. We need a system for participants to agree on a single transaction history. The recipient of the transaction needs this agreement and collective proof to confirm the transactions.
Timestamp server
In the Bitcoin white paper, the first part of Nakamoto’s solution is to use a timestamp server to solve the problem of spending coins twice. The function of this server is that by specifying the exact hash time of a block, it can publish it like a newspaper.
According to the time signature, the data must exist in a specific time period (it is not possible to create it and add it to the block at another time). Each timed tag consists of the hash of the previous tag and creates a chain and confirms the previous tags by using an additional tag.
Proof of work in the Bitcoin White paper
Now, in order to use the timestamp server, a mechanism is needed that can be used instead of the newspaper. This system was a proof-of-work algorithm.
The proof of work consists of searching and checking for a number that is obtained based on the Bitcoin hashing algorithm, SHA-256. This number starts with a few zeros and as the number of first zeros increases, more processing is needed to reach that power.
Nance number variable is actually the same number that should be found in the proof of work mechanism of the Bitcoin network. The Nance number is combined with other block information, that is, the hash of the previous block and transaction records, and a new hash is created by them. Nance number is repeated several times to reach the desired blockchain hash. When this number is obtained;
The energy required to change the block data will be as much as the processing power required for the block hash.
If someone wants to make a change in a specific block in the chain, he must have the processing power equivalent to that block in the network and all subsequent blocks. Because in all the previous blocks, the data of that specific block exists and all of them must be changed.
Network
The proof-of-work algorithm reduces fraud and network hacking by lengthening the Bitcoin blockchain network. Because the processing power required to change the block is very high. Also, over time, more nodes are added to the network. Nodes are actually miners or participants in the Bitcoin network.
With the addition of each node, the processing power of the network increases. This problem increases the speed of hash blocks. Anticipating this, Nakamoto added:
The difficulty of the variable network is to control the speed of the hash blocks.
In the Bitcoin White Paper, he explains what the Bitcoin network is and its features include:
- New transactions are announced to all nodes.
- Each node collects new transactions in a block.
- Each node is trying to complete the proof-of-work process earlier than other nodes.
- When a node produces a block, other members of the network are informed about it.
- Nodes confirm the transaction when they ensure that the transaction is correct and that bitcoins are not spent twice.
- After confirming the hashed block, the nodes proceed to create a new block and use the hash of the previous block to do so.
Nodes always consider the longest chain. For example, if the backblock is hashed by two nodes at the same time, the other nodes will accept the block that they received earlier. But they store the previous block in memory to join it if the chain gets longer.
Nodes always consider the longest chain. For example, if the backblock is hashed by two nodes at the same time, the other nodes will accept the block that they received earlier. But they store the previous block in memory to join it if the chain gets longer.
Motivation and reward
Nodes need incentives to provide high processing power to the network. Nakamoto considered the block reward system in order to secure nodes. The first transaction of each block is unique and belongs to the person who hashed the block. The new coins generated by this transaction will be awarded to the first person to create the block.
In addition to keeping the nodes in the network and maintaining security, the block reward motivates the nodes. It also encourages nodes to act honestly in the network. If a hacker is able to respend large amounts of spent assets and transfer them to his own account, he has put the security of the entire network at risk and devalues his and others’ assets. Therefore, honest activity in the network will benefit everyone.
Allocation of data storage space
In the continuation of the Bitcoin white paper, it should be mentioned the lengthening of the Bitcoin network block chains. This point shows the importance of information storage space;
This issue may become a problem for the nodes in the network. But Nakamoto has provided a solution to solve this problem in the Bitcoin white paper. His solution is the Merkel tree.
Merkel tree
In this system, by executing the last transaction in a block, it is possible to benefit from all previous transactions. Of course, there is no need to break the hash blocks; Only their abstract is stored in the form of a hash called the root of the Merkel tree.
In the Merkel tree, the branches of the previous blocks are removed from the blockchain by storing them in a new block without transactions. In this way, the Bitcoin network will no longer face the problem of storage space, and it is possible to store complete blockchain information on computers.
Simplified confirmation of transactions
Running a complete node, which, in addition to confirming transactions, also creates a new block, is considered costly. Nakamoto has provided a simple solution to solve this problem. He writes in the Bitcoin white paper:
It is possible to confirm a transaction without creating a full node. Therefore, the user only needs to have a copy of the block headers of the longest verified chain.
With this, all network users will have the possibility to ensure the security of their transactions without having to pay for Bitcoin mining.
Combining and dividing coins
The ninth part of the Bitcoin white paper is about the form of transactions. Transferring bitcoins is not difficult, but if we want to exchange a fraction of a bitcoin, it can be a bit difficult. We need to be able to split a bitcoin into smaller parts and merge the smaller parts together. For this purpose, each transaction must have different inputs and outputs.
The transaction input can be a single amount of bitcoins obtained from a previous transaction, or it may be a combination of smaller amounts. There are also two outputs, one for payment and the other for the remaining amount spent back to the sender.
It is interesting to know that this combination of transactions does not cause any problems in the Bitcoin network. Because users will not have to check the entire transaction history.
Privacy
One of the concerns mentioned by Nakamoto in the Bitcoin white paper from the beginning of the project was the protection of user privacy and blockchain security. Nakamoto wanted all people to trade with each other regardless of race, nationality and gender. In the traditional banking system, parties need to authenticate before making a transaction.
This causes restrictions for different groups and blocking of certain transactions. Of course, on the other hand, authentication ensures transaction security; But it puts the power in the hands of a specific entity that has the authority over the users’ assets. (Actually, the reason why governments oppose cryptocurrencies is the decentralization of cryptocurrencies)
Read more: How can blockchain security be increased?
To solve this problem, Nakamoto included a solution in the Bitcoin white paper. In the Bitcoin network, transactions can be identified instead of individuals. This means that a person with an unknown identity makes certain and traceable transactions.
Bitcoin made this possible with cryptographic methods. Each user needs a public and private key to be in the network. Transactions are done by the public key and the user will be able to access their assets with the private key.
Even with encryption methods, if a person regularly uses a public key to create a transaction, there is a possibility that his identity will be revealed. Nakamoto points out in the Bitcoin white paper:
It is better to use new keys to create each transaction, so that if the identity of a key is revealed, it is not possible to track subsequent transactions.
Calculations
The calculation section of the Bitcoin White Paper or Bitcoin White Paper contains complex and various mathematical calculations. In this part of the Bitcoin White Paper, Nakamoto explains why in the Bitcoin network, even crooks and hackers are forced to perform honest activities to receive rewards.
In this part of the Bitcoin white paper, Nakamoto proves that all hackers do is change their transactions to withdraw a certain amount of Bitcoin.
Conclusion in the Bitcoin white paper
In the Bitcoin white paper, Nakamoto examines and describes a financial system without the need for intermediaries. Digital signatures to confirm transactions and the proof-of-work algorithm to prevent double-spending of bitcoins were among Nakamoto’s solutions to solve possible problems in this network.
He explained in the Bitcoin white paper that this system even encourages vandals and hackers to operate honestly on the network. Also, in this document and white paper, Bitcoin describes the process of privacy of users and active nodes in the network. New rules and capabilities are allowed to enter the network only if they are accepted by the network’s consensus mechanism.
Farsi Bitcoin white paper translation
The contents mentioned in this article from the Bitcoin White Paper are important parts of the Bitcoin White Paper. In the Bitcoin White Paper, there are exclusive materials for people who are looking for fundamental Bitcoin analysis.
Read more: Fundamental analysis
If you need a detailed review of this white paper, you can access the Bitcoin white paper pdf with Farsi translation through the link below.
Satoshi Nakamoto, the creator of Bitcoin, has released a Bitcoin white paper titled Bitcoin, a Peer-to-Peer Electronic Payment System.
Bitcoin white paper has 6 written pages.
On October 28, 2008, the Bitcoin White Paper was published on Metzdowd.com.
