ABSTRACT
Bitcoin is the lightning rod for a new species of digital money. In this system, the operations of money creation and system supervision are distributed; that is, there is no functional equivalent to a central bank. The novel techniques in bitcoin production, distribution, and supervision leave many questions unanswered regarding the scalability and security of the system. The chapter presents the Bitcoin protocol and highlights operational issues that practical implementations have encountered. The Bitcoin protocol packages features resulting from years of research in various disciplines, particularly distributed systems to resolve the problem of building a consensus among decentralized entities while exchanging information over an unreliable and insecure network. Bitcoin wallets are programs installed on a user terminal to hold all the Bitcoin addresses of a given user as well the private keys that correspond to these addresses. The wallet stores the user’s private keys, either as structured files or in a database.
