Mastering Bitcoin: Programming the Open Blockchain

Cover
Copyright
Table of Contents
Preface
	Writing the Bitcoin Book
	Intended Audience
	Why Are There Bugs on the Cover?
	Conventions Used in This Book
	Code Examples
	Using Code Examples
	Changes Since the Previous Edition
	Bitcoin Addresses and Transactions in This Book
	O’Reilly Online Learning
	How to Contact Us
	Contacting the Authors
	Acknowledgments for the First and Second Editions
	Acknowledgments for the Third Edition
	Early Release Draft (GitHub Contributions)
Chapter 1. Introduction
	History of Bitcoin
	Getting Started
		Choosing a Bitcoin Wallet
		Quick Start
		Recovery Codes
		Bitcoin Addresses
		Receiving Bitcoin
		Getting Your First Bitcoin
		Finding the Current Price of Bitcoin
		Sending and Receiving Bitcoin
Chapter 2. How Bitcoin Works
	Bitcoin Overview
	Buying from an Online Store
	Bitcoin Transactions
		Transaction Inputs and Outputs
		Transaction Chains
		Making Change
		Coin Selection
		Common Transaction Forms
	Constructing a Transaction
		Getting the Right Inputs
		Creating the Outputs
		Adding the Transaction to the Blockchain
	Bitcoin Mining
	Spending the Transaction
Chapter 3. Bitcoin Core: The Reference Implementation
	From Bitcoin to Bitcoin Core
	Bitcoin Development Environment
	Compiling Bitcoin Core from the Source Code
		Selecting a Bitcoin Core Release
		Configuring the Bitcoin Core Build
		Building the Bitcoin Core Executables
	Running a Bitcoin Core Node
	Configuring the Bitcoin Core Node
	Bitcoin Core API
		Getting Information on Bitcoin Core’s Status
		Exploring and Decoding Transactions
		Exploring Blocks
		Using Bitcoin Core’s Programmatic Interface
	Alternative Clients, Libraries, and Toolkits
		C/C++
		JavaScript
		Java
		Python
		Go
		Rust
		Scala
		C#
Chapter 4. Keys and Addresses
	Public Key Cryptography
		Private Keys
		Elliptic Curve Cryptography Explained
		Public Keys
	Output and Input Scripts
	IP Addresses: The Original Address for Bitcoin (P2PK)
	Legacy Addresses for P2PKH
	Base58check Encoding
	Compressed Public Keys
	Legacy Pay to Script Hash (P2SH)
	Bech32 Addresses
		Problems with Bech32 Addresses
		Bech32m
		Private Key Formats
		Compressed Private Keys
	Advanced Keys and Addresses
		Vanity Addresses
		Paper Wallets
Chapter 5. Wallet Recovery
	Independent Key Generation
		Deterministic Key Generation
		Public Child Key Derivation
		Hierarchical Deterministic (HD) Key Generation (BIP32)
		Seeds and Recovery Codes
		Backing Up Nonkey Data
		Backing Up Key Derivation Paths
	A Wallet Technology Stack in Detail
		BIP39 Recovery Codes
		Creating an HD Wallet from the Seed
		Using an Extended Public Key on a Web Store
Chapter 6. Transactions
	A Serialized Bitcoin Transaction
	Version
	Extended Marker and Flag
	Inputs
		Length of Transaction Input List
		Outpoint
		Input Script
		Sequence
	Outputs
		Outputs Count
		Amount
		Output Scripts
	Witness Structure
		Circular Dependencies
		Third-Party Transaction Malleability
		Second-Party Transaction Malleability
		Segregated Witness
		Witness Structure Serialization
	Lock Time
	Coinbase Transactions
	Weight and Vbytes
	Legacy Serialization
Chapter 7. Authorization and Authentication
	Transaction Scripts and Script Language
		Turing Incompleteness
		Stateless Verification
		Script Construction
		Pay to Public Key Hash
	Scripted Multisignatures
		An Oddity in CHECKMULTISIG Execution
	Pay to Script Hash
		P2SH Addresses
		Benefits of P2SH
		Redeem Script and Validation
	Data Recording Output (OP_RETURN)
		Transaction Lock Time Limitations
		Check Lock Time Verify (OP_CLTV)
		Relative Timelocks
		Relative Timelocks with OP_CSV
	Scripts with Flow Control (Conditional Clauses)
		Conditional Clauses with VERIFY Opcodes
		Using Flow Control in Scripts
	Complex Script Example
		Segregated Witness Output and Transaction Examples
		Upgrading to Segregated Witness
	Merklized Alternative Script Trees (MAST)
	Pay to Contract (P2C)
	Scriptless Multisignatures and Threshold Signatures
	Taproot
	Tapscript
Chapter 8. Digital Signatures
	How Digital Signatures Work
		Creating a Digital Signature
		Verifying the Signature
		Signature Hash Types (SIGHASH)
	Schnorr Signatures
		Serialization of Schnorr Signatures
		Schnorr-based Scriptless Multisignatures
		Schnorr-based Scriptless Threshold Signatures
	ECDSA Signatures
		ECDSA Algorithm
		Serialization of ECDSA Signatures (DER)
	The Importance of Randomness in Signatures
	Segregated Witness’s New Signing Algorithm
Chapter 9. Transaction Fees
	Who Pays the Transaction Fee?
	Fees and Fee Rates
	Estimating Appropriate Fee Rates
	Replace By Fee (RBF) Fee Bumping
	Child Pays for Parent (CPFP) Fee Bumping
	Package Relay
	Transaction Pinning
	CPFP Carve Out and Anchor Outputs
	Adding Fees to Transactions
	Timelock Defense Against Fee Sniping
Chapter 10. The Bitcoin Network
	Node Types and Roles
	The Network
	Compact Block Relay
	Private Block Relay Networks
	Network Discovery
	Full Nodes
	Exchanging “Inventory”
	Lightweight Clients
	Bloom Filters
		How Bloom Filters Work
		How Lightweight Clients Use Bloom Filters
	Compact Block Filters
		Golomb-Rice Coded Sets (GCS)
		What Data to Include in a Block Filter
		Downloading Block Filters from Multiple Peers
		Reducing Bandwidth with Lossy Encoding
		Using Compact Block Filters
	Lightweight Clients and Privacy
	Encrypted and Authenticated Connections
	Mempools and Orphan Pools
Chapter 11. The Blockchain
	Structure of a Block
	Block Header
	Block Identifiers: Block Header Hash and Block Height
	The Genesis Block
	Linking Blocks in the Blockchain
	Merkle Trees
	Merkle Trees and Lightweight Clients
	Bitcoin’s Test Blockchains
		Testnet: Bitcoin’s Testing Playground
		Signet: The Proof of Authority Testnet
		Regtest: The Local Blockchain
	Using Test Blockchains for Development
Chapter 12. Mining and Consensus
	Bitcoin Economics and Currency Creation
	Decentralized Consensus
	Independent Verification of Transactions
	Mining Nodes
		The Coinbase Transaction
		Coinbase Reward and Fees
		Structure of the Coinbase Transaction
		Coinbase Data
	Constructing the Block Header
	Mining the Block
		Proof-of-Work Algorithm
		Target Representation
		Retargeting to Adjust Difficulty
	Median Time Past (MTP)
	Successfully Mining the Block
	Validating a New Block
	Assembling and Selecting Chains of Blocks
	Mining and the Hash Lottery
		The Extra Nonce Solution
		Mining Pools
	Hashrate Attacks
	Changing the Consensus Rules
		Hard Forks
		Soft Forks
		Consensus Software Development
Chapter 13. Bitcoin Security
	Security Principles
		Developing Bitcoin Systems Securely
		The Root of Trust
	User Security Best Practices
		Physical Bitcoin Storage
		Hardware Signing Devices
		Ensuring Your Access
		Diversifying Risk
		Multisig and Governance
		Survivability
Chapter 14. Second-Layer Applications
	Building Blocks (Primitives)
	Applications from Building Blocks
	Colored Coins
		Single-Use Seals
		Pay to Contract (P2C)
		Client-Side Validation
		RGB
		Taproot Assets
	Payment Channels and State Channels
		State Channels—Basic Concepts and Terminology
		Simple Payment Channel Example
		Making Trustless Channels
		Asymmetric Revocable Commitments
		Hash Time Lock Contracts (HTLC)
	Routed Payment Channels (Lightning Network)
		Basic Lightning Network Example
		Lightning Network Transport and Pathfinding
		Lightning Network Benefits
Appendix A. The Bitcoin Whitepaper by Satoshi Nakamoto
	Bitcoin - A Peer-to-Peer Electronic Cash System
		Introduction
		Transactions
		Timestamp Server
		Proof-of-Work
		Network
		Incentive
		Reclaiming Disk Space
		Simplified Payment Verification
		Combining and Splitting Value
		Privacy
		Calculations
		Conclusion
		References
	License
Appendix B. Errata to the Bitcoin Whitepaper
	Abstract
	Transactions
	Proof of Work
	Reclaiming Disk Space
	Simplified Payment Verification
	Privacy
	Calculations
Appendix C. Bitcoin Improvement Proposals
Index
About the Authors
Colophon