Bitcoin blockchain: performance and scalability

Bitcoin is a decentralized electronic cash system that makes peer-to-peer payment possible without going through an intermediary. The original Bitcoin software was developed by Satoshi Nakamoto and released under the MIT License in 2009, following the Bitcoin white paper, Bitcoin: A Peer-to-Peer Electronic Cash System. 

Bitcoin is the first successful implementation of a distributed cryptocurrency. Sixteen years after Bitcoin was born, there are about 20 million Bitcoins in circulation, and it has now reached a market cap of over $2 trillion.

Within the Bitcoin blockchain, a transaction means that a collection of inputs and outputs transfer the ownership of bitcoins between payer and payee. Inputs instruct the network which coin or coins the payment will draw from. Those coins in the input have to be unspent, which means they haven’t been used to pay someone else. Meanwhile, outputs provide the spendable amounts of bitcoins that the payer agrees to pay to the payees. Once the transaction is made, the outputs become the unspent amounts to the payee, and they remain unspent until the current payee pays someone else with the coin.

When, for example, Alice needs to pay Bob 10 BTC, Alice opens her Bitcoin wallet, and scans or copies Bob’s transaction address and creates a transaction with a 10 BTC payment to Bob. Once the transaction is digitally signed and submitted, it’s sent to the Bitcoin blockchain network.