The other day I commented to a friend that while I understand the Bitcoin blockchain well, I don’t fully understand its value from a business standpoint. To be blunt, I get the tech and find it fun and fascinating, and while I know it’s useful, I don’t entirely see how it’s useful. My friend commented that this is a common problem with tech people- we understand the tech but don’t understand the business. Fair enough.
I came across the book Blockchain: Blueprint for a New Economy by Melanie Swan. It’s described as a book that “takes you beyond the currency (‘Blockchain 1.0’) and smart contracts (‘Blockchain 2.0’) to demonstrate how the blockchain is in position to become the fifth disruptive computing paradigm after mainframes, PCs, the Internet, and mobile/social networking.” It sounded good, and it’s an O’Reilly book, so I decided to give it a read.
This post is a summary and review of Blockchain, which is essentially a list of blockchain use cases, all discussed at a very high level. While the author doesn’t touch on the technical side of things or implementation, I found it a useful quick read.
I came across Bitcoin about 6 months ago, thanks to a friend who started her own company that uses blockchain technology. I’d heard of Bitcoin before- my general idea was “Bitcoin is a virtual currency that my brother used to mine when I was in high school.” I didn’t know much other than that, like most people.
What really sparked my interest was my realization that Bitcoin and other digital currencies are a great application of cryptography (hence the name “cryptocurrency”), a field that I’ve always been very fascinated by. Cryptography, to me, is a perfect way to use math in the real world. Once this realization hit, I decided to actually look into the math behind bitcoin.
Although I read countless articles, including the original Nakamoto whitepaper, I still struggled to find a resource that would answer the fundamental question: What’s the math? The best I could find was articles that would discuss elliptic curve cryptography, and the particular parameters used for Bitcoin. This didn’t satisfy me.
I hope this blog post can help you understand the Bitcoin protocol and the Bitcoin blockchain, from a mathematical perspective. I’ll assume first that you’re familiar with Bitcoin, and second that you have a knowledge of the math. I’ll leave links to explanations of the math topics below, for those who are not so familiar.