The document provides an introductory overview of Bitcoin for developers, detailing its underlying blockchain technology, structure of blocks and transactions, and cryptographic principles. It covers topics such as transaction formats, Bitcoin address generation, and scripts used in transaction validation. Additionally, it outlines Bitcoin's development resources and job opportunities in the field.

1. Intro to Bitcoin for
Developers
Yuri Pimenov, CTO @ Paybis
y.pimenov@paybis.com
http://coinside.ru

2. Used resources
● “Bitcoin developer guide” https://bitcoin.org/en/developer-guide
● “Mastering Bitcoin” https://github.com/bitcoinbook/bitcoinbook/
● “Mastering Bitcoin” in Russian and other languages
https://www.transifex.com/bitcoinbook/mastering-bitcoin/
● https://www.coursera.org/learn/cryptocurrency

3. Bitcoin is P2P

4. Blockchain is huge

5. What is Blockchain?
TL;DR: Blockchain is a linked list of blocks containing transactions!

6. Structure of a Block
Size Field Description
4 bytes Block Size The size of the block, in bytes, following this field
80 bytes Block Header Several fields form the block header
1-9 bytes (VarInt) Transaction Counter How many transactions follow
Variable Transactions The transactions recorded in this block

7. Block Header
Size Field Description
4 bytes Version A version number to track software/protocol upgrades
32 bytes Previous Block Hash A reference to the hash of the previous (parent) block
32 bytes Merkle Root A hash of the root of the merkle tree of this block’s transactions
4 bytes Timestamp The approximate creation time of this block (Unix Epoch)
4 bytes Difficulty Target The proof-of-work algorithm difficulty target for this block
4 bytes Nonce A counter used for the proof-of-work algorithm

8. What is Transaction?
TL;DR: Transactions are linked structures!
class COutPoint {
uint256 hash;
uint32_t n;
class CTxIn {
COutPoint prevout;
CScript scriptSig;
class CTxOut {
CAmount nValue;
CScript scriptPubKey;
class CTransaction {
vector<CTxIn> vin;
vector<CTxOut> vout;

9. Bitcoin transactions: an example

10. Common transaction forms

11. Cryptography
● HASH: 𝒇(“The quick brown fox...”) →
0xa3b634ffa1424…
Public key cryptography (Public Key & Private Key):
● SIGN: 𝓕(“The quick brown fox...”, PRIVATE_KEY) →
0xa583fa1dada…
● VERIFY: 𝓕’(0xa583fa1dada…, PUBLIC_KEY) → “The
quick brown fox...”

12. Elliptic curve
y2 = x3 + 7
Secp256k1

13. Elliptic curve cryptography
TL;DR: sign with private key, verify with public key

14. Generating private key
>>> import hashlib
>>> import os
>>> from pycoin import ecdsa, encoding
>>> import binascii
>>> rand = binascii.hexlify(os.urandom(32))
>>> rand
b'19450ccb2fd155fcd5933e1487d6295a7c6d83ce1c198a9b01c178af8
161d592'
>>> secret_exponent = int('0x' + rand.decode(), 0)
>>> secret_exponent
11429821960912496644762147021914232624305188114701093398105
624802483832477074

15. Generating public key
>>> private_key_wif =
encoding.secret_exponent_to_wif(secret_exponent)
>>> private_key_wif
'Kx4qCrgP6uRVkYrzqpkefPaWMz4JNAKNtB3ofmNjxqTZZQEiKBVs'
>>> public_pair =
ecdsa.public_pair_for_secret_exponent(ecdsa.secp256k1.gener
ator_secp256k1, secret_exponent)
>>> public_pair
(8383574116545539269076290525564606006885119882359933136746
6434419371333356943,
29390949121653277068495088942182866226704757294052224997547
313025682750397184)

16. Generating Bitcoin address
>>> hash160 =
encoding.public_pair_to_hash160_sec(public_pair)
>>> int('0x' + binascii.hexlify(hash160).decode(), 0)
451995369346927816479889813976421291895952315620
>>> encoding.hash160_sec_to_bitcoin_address(hash160)
'18DdJNbCYjo9nmAZAZZ2X3MYCv7gwoLvQn'

17. Sizes
len(private key) = 32 bytes (256 bit)
len(public key) = 64 bytes (or 32 bytes + 1 bit)
len(hash) = 20 bytes
1077 < 2256 < 1078
~ Number of atoms in the Universe

18. Bitcoin address
TL;DR: Address is a Base58 of pubkey hash + checksum
1. Hash = RIPEMD160(SHA256(K))
2. Csum = SHA256(SHA256(Version + Hash))
3. Address = Base58(Version + Hash + Csum[0:4])
Base58 alphabet:
0123456789
ABCDEFGHIJKLMNOPQRSTUVWXYZ
abcdefghijklmnopqrstuvwxyz

19. “Script” is like FORTH
“2 + 7 – 3 == 6” “2 7 OP_ADD 3 OP_SUB 6 OP_EQUAL”
2 [2]
7 [2; 7]
OP_ADD [9]
3 [9; 3]
OP_SUB [6]
6 [6; 6]
OP_EQUAL [TRUE]

20. Some “Script” operators
● OP_IF
● OP_SWAP
● OP_SUBSTR
● OP_CAT
● OP_ABS
● OP_MOD
● OP_SIZE
● OP_XOR

21. Transfer of ownership

22. Pay-to-Public-Key (obsolete)
scriptPubKey: <pubKey> OP_CHECKSIG
scriptSig: <sig>
<sig> <pubKey> OP_CHECKSIG
“OP_CHECKSIG is script opcode used to verify that the signature for a tx input is
valid. OP_CHECKSIG expects two values to be on the stack.”
scriptSig are digitally signed following data:
● ID (hash) of particular input (prev_out)
● double SHA of new transaction data

23. Pay-to-Public-Key-Hash (P2PKH) transaction
[<sig> <pubKey>]
+
[OP_DUP OP_HASH160 <pubKeyHash> OP_EQUALVERIFY OP_CHECKSIG]

24. Pay-to-Public-Key-Hash (P2PKH) transaction
<sig> <pubKey> OP_DUP OP_HASH160
<pubKeyHash> OP_EQUALVERIFY OP_CHECKSIG
OP_DUP OP_HASH160 <pubKeyHash>
OP_EQUALVERIFY OP_CHECKSIG
<sig> <pubKey>
OP_HASH160 <pubKeyHash> OP_EQUALVERIFY
OP_CHECKSIG
<sig> <pubKey> <pubKey>
<pubKeyHash> OP_EQUALVERIFY OP_CHECKSIG <sig> <pubKey> <pubKeyHashA>
OP_EQUALVERIFY OP_CHECKSIG <sig> <pubKey> <pubKeyHashA>
<pubKeyHash>
OP_CHECKSIG <sig> <pubKey>
True

25. MultiSig transactions (M-of-N)
scriptPubKey: <M> [pubKey1 … pubKeyN] <N> OP_CHECKMULTISIG
scriptSig: 0 [sig1 … sigM]
Possible use cases:
● 1-of-N: shared account (husband + wife + kid)
● N-of-N: kinda “N”-factor authorization
● M-of-N: escrow services, example 2-of-3

26. Is that you?
Paybis is looking for a dev:
● Default: PHP, JS, CSS, MySQL, GIT
● Bonus: Symfony2, ReactJS
k.vasilenko@paybis.com

27. Pay-to-Script-Hash (P2SH, BIP16)
Bitcoin P2SH addresses always start with 3
Example: 3P14159f73E4gFr7JterCCQh9QjiTjiZrG
scriptPubKey: OP_HASH160 <scriptHash> OP_EQUAL

28. Merkle Tree

29. Merkle Tree - II
To prove that transaction K is included in the block only nodes HL, HIJ, HMNOP and
HABCDEFGH are required ~ Log2N

30. Difficulty, Target Difficulty and Nonce

31. And many many more…
Questions