【Bitcoin Beginner's Manual🔖】
🔸Bitcoin ecosystem projects have caused fomo, but you don't know BTC?
🔸It doesn't matter, Bibi has prepared a basic knowledge manual for you to enter the BTC ecosystem.
*Note: The content has been simplified; it is recommended to read in order
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Basic Knowledge
✦If you want to participate in the BTC ecosystem, you first need a wallet.
1⃣BTC Wallet
There are many wallets in the BTC ecosystem, among which @unisat_wallet wallet should be the most used wallet.
Other popular wallets include Xverse wallet, Magiceden wallet, OKX wallet, etc.
*It is recommended to familiarize yourself with Unisat wallet first, and then turn to other wallets.
✦The address in the wallet is used to receive the corresponding assets, including BTC, Ordinals, Brc20, etc.
2⃣BTC address
The BTC wallet will display four types of BTC addresses: Legacy, Nested Segwit, Native Segwit, Taproot
Key points
1/Generally speaking, use the address starting with bc1.
2/bc1q is generally used for daily payment of transaction fees; bc1p is more suitable for receiving Ordinals and BRC20 assets.
3/The four addresses can transfer BTC to each other; but Ordinals and BRC20 assets are best transferred only between addresses of the same type.
Legacy address: The old address format starting with 1 is high in cost and is generally not used.
Nested Segwit: The address starting with 3 can only be used to receive BTC, not to receive inscriptions or runes.
Native Segwit: The address starting with bc1q is the most compatible with the current cex platform.
Taproot: The address starting with bc1p is more advanced than bc1q. It can support complex smart contracts.
✦ When you have BTC assets, you will inevitably need to trade.
Before sending a transaction, you will see the term sats/vb.
3⃣Sats
BTC is the native token of the Bitcoin network, and Sats is its smallest unit, used to pay gas fees and small payments.
Transaction fees in the network are calculated based on the transaction size, in vByte (virtual bytes).
Therefore, Sats/vb refers to the Bitcoin transaction fee paid per virtual byte (vByte).
✦In addition, when sending a transaction, you will find the words "available" and "unavailable".
4⃣Available and unavailable
Available Bitcoin (Available): refers to the Bitcoin balance you can currently use for transactions. These Bitcoins have been confirmed and can be transferred at any time.
Unavailable Bitcoin (unavailable): refers to Bitcoins that are currently unavailable for transactions. These Bitcoins may be in the following states:
1) Waiting for confirmation. If you have received a Bitcoin before, but the transaction has not been confirmed by enough blocks, these Bitcoins are temporarily unavailable.
2) Locked state. Sometimes, Bitcoin may be locked due to contracts, pending orders or other conditions and cannot be used to initiate new transactions immediately.
3) Inputs in use. If you are in another transaction and the inputs involved in the transaction have not yet been confirmed, the relevant Bitcoins will be marked as unavailable.
✦The inputs and outputs mentioned above are the core part of Bitcoin transactions.
5⃣Inputs and Outputs
Inputs:
Inputs refer to the source of funds you use to pay Bitcoin. It comes from the output of a previously received transaction (that is, the Bitcoin that someone sent you before).
When you initiate a new Bitcoin transaction, the wallet will use the previously received Bitcoin as input. These inputs are called unspent transaction outputs (UTXO, Unspent Transaction Output).
For example: If you received 1 BTC in a previous transaction, when you initiate a new transaction, this 1 BTC unspent output becomes the input of your new transaction.
Outputs:
Outputs are where you pay Bitcoin in a transaction. Each transaction can have one or more outputs, indicating which address the Bitcoin is sent to.
Outputs define a new unspent transaction output (UTXO), which will become the input of future transactions.
For example: If you transfer 0.5 BTC to a certain address, this 0.5 BTC will become an output and be recorded on the blockchain.
✦UTXO is the balance model adopted by Bitcoin. Let's explain it with a simple metaphor.
6⃣UTXO
You are in the supermarket and want to buy an egg for 1 yuan, but you only have a 5 yuan bill.
You hand the whole 5 yuan bill to the cashier, and he gives you 4 1 yuan coins as change.
In the above metaphor, the whole 5 yuan bill is the old UTXO, and the 4 1 yuan coins are the new UTXO.
The essence of the UTXO model is that each transaction consumes the old UTXO and generates new UTXO, which can be used in future transactions.
✦You finally submitted the transaction, but the transaction still needs to wait for execution in Mempool (memory pool).
7⃣Mempool
Mempool is the waiting pool and transit station for Bitcoin transactions. Only when the transaction is processed by the miner will the transaction be removed from Mempool.
Mempool is very useful. It allows you to know the current gas fee of the BTC network, the waiting time, and track your transaction status.
In addition, since miners are responsible for packaging blocks and receive transaction fees, you can increase transaction fees (sats/vb) to "bribe" miners to prioritize packaging your transactions.
Mempool: mempool.space
✦After the transaction is selected by the miner in Mempool, it needs to be packaged into the block and added to the blockchain.
8⃣Miners and Packed Blocks
Bitcoin is a decentralized network that requires nodes to verify, propagate, and store transactions. Miners are entities that run nodes.
Their main task is to find qualified blocks by solving mathematical problems, and package transactions submitted by users into these blocks, and finally add new blocks to the blockchain.
For each successful packaging of a block, miners will receive a portion of the newly generated Bitcoin. This is how Bitcoin is issued, and the reward for new blocks will gradually decrease during the Bitcoin halving event.
*BTC halving: Every 210,000 blocks (about 4 years), the block reward received by miners will be automatically halved. This process continues until the supply of Bitcoin reaches the hard cap of 21 million.
✦ Basic knowledge expansion - Ordinals/BRC20/Runes
🔸Ordinals
The purpose of the Ordinals protocol is to mark and track specific Sats.
Users use the Ordinals protocol to give specific Sats an "inscription" (text/image, etc.).
This operation makes Sats no longer homogeneous and becomes an asset similar to NFT.
You can spend it as a Gas token or trade it as an NFT.
*Unlike NFTs on Ethereum, the inscriptions of Ordinals are stored directly on the Bitcoin blockchain, not through external links.
🔸BRC20
Since a set of Sats can be inscribed with different data, thus becoming a non-homogeneous NFT.
Then a set of Sats can also be inscribed with the same data, thus becoming a homogeneous token.
The BRC20 protocol is to inscribe Sats through the same JSON data (ORDI), so that these Sats are "marked" as tokens of the same category ($ORDI).
*Unlike ERC20 on Ethereum, BRC-20 does not have the complex functions of smart contracts, but is just a simple token engraving.
🔸Runes
Similar to BRC20, the purpose of Rune is also to create homogeneous tokens.
BRC20 uses JSON data to mark Sats; Rune uses the OP_RETURN opcode to embed token information on Sats.
Compared with BRC-20, the advantage of Rune is that it reduces UTXO expansion and reduces the storage pressure of the Bitcoin network.
The above is the content of the basic knowledge section. If you find it helpful, please like and forward it to support it.
This post will be continuously updated.
