Bitcoin: A Peer-to-Peer Electronic Cash System

we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions (Page 1)

chain of digital signatures (Page 2)

the earliest transaction is the one that counts (Page 2)

we don't care about later attempts to double-spen The only way to confirm the absence of a transaction is to be aware of all transactions. (Page 2)

transactions must be publicly announced (Page 2)

we need a system for participants to agree on a single history of the order in which they were received (Page 2)

Each timestamp includes the previous timestamp in its hash, forming a chain, with each additional timestamp reinforcing the ones before it. (Page 2)

proof-of-work involves scanning for a value that when hashed, such as with SHA-256, the hash begins with a number of zero bits (Page 3)

exponential in the number of zero bits required (Page 3)

verified by executing a single hash (Page 3)

As later blocks are chained after it, the work to change the block would include redoing all the blocks after it (Page 3)

determining representation in majority decision making (Page 3)

Proof-of-work is essentially one-CPU-one-vote (Page 3)

majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it. (Page 3)

proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour. If they're generated too fast, the difficulty increases (Page 3)

first transaction in a block is a special transaction that starts a new coin ow (Page 4)

provides a way to initially distribute coins into circulation (Page 4)

there is no central authority to issue them (Page 4)

analogous to gold miners expending resources to add gold to circulation (Page 4)

CPU time and electricity that is expended (Page 4)

incentive can also be funded with transaction fees (Page 4)

Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation (Page 4)

spent transactions before it can be discarded to save disk space (Page 4)