Bitcoin: A Peer-to-Peer Electronic Cash System
When trying to understand what Bitcoin is and does, it's helpful to start with an understanding of the context in which it was build and the problem it was trying to solve. There were many digital currencies before Bitcoin, but Bitcoin was the first decentralized digital currency. Creating a digital currency without a central authority was the problem that was being solved for.
Bitcoin was first introduced to the world On October 31, 2008, with the publishing of the Bitcoin white paper Bitcoin: A Peer-to-Peer Electronic Cash System. The paper gives insight into the motivations and architecture of the system. Much of what is covered in the paper are topics that we will dive into in later units. So, we recommend reading through it briefly now and coming back to it often throughout your studies.
7. Reclaiming Disk Space
Once the latest transaction in a coin is buried under enough blocks, the spent transactions before it can be discarded to save disk space. To facilitate this without breaking the block's hash, transactions are hashed in a Merkle Tree, with only the root included in the block's hash. Old blocks can then be compacted by stubbing off branches of the tree. The interior hashes do not need to be stored.
A block header with no transactions would be about 80 bytes. If we suppose blocks are generated every 10 minutes, 80 bytes * 6 * 24 * 365 = 4.2MB per year. With computer systems typically selling with 2GB of RAM as of 2008, and Moore's Law predicting current growth of 1.2GB per year, storage should not be a problem even if the block headers must be kept in memory.