Subnostr

Mathematics Behind Bitcoin

Bitcoin’s security and functionality rely on cryptography, algorithms, and game theory:

1. Cryptographic Hash Functions (SHA-256):

• Creates unique, irreversible hashes for data security.

• Used in mining and verifying transactions.

2. Public-Key Cryptography (Elliptic Curve Cryptography):

• Private keys generate public keys and Bitcoin addresses.

• Ensures ownership and secures transactions without revealing private keys.

3. Proof of Work (PoW):

• Miners solve complex puzzles to validate transactions and add blocks.

• Prevents manipulation by making attacks computationally expensive.

4. Game Theory:

• Incentivizes honesty with rewards (block rewards/fees).

• Makes attacking the network cost-prohibitive.

5. Finite Supply & Halving:

• Bitcoin’s supply is capped at 21 million.

• Mining rewards halve every 4 years to control issuance and mimic scarcity.

6. Merkle Trees:

• Efficiently verify transactions using a hierarchical structure of hashes.

These principles ensure Bitcoin’s decentralization, security, and trustworthiness.