Key takeaways
- Bitcoin Core is the foundation software for the Bitcoin blockchain and cryptocurrency. It was developed in 2009 by Satoshi Nakamoto to provide node and wallet functionality while enforcing network rules.
- Bitcoin network control, development and maintenance are decentralized. It is managed by a community of volunteers to propose, vote and develop upgrades to the network.
- Key features of Bitcoin Core software include transaction validation, crypto wallet functionality, node operation and network participation.
- Future developments of Bitcoin Core are likely to focus on scalability and performance alongside content privacy and Bitcoin blockchain security enhancements.
Bitcoin Core is the backbone of the Bitcoin blockchain and cryptocurrency. It is the software that enables the network to operate in a decentralized manner while remaining secure and community-driven.
In many ways, it’s the foundation of the whole cryptocurrency and blockchain industry, which has inspired thousands of other projects and even enabled tweaked variations on Bitcoin, such as Litecoin. Below, you’ll find an in-depth look at Bitcoin Core, who controls it and its key features.
What is Bitcoin Core? A complete overview
Bitcoin Core is the original software that powers the Bitcoin blockchain network. You can think of it as the “brain” of Bitcoin that enforces rules or protocols while also delivering node and wallet functionality. It was initially developed and released by Satoshi Nakamoto in 2009.
Since then, it has evolved to become the reference implementation of the Bitcoin protocol. When you run the Bitcoin Core architecture, your computer joins the Bitcoin network; this makes your computer a node, communicating with other Bitcoin Core nodes on the blockchain.
Anybody can host a node and connect to the network. Once connected, the node downloads, hosts and synchronizes a copy of the Bitcoin ledger, helping to ensure Bitcoin network security and transaction validation.
As the Bitcoin Core project is open-source, anyone can view, clone or modify the code for their own use. This allows anybody to replicate or “fork” their own Bitcoin network with modifications. Critically, this does not mean that the original Bitcoin protocols can be modified by anyone. Upgrades and modifications to Bitcoin must be proposed, reviewed and voted on by the decentralized Bitcoin community.
Bitcoin Core is fundamental to the blockchain and cryptocurrency, ensuring everybody follows the same rules and keeping the network secure, decentralized and trustworthy.
Did you know? Satoshi Nakamoto is a pseudonym used by the person (or persons) who developed Bitcoin. This person wrote the main code and authored the Bitcoin white paper, but they are anonymous, and nobody knows for sure who the creator of Bitcoin really is.
Who controls Bitcoin Core? Understanding its governance
Bitcoin is not owned or operated by a single company, organization or government; instead, it is decentralized. This spreads out Bitcoin Core governance, decision-making and control to many different people or entities. It allows anybody to share in the power and responsibility of maintaining the blockchain. Often, this makes systems securer, fairer and more transparent.
The Bitcoin Core development process is a group effort from volunteers referred to as Bitcoin Core developers. There are no restrictions or qualifications needed to be a Core developer, and there’s no single leader or manager deciding what to build.
This community approach allows any developer to propose changes to the network through Bitcoin Improvement Proposals (BIPs). A proposal is then reviewed and voted on by the community. If accepted, developers can write and test the code to ensure it works correctly. Once thoroughly reviewed, a core developer with commit privileges merges the changes into the software code.
This rigorous review process ensures that Bitcoin Core updates are secure, reliable and aligned with the main consensus of the network participants.
Did you know? The Bitcoin Core development is funded by donations and several organizations that have committed to sponsoring its maintenance. These funders include Square Crypto, Chaincode, MOT DCI, Blockstream, Gemini, Coinbase and BitMEX.
Key features and functions of the Bitcoin Core
The software incorporates a number of features to give users the functionality to both secure and manage the network while also using the cryptocurrency itself.
Here are the main Bitcoin Core features:
Transaction validation
When a new transaction is broadcast to the network, nodes check it against the set of rules to ensure it is valid. The process involves verifying the sender has the required funds to make the transaction and that it is correctly signed.
Then, when a new block is mined, the nodes check that the transactions contained are valid and match the consensus rules. These rules include block size, format and cryptographic mining difficulty that miners need to solve. Correct rule enforcement stops fraudulent behavior and double-spending of coins.
Wallet functionality
The Bitcoin Core client has a built-in crypto wallet. This allows users to store, send and receive Bitcoin (BTC) within the software. It is a self-custody wallet that gives you full control over private keys while being able to track transaction history and set custom transaction fees.
The wallet also offers multisignature capabilities, so multiple people are needed to authorize outgoing payments. It was the first Bitcoin wallet, but since it was realized, many other Bitcoin wallets are now available. These include software wallets you can run on a computer or phone, plus hardware wallets to store your crypto offline when not in use.
Participation
Bitcoin core users also have a huge role to play in network participation — not just validating transactions but broadcasting them to other nodes. In addition, nodes must maintain a complete copy of the blockchain network. That means storing data on every transaction ever made on Bitcoin.
This helps decentralized record-keeping, making it almost impossible to alter or delete past transactions. Any node attempting to do this would be rejected from the network, so it builds transparency and trust automatically. Plus, Bitcoin Core participants can vote on proposed protocol changes.
Mining
The original Bitcoin Core client had mining functionality built-in to the wallet, although this was disbanded in 2016. Before this, anybody could mine using their computer’s CPU. Now you need specialist mining software and hardware.
Did you know? Bitcoin’s ledger is over half a terabyte in size; that’s more than 500GB. Downloading the full data and syncing it with the blockchain can take weeks when setting up a node. Pruning methods have been developed to reduce hard drive space to validate incoming transactions drastically.
Running a Bitcoin Core node: Step-by-step guide
Here’s a step-by-step guide to running a Bitcoin core node:
Step 1: Check minimum requirements
- Ensure your system meets the basic requirements: recent OS (Windows, macOS, Linux), at least 7 gigabytes of free disk space, 2GB of RAM and a reliable internet connection with upload speeds of at least 400 Kbps.
Step 2: Download Bitcoin Core
- Go to the Bitcoin Core website and download the latest version suitable for your OS.
Step 3: Install Bitcoin Core
- Follow the installation instructions. When setting up, choose a secure directory with enough space to accommodate the blockchain.
Step 4: Initial blockchain sync
- Start Bitcoin Core; it will automatically begin downloading and synchronizing the blockchain. This may take several hours or even days, depending on your internet speed and hardware.
Step 5: Configure network settings
- If behind a firewall, open port 8333 to allow incoming Bitcoin connections. This helps with connectivity and network stability.
Step 6: Monitor and secure your node
- Regularly check your node’s status to ensure it’s connected and syncing. Also, consider running it with wallet security settings or linking an external secure wallet.
Full details about running a Bitcoin full node can be found here.
Did you know? Initial Block Download (IBD) is the process by which nodes synchronize with the Bitcoin network by downloading blocks that are new to them. This occurs when a node is significantly behind the current tip of the blockchain. During IBD, the node does not accept incoming transactions or request transactions from the mempool, ensuring that it fully synchronizes before participating in the network.
Costs and warnings
Costs:
- Bandwidth: Running a full node uses around 200GB per month of upload bandwidth and approximately 20GB of download bandwidth, with an additional 340GB on initial sync.
- Storage and CPU: The blockchain is large, so ensure storage speed is optimal, and check your CPU capacity to avoid slow performance.
Warnings:
- Legal risks: Bitcoin may be restricted in some regions; check local regulations.
- Bandwidth limits: Exceeding limits could lead to extra charges or even service termination from your Internet Service Provider (ISP).
- Anti-virus issues: Some anti-virus software may mistakenly flag blockchain data, particularly on Windows. Configure exceptions if this occurs.
- Potential attacks: Running a node can expose you to denial-of-service (DoS) attacks, affecting your internet or CPU bandwidth. Always secure your connection and monitor for unusual activity.
Bitcoin Core notable developments
Major upgrades to the Bitcoin blockchain are few and far between. Over the years, there have been some notable code changes that were agreed upon, developed and implemented by the Bitcoin Core community.
Segregated Witness (SegWit)
SegWit improves the transaction throughput of Bitcoin. It was activated on the Bitcoin blockchain on Aug. 24, 2017, and was a contentious issue in the community, but the proposal was agreed upon by a majority consensus. The improvement reduces the weight of transactions in each block by splitting transactions into two sections.
Simply put, it allows more transactions to be included in each block. This increases the number of transactions validated every 10 minutes. There were further proposals to add SegWit2x upgrades to increase each block size. This led to disagreements and a lack of consensus, so it was never implemented — an example of the Bitcoin Core community rejecting a proposed upgrade.
Taproot
Another protocol upgrade implemented by the Bitcoin Core community is Taproot. This aims to improve privacy, efficiency and smart contract capabilities. It was activated on Nov. 14, 2021. The proposal reached a 90% consensus, and it is thought to give developers a wider range of options to build on the Bitcoin network. Bitcoin Core wallets also now support Taproot transactions.
Schnorr Signatures
Schnorr signatures, a more efficient and secure signature scheme, were introduced, enabling features like batch verification and multisignature wallets.
Bitcoin Core’s future roadmap and challenges
The future of Bitcoin is shaped by continual community proposals, development efforts and the evolving needs of cryptocurrencies. One of the primary focuses of Bitcoin Core is to address scalability and performance improvements continually.
Accusations of slow and expensive transactions are regularly made against Bitcoin, especially during busy periods for the network. This leads to fierce debate in the community on how to increase transaction throughput and reduce fees. Those wishing to submit or review BIPs can do so on the relevant GitHub. Here, you can see a full historical list and current applications.
Privacy and security are the other big focus going forward. Both are crucial in the fundamental design of Bitcoin. Many expect future versions of Bitcoin Core to include more robust security features, following on from the Schnoor signatures and Taproot activated in 2021. You might see enhancements like coin-mixing protocols and transaction obfuscation in the coming years.
On the security side of things, the Bitcoin Core development team will continue to protect against new types of attacks or vulnerabilities. Moreover, the threat of quantum computing has prompted research into quantum-resistant cryptographic algorithms. Bitcoin Core developers are actively exploring ways to incorporate these algorithms into the protocol to ensure its long-term security.
Written by Marcel Deer