Main Functions Of Bitcoin’s Monetary System

In order to function as a monetary system, without a central mediator, Bitcoin needs different participants in its network to achieve the following:

1. Maintaining an accurate historic ledger of transactions & unspent balances
2. Validate new transactions that confirm with the rules (consensus mechanism)
3. Add those transactions to the historic ledger, in the correct data format
4. Issue new bitcoin at the defined rate – currently 6.25BTC per new block
5. Allow wallets to spend & receive transactions & sync to the ledger
6. Act as a service for external users/services to reference transactional data
7. Route information across participants in its peer-to-peer network

Satoshi Nakamoto encapsulated these functions in the original reference code he wrote in 2008.  The software has since been updated and is made available in a reference client, the most commonly used being Bitcoin Core.

Bitcoin Core enables anyone with a modest computer set-up to join a network of Nodes fulfilling Bitcoin’s functions, as well as providing a bridge to those that want to build services to expand the ecosystem and user adoption.