On 19 December 2013 12:13, Telmo Menezes <te...@telmomenezes.com> wrote:
> > All the transactions that occurred so far are registered in a file > that is shared between the nodes in the network. New transactions are > broadcast to many nodes. > > One of these nodes is going to be lucky enough to find a way to > incorporate the outstanding transactions into the file according to > very strict requirements. These outstanding set of transactions will > form a "block". A block contains the following things: > > - the hash of the previous block > - the set of transactions > - an arbitrary number (nounce) > > An hash is the output of a one-way functions. One-way functions are > hard to invert, so getting the original block from the hash is > computationally hard. The bitcoin protocol wants to make the hash hard > to create, in part because every time a hash is discovered, the > discoverer is rewarded with a predetermined number of bitcoins. The > way to make the hash hard to create is that the network agrees that it > must start with a certain number of zeros. The only way to meet this > requirement is through brute force, by trying random values for the > nounce until one works. > > Once the hash is found, a new block is created and work will begin on > finding the nest one, ad infinitum. This is why the ledger file is > called a blockchain. Each block hashes the hash of the previous block. > > This difficulty also serves as a proof-of-work (a receipt that shows > that a certain amount of computational effort was spent, on average). > This protects the network against attacks. If a node received two > conflicting blockchains, it will chose the longest one. This way, > unless the attacker controls the majority of the computing power of > the network, it cannot create a fake blockchain longer than the rest > of the network. > > So mining for bitcoins is the same process that allows for > transactions. There is also the possibility of transaction fees. When > you make a transaction, you can volunteer to pay a fee to the miners. > The discoverer of the next block will receive this fee. Nodes that > receive your transactions are not forced to accept them, so the fee is > an incentive for them to accept it. As mining becomes less profitable, > it becomes more likely that miners will expect fees. Once all coins > are discovered, the network will work solely on fees, and I imagine > fee prices will emerge naturally (miners will compete on price, users > will pay more according to urgency). In a market with many > transactions, mining can become profitable even with no new coins to > discover and low fees. > > What "contains" your coins are wallets. Wallets are two random > numbers. One is public, for incoming transactions and one private, for > outgoing transactions. Only you know your private address but if you > sign a transaction with it, the validity if the transaction can be > confirmed through a one-way function against the blockchain. So > ultimately, you keep possession of your coins by knowing the private > address. > > So the blockchain is a gigantic number and the wallets are numbers. > The actual coins are not numbers, they are a complete abstraction. > > Thank you very much for that description, which I think I have more or less managed to understand. (I assume the 21 million limit is an outcome of this system demanding that the hast start with a specified number of zeroes?) It sounds as though these things will eventually mimic house prices, which "decouple" from the cost of building after a while and go into a market-driven upwards spiral. (Well, except that people actually *need * houses...) -- You received this message because you are subscribed to the Google Groups "Everything List" group. To unsubscribe from this group and stop receiving emails from it, send an email to everything-list+unsubscr...@googlegroups.com. To post to this group, send email to firstname.lastname@example.org. Visit this group at http://groups.google.com/group/everything-list. For more options, visit https://groups.google.com/groups/opt_out.