On 19 December 2013 12:13, Telmo Menezes <[email protected]> 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 [email protected]. To post to this group, send email to [email protected]. Visit this group at http://groups.google.com/group/everything-list. For more options, visit https://groups.google.com/groups/opt_out.
