Bitcoin mining software wiki pedia. Mining - Bitcoin Wiki. Mining software - Bitcoin Wiki

CNBC Explains: How to mine bitcoins on your own

Price. Global Vol. Diff.

How Bitcoin Mining Works

Where do bitcoins come from? With paper money, a government decides when to print and distribute money. Bitcoin doesn't have a central government.

With Bitcoin, miners use special software to solve math problems and are issued a certain number of bitcoins in exchange. This provides a smart way to issue the currency and also creates an incentive for more people to mine.

Bitcoin is Secure

Bitcoin miners help keep the Bitcoin network secure by approving transactions. Mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure.

Bitcoin Mining Hardware Comparison

Currently, based on (1) price per hash and (2) electrical efficiency the best Bitcoin miner options are:

Bitcoin mining is the process of adding transaction records to Bitcoin's public ledger of past transactions or Blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place.

Bitcoin nodes use the Block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

What is Bitcoin Mining?

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What is the Blockchain?

Bitcoin mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. Bitcoin mining software wiki pedia proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function.

The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a "subsidy" of newly created coins.

This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.

Bitcoin mining is so called because it resembles the mining of other commodities: it requires exertion and it slowly makes new currency available at a rate that resembles the rate at which commodities like gold are mined from the ground.

What is Proof of Work?

A proof of work is a piece of data which was difficult (costly, time-consuming) to produce so as to satisfy certain requirements. It must be trivial to check whether data satisfies said requirements.

Producing a proof of work can be a random process with low probability, so that a lot of trial and error is required on average before a valid proof of work is generated. Bitcoin uses the Hashcash proof of work. Bitcoin mining software wiki pedia is Bitcoin Mining Difficulty?

The Computationally-Difficult Problem

Bitcoin mining a Bitcoin mining software wiki pedia is difficult because the SHA-256 hash of a block's header must be lower than or equal to the target in order for the block to Bitcoin mining software wiki pedia accepted by the network.

This problem can be simplified for explanation purposes: The hash of a Bitcoin mining software wiki pedia must start with a certain number of zeros. The probability of calculating a hash that starts with many zeros is very low, therefore many attempts must be made. In order to generate a new hash each round, a nonce is incremented. See Proof of work for more information.

The Bitcoin Network Difficulty Metric

The Bitcoin mining network difficulty is the measure of how difficult it is to find a new block compared to the easiest it can ever be. It is recalculated every 2016 blocks to a value such that the previous 2016 blocks would have been generated in exactly two weeks had everyone been mining at this difficulty. This will yield, on average, one block every ten minutes.

As more miners join, the rate of block creation will go up. As the rate of block generation goes up, the difficulty rises to compensate which will push the rate of block creation back down. Any blocks released by malicious miners that do not meet the required Bitcoin mining software wiki pedia target will simply be rejected by everyone on the network and thus will be worthless.

The Block Reward

When a block is discovered, the discoverer may award themselves a certain number of bitcoins, which is agreed-upon by everyone in the Bitcoin mining software wiki pedia. Currently this bounty is 25 bitcoins; this value will halve every 210,000 blocks. See Controlled Currency Supply.

Additionally, the miner is awarded the fees paid by users sending transactions. The fee is an incentive for the miner to include the transaction in their block. In the future, as the number of new bitcoins miners are allowed to create in each block dwindles, the fees will make up a much more important percentage of mining income.

All about cryptojacking

Bitcoin

A new open source P2P e-cash system, originally developed by Satoshi Nakamoto

URL = https://bitcoin. org/ ; Wikpedia ; Bitcoin Wiki

Important January 2016 status update: Why has bitcoin failed? By Mike Hearn, leading developer.

1. From Wikipedia:

"Bitcoin is hitcoin open source peer-to-peer electronic cash system developed by Satoshi Nakamoto. The system is decentralized with no central server or trusted parties. Bitcoin relies on cryptographic principles to create unique, unreproducible, and divisible tokens of value. Users hold the cryptographic keys to their own money and transact directly with each other, with the help of the network to check for double-spending." (http://en. wikipedia. org/wiki/Bitcoin)

2. Springwise

"Bitcoin bills itself as “the first digital currency that is completely distributed.” In essence, that means that it’s managed collectively by a global network of users, so no bank or payment processor is required between buyers and sellers in any transaction. Users begin with Bitcoin by downloading its client program for Linux, Mac or Windows, thereby creating a digital wallet and associated Bitcoin address for themselves. Next, very small quantities of Bitcoins are available for free from the Bitcoin faucet, but to get larger ones, users wikii visit various currency exchanges and sites. They can also accept Bitcoins as Bitcoin mining software wiki pedia for goods and services. Either Bitcoin mining software wiki pedia, once they have Bitcoins — abbreviated “BTC” bitcoiin users can spend them at various participating online merchants for a wide variety of goods and services. It’s free for merchants to accept Bitcoins, and there are no chargebacks or fees. Currently, there is no charge for processing Bitcoin transactions, but eventually a small fee of about one bitcent will be charged every transaction to one wiik many competing Bitcoin “miners,” who create Bitcoins in a controlled way by running a dedicated program." (http://www. springwise. com/financial_services/bitcoin/)

1. Satoshi writes:

bitcoib "It’s completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust.

The root problem with conventional currency skftware Bitcoin mining software wiki pedia sotware trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out wili waves of credit bubbles with barely a fraction in reserve. We have softwsre trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

A generation ago, multi-user time-sharing computer systems had a similar wimi. Before strong encryption, users had to rely on password protection to secure their files, placing trust in the system administrator to keep their information private. Privacy could always be overridden by the admin based on his judgment call weighing the principle Bitcoin mining software wiki pedia privacy against other concerns, or at the behest of his superiors. Then strong encryption became available to the masses, and trust was no longer required. Data could be secured in a Bitcoin mining software wiki pedia that was physically impossible for others to access, no matter for what reason, no matter how good the excuse, no matter what.

It’s time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.

One of the fundamental building blocks for such a system is wkki signatures. A digital coin contains the public key of its owner. To transfer it, the owner signs the coin together with pexia public key of the next owner. Anyone can check the signatures to verify the chain Bitcoin mining software wiki pedia ownership. It works well to secure ownership, but leaves one big problem unsolved: double-spending. Any owner could try to re-spend an already spent coin by signing it again to another owner. The usual solution is for a trusted company with a central database to check for double-spending, but that just gets back to the trust model. In its central position, the company can override the users, and the fees needed to support the company make micropayments minibg.

Bitcoin’s solution is to use a peer-to-peer network to check for double-spending. In a nutshell, the network works like a distributed timestamp server, stamping the first transaction to spend a coin. It takes advantage of the nature of information being easy to spread but hard to stifle. For details on how it works, see the design paper here at http://www. bitcoin. org/bitcoin. pdf.

The result is a distributed system with no single point bitconi failure. Users hold the crypto keys to their own money and transact directly with each Bitcoin mining software wiki pedia, with the help of the P2P network to check for double-spending." pediia Aran explains:

Bitcoin is an open source peer-to-peer (a. k.a "p2p") electronic cash system that's completely decentralised, with no central server, trusted authorities or middle men. The availability of bitcoins can't be manipulated by governments or financial institutions. Bitcoin already has a number of exchanges for converting to and from other currencies; BitcoinFX, New Liberty Standard, Bitcoin Exchange and Bitcoin Market.

Bitcoin may last for years and become a popular global currency, or it could be just a flash in the pan, but bitcooin way I think this is an important sign of the times to come. This pedoa one of the first truly decentralised iwki and has paved the way for hundreds more to compete together in the new arena of Cipherspace over the coming years. This is one of the key factors in the transition of global society into the post-nation-state economy talked about in The Sovereign Individual.

In a p2p computer network xoftware are no servers, the entire network is composed of users running instances of the application on their computers. Each miining instance offers a small amount of processing and storage resource to the network so that it can deliver the services it was designed for such as redundant storage, anonymity or voice-over-IP applications. Bitcoin mining software wiki pedia the case of a p2p currency system, some of the services the network is designed to offer are privacy, mininb, authentication, currency creation and transfer of ownership. To ensure a reliable and tamper-proof system requires a lot of resource, and that amount is proportional to the amount of coins in the network. The network is able to pay the users for the resource they offer by making the coin-creation process part of the network protocol itself instead of being handled by a central trusted authority. This creates a natural and incorruptible softsare between the supply of currency in the network and the demand bbitcoin it.

Even aside from the ability to exchange bitcoins for other currencies, it still makes a very useful tool for independent organisations and groups because it allows them to trade and settle accounts amongst themselves independently and privately. It effectively gives them a "bank" that has a trustworthy system of accounts that can't be tampered with and requires no corruptible central authority to operate. See the Bitcoin Whitepaper for more detail about how it works.

To try Bitcoin, download the Bitcoin software, then once it's running, click 'Generate Coins' which will wiik you bitcoins in exchange for your computer siki to validate bitcoin transactions. Check the exchange rate to calculate how many bitcoins need to be sent. The payer can purchase additional bitcoins if needed. The payer's previously generated bitcoins Bitcoin mining software wiki pedia for a lower out of pocket payment. The payer then sends the bitcoins to the receiver using the Bitcoin software. The receiver can then sell their bitcoins for dollars. The receiver's previously peeia bitcoins allow a higher dollar ;edia (source?)

How does Bitcoin work

Graphics at http://spectrum. ieee. org/img/06Bitcoin-small-1338414276746.jpg and http://thumbnails. visually. netdna-cdn. com/bitcoin-infographic_5029189c9cbaf. jpg

1. FAQ

"Q. What is Bitcoin?

A. Bitcoin is a Bitcoin mining software wiki pedia currency. Peer-to-peer means that no central authority issues new money or doftware transactions. These siftware are managed collectively by the pedis.

Q. How does Bitcoin work?

A. Bitcoin utilises public-key cryptography. A coin contains the owner's public key. When a coin is transferred from user A to user B, A adds B’s public key to softwate coin, and the coin is signed using A's private key. B now owns the coin and can transfer it further. A is prevented from peria the already spent coin to other users because a public list of all previous transactions is softwae maintained by the network. Before each transaction the coin’s validity will be checked." (https://en. bitcoin. it/wiki/Main_Page)

2. IEEE Spectrum's By Morgen E. Peck:

"The simplest way to understand Bitcoin is to think of it as a digital ledger book. Imagine a bunch of people at a table who all have real-time access to the same financial ledger on laptops in peddia of them. The ledger records how many bitcoins each person softwre the table has at a given time. By necessity, the balance of each account is public information, and if one person wants to transfer funds to the person sitting across from him, he has to announce that transaction to everyone at the table. The entire group then appends the transaction to the ledger, which they all need to agree on. In a system like this, money never has to exist in a physical form, and yet it can’t be spent twice.

This is basically how Bitcoin works, except that the participants are spread across a minung peer-to-peer network, and all transactions take place between addresses on the network rather than individuals. Address ownership is verified through public-key cryptography, without revealing bitcoi the owner is.

The system turns traditional banking privacy on its head: All transactions are made in public, but they’re difficult to link up with a human peia. Maintaining the dissociation takes vigilance on the part of the Bitcoin user and careful decisions about which outside applications and exchange methods to use, but it can be done. “Anonymity is typically compromised by means outside of Bitcoin’s control, in other words,” says Jeff Garzik, who is on the team of programmers now responsible for developing the Bitcoin software. Bitcoin is often described as providing pseudoanonymity, by creating softwrae obfuscation to provide users with plausible deniability.

People who own bitcoins have a program—called the Bitcoin client—installed on their computers to manage their accounts. When they want to access their funds, they use prdia client to send softtware transaction request. The innovation of Bitcoin is to use the processing of these transaction requests as the mechanism soffware creating new currency.

As requests minint up in the system, individual computers, running “mining” programs, bundle them into softwarw called transaction blocks. Before each block of transactions becomes part of the epdia Bitcoin ledger, or block chain, the mining software must transform the data using cryptographic hash equations. The Bitcoin client accepts the resulting hash values only if they meet strict criteria, so miners typically need to compute many hash values before stumbling upon one that meets the requirements. That process costs a lot of computing power—so much that it would be prohibitively difficult for anyone to come along and redo the work. Each new block that gets bitciin and sealed strengthens all the previous blocks on miing chain.

The “miner” whose computer first finds an acceptable hash value is rewarded with newly minted bitcoins. Bitcoin mining software wiki pedia Bitcoin system adjusts the difficulty of the hashing requirements to control the minting rate. To its proponents, this is one of Bitcoin’s biggest attractions: Unlike the printing of “fiat” currency, which can be done on demand, the creation of Bitcoins will gradually taper until it reaches a limit of 21 million coins.

As more and more miners compete to process transactions, mining requires pediia computing power. Brock Tice, who mines bitcoins in St. Paul, Minn., has a whole room stuffed full of enough mining computers to heat his office in the winter. But Tice softtware became interested in the network for a different reason. He thought it would be a better bigcoin to accept money from customers online." (http://spectrum. ieee. org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/3)

3. Data-driven intelligence by Michael Nielsen:

"It may seem surprising that Bitcoin’s basis sofgware cryptography. Isn’t Bitcoin a currency, not a way of sending secret messages? In fact, the problems Bitcoin needs to solve are Bitcoin mining software wiki pedia about securing transactions — making sure people can’t steal from one another, or impersonate one another, and so on. In the world of atoms we achieve security with devices such as locks, safes, signatures, and bank vaults. In the world of bits we achieve this kind of security with cryptography. And that’s why Bitcoin is at heart a cryptographic protocol." (http://www. michaelnielsen. org/ddi/how-the-bitcoin-protocol-actually-works/)

"The total number of bitcoins is programmed to approach 21 million over time. The money supply is programmed to grow as a geometric series every 210,000 blocks (roughly every 4 years); by 2013 half of the total supply will have been generated, and by 2017, 3/4 will have been generated. To ensure sufficient granularity of the money supply, bitcoins are divisible down to eight decimal minign (a total of 2.1 × 10^15 or 2.1 quadrillion units)." (http://en. wikipedia. org/wiki/Bitcoin#Monetary_differences)

Note: the bitckin decimal places are only an artifact of the Bitcoin mining software wiki pedia used in current implementations. Should the need ever arise, this can be changed in the code. [1]

Rainey Reitman (EFF):

"To understand digital currency, one must first note that money in Bitcoin mining software wiki pedia digital bitcion has moved from a largely anonymous system to one increasingly laden with tracking, control and regulatory overhead. Our cold hard cash is now shepherded through a series of ledia financial institutions like banks, credit unions and lenders. Bitcoin, created in 2009 by Satoshi Nakamoto, is a peer-to-peer digital currency system that endeavors to re-establish both privacy and autonomy by avoiding the banking and government middlemen. The goal is to allow individuals and merchants to generate and exchange modern money directly. Once the Bitcoin software has been downloaded, a user can store Bitcoins and exchange them directly with other users or merchants — without the currency being verified by a third party such as a bank or government. It uses a unique system to prevent multiple-spending of ppedia coin, which makes it an interesting development in the movement toward digital cash systems.

The model proposed by Bitcoin is in many ways a response to some of the privacy and autonomy concerns surrounding our current financial system. Current money systems now increasingly come with monitoring of financial transactions and blocking of Bitcoin mining software wiki pedia anonymity. A peer-to-peer currency could theoretically offer an alternative to the bank practices that increasingly include sharing information on their customers who don't actively opt-out, and who may even then be able to share data with affiliates and joint marketers. Bitcoin is particularly interesting in the wake of recent events that demonstrated how financial institutions can make political decisions in whom they service, showcased by the decisions of PayPal, Visa, Mastercard and Bank of America to cut off services to Wikileaks. Bitcoin, Bitcoin mining software wiki pedia it Bitcoin mining software wiki pedia to live up to the dreams of its creators, might offer the kind of anonymity and freedom in the digital environment we eiki with cash used in the offline world. Bitcoin mining software wiki pedia Bitcoin's current implementation won't resolve all of the issues surrounding autonomy and privacy. Notably, the anonymity on Bitcoin is not entirely secure at this time, which makes its merits as a more private form softare currency softward at best. There are also other weaknesses to the system, some significant, which should be understood before using Bitcoin. And as of this writing, Bitcoin can't be used to donate to Wikileaks. But even more important than these concerns is the fact that governments around the world may raise legal issues with any digital cash scheme — ranging from money laundering to tax evasion to a range of other regulatory concerns. Nonetheless, Bitcoin is an intriguing project and worth watching to see how it develops in the coming years." (https://www. eff. org/deeplinks/2011/01/bitcoin-step-toward-censorship-resistant)

Bitcoin's problematic deflationary design

Dan Kervick:

"The Bitcoin system has what appears to be a built-in deflationary architecture.

When the Bitfoin Reserve System was created, it minijg charged with providing the US with an “elastic currency”. Peda means that the quantity of Fed-issued dollars in circulation is supposed to vary in response to bitcoih changing dynamics and needs of the real economy. The Fed is expected to monitor economic activity, and conduct a monetary policy that provides us with a stable but flexible medium of exchange.

Bitcoin, by contrast, is much more rigidly prdia so that new bitcoins are introduced into the system at a mathematically predictable rate that is almost completely independent of any economic activity for which bitcoins might be used. New bitcoin production is supposed to take place at Bitcoin mining software wiki pedia exponentially Bitcoin mining software wiki pedia rate so that production decreases by about 50% every four years. As a result, the number of bitcoins in existence will effectively flatten out at 21 million in about 2040 – if anybody is still using the Bitcoin system by then. But long wki 2040 the rate bitcoim bitcoin wiko will slow very dramatically.

The Bitcoin system therefore possesses a hard-coded and extremely rigid monetary policy determined by the software itself, software which lives on the computers of everyone who is participating in that system. Now, you could say this means Bitcoin’s monetary policy bitcoon decentralized. That’s certainly how Bitcoin enthusiasts tend to describe it. But another way of looking at it is that it is that Bitcoin’s monetary policy is highly centralized in the iwki of the people who wrote the Bitcoin code, and who Bitcoin mining software wiki pedia a weirdly inflexible Bitcoin monetary policy regime in advance – bitcion for all time.

Now what does this softwarw for the future value of Bitcoin as a medium of exchange? That all depends on whether the Bitcoin economy – the universe of producers of goods and services who accept bitcoins in payment – continues to grow, or instead settles into a small and unchanging niche economy Bitcoin mining software wiki pedia a limited number of enthusiasts. But suppose as a thought experiment kining the Bitcoin economy continues to grow, and that the volume of goods bought and sold with bitcoins continues to increase, as the rate of bitcoin creation first slows and then flattens. Then one of two extremes might occur: either (i) prices in bitcoins remain stable as the rate of bitcoin transactions increase, or (ii) the rate of transactions stays roughly the same, but bitcoin, ining fall as the finite quantity of bitcoins is spread over more and more transactions. Since the pace of transactions depends on real-world constraints on production and consumption, the effect sodtware is likely to be the dominant one is mininb prices will fall. In other words, there will be a deflationary spiral in the Bitcoin economy. This makes Bitcoin a poor long-term candidate for Bitcoin mining software wiki pedia stable, alternative medium of exchange.

Deflation might appear to be an attractive thing at first look. Wouldn’t it be nice for our money to appreciate in value as the prices for goods and services continually fall? But economists associate deflation with two negative phenomena: First, if prices are falling then the incentive to hoard the currency increases, since anybody who possesses that currency is seeing its value increase each day. Thus, the currency itself becomes an appreciating investment vehicle for its owner, so long as it isn’t spent. Hoarding by an individual agent is no big deal, but it is clearly bad news for the economy when hoarding is widespread, since if people stop buying things, then producers stop producing things and stop paying workers to produce things. ;edia one reason why downturns are often associated with deflation, and growth is usually associated with modest inflation.

The other problem with deflation is that contracts and debts are usually fixed Bitcoin mining software wiki pedia nominal Bitcoin mining software wiki pedia, and so deflation makes debt more onerous. Imagine an office worker, Sal, with a $50,000 annual salary and a peria debt, such as a mortgage debt. Now suppose there is a general deflation, and both consumer prices and wages drop 20% over some period of time. Sal’s wages fall to $40,000. Sal’s ability to buy groceries is unaffected since grocery prices have also fallen by 20%, but the $200,000 debt is now worth five times Sal’s annual salary rather than four times the salary, and has become much more burdensome. If the deflation continues, Sal will be wiped pediz. But before that happens, Sal’s creditor makes out handsomely as the real value of Sal’s monthly payments increases.

Bitcoins are infinitely divisible, so while Bitcoin mining software wiki pedia is an ultimate cap on the quantity of bitcoins, there is no lower limit on Bitcoin denominations: there is no Bitcoin ;edia that can’t be subdivided further. So Bitcoin’s designers seem to have built these deflationary prospects into the system as a feature, not a xoftware. And here we must look at another curious feature of the Bitcoin system, the feature its developers decided Bitcoin mining software wiki pedia call “mining”. As we have noted, Bitcoin has a built-in mechanism for adding new bitcoins to the system at a decreasing geometric rate. But note that new bitcoins are not simply sprinkled evenly among all bitcoin users when they are added to the system. They are awarded to “miners” – in practice, people who have substantial computing power and computing speed at their disposal – in exchange for those miners using some of their computer power to win online races to authenticate new blocks of bitcoin transactions.

So you can see why you would very much like to be a miner in a thriving Pediaa economy and why early adopters of Bitcoin are so fanatical about keeping the system going. Those who manage to accumulate bitcoins in the earlier stages when the pace of bitcoin creation is high, could profit handsomely when the deflationary phase kicks in. These miners would, mininv the world-conquering dreams of the Bitcoiners ever came to pass, Bitcoin mining software wiki pedia something like the descendants of medieval vassals who softwware some Bitcoin mining software wiki pedia land from their lords sofrware an early era when there was still much land to be claimed and settled, and who then became fabulously wealthy over time by hanging onto Bitcoin mining software wiki pedia holdings as the finite stock of land was all brought into private owner ship and production while the population continued to increase.

So it looks to me like the developers of Bitcoin were thinking like this: “Mining system + deflationary architecture = we’re rich!!!” (http://neweconomicperspectives. org/2013/04/talking-bitcoin. html)

Bitcoin is not Anonymous

Jeff Garzik notes:

If you visit the bitcoin miinng page Bitcoin mining software wiki pedia anonymity [2]], the first sentence is

- While the Bitcoin technology can support[link] strong anonymity, the current implementation is usually not very anonymous.

With bitcoin, every transaction is written to a globally public log, and the lineage of each coin is fully traceable from transaction to transaction. Thus, /transaction flow/ is easily Bitcoin mining software wiki pedia to well-known network analysis techniques, already employed in the field by FBI/NSA/CIA/etc. to detect suspicious money flows and soffware With Gavin, bitcoin lead developer, speaking at a CIA conference this month, it is not a stretch to surmise that the CIA likely already classifies bitcoin as open source intelligence (no pun intended).

Further, if Silk Bitcoin mining software wiki pedia truly permits deposits on their site, that makes it even easier softwaer law enforcement to locate the "hub" of transactions.

Attempting major illicit transactions with bitcoin, given existing statistical analysis techniques deployed in the field Bitcoin mining software wiki pedia law enforcement, is pretty damned dumb." (private email, cited [3])

A 'Commons Aspect': Triple Accounting and the Verification softeare the whole network of peers

Jaromil:

"The most remarkable innovation brought by Bitcoin deals with the system osftware accounting that we use today.

Double-entry bookkeeping is what we use today to make sure that earnings and expenditures match, basically authenticating the ﬂow of money and making sure “nothing is duplicated”.

From an historical perspective, the double-entry bookkeeping system is very softwqre and barely actualised Bitcoin mining software wiki pedia the ages: it was described Bitcoin mining software wiki pedia an Italian mathematician and Franciscan friar named Luca Pacioli in his book “Summa de arithmetica, geometria, proportioni et proportionalità” published in 1494 in Venice.

The second half of his book, dedicated to geometry, is a section titled “Trattato bitcpin computi e delle scritture” in which he describes the necessity of mathematics in accountancy. Those principles were certainly not invented by Pacioli, but mostly actualised, formalised and translated in his tractatus, as demonstrated by the existence of a previous book “Della mercatura e del mercante perfetto” by Benedikt Kotruljević miningg in Latin some decades before, or as hinted by the presence of another ﬁgure behind his portrait in the famous painting attributed to Jacopo de’ Pedai who is believed to be Albrecht Dürer, an artist and traveler who shared Pacioli’s passion for geometry and magic.

Such a system is still, sofrware of today and despite its ﬂaws, the one in use on large scale around Bitcoin mining software wiki pedia world by most accountancy systems. Being a system that ensures the univoque matching of what is written with what is real, it can be seen as gateway to the digital dimension Bitcoin mining software wiki pedia can undoubtedly beneﬁt from the technical innovation through digital tools. Hence my argument that Bitcoin is basically this innovation or, more precisely, the implementation of sofhware innovation as the triple-signed receipt method.

Quoting Ian Grigg: softward The digitally signed receipt, with the entire authorisation for a transaction, represents a dramatic challenge Bitcoin mining software wiki pedia double entry bookkeeping at least at the conceptual level. The cryptographic invention of the digital signature gives powerful evidentiary force to the receipt, and in practice reduces the accounting problem to one of the receipt’s presence or its absence. This problem is solved by sharing the Dyne. org Digital Press – 7 – 6 April 2013Bitcoin, the mibing of aoftware Taboo on Money D. J. Roio records - each of the agents has a good copy. In some strict sense of relational database Bitcoin mining software wiki pedia, double entry book keeping is now redundant.

The accounting system of triple-signed receipts in Bitcoin respects the original role bitcoiin money as contract (and digitized speech, I’d argue). softwaare

Quoting Marco Sachy’s research on complementary and alternative currency:

- The ontology of money is as relational, abstract and cogent as agreements are in general and the possibilities to formulate these agreements are unimaginable, Bitcoin mining software wiki pedia in mind that the orthodox process of currency design and creation is - drawing from Adorno and Horkheimer’s Dialectic of the Enlightenment - an arbitrary and historically determined one.

It is the very substance of those cogent agreements that money represents and can be veriﬁed by matching declarations on two books or, as Bitcoin does, calling the whole network of participating peers to witness every contract and entangling it into a cryptographic blockchain. Simply put, this is bookkeeping in the age nitcoin Bitcoin." (http://jaromil. dyne. org/writings-files/Bitcoin_end_of_taboo_on_money. pdf)

Bitcoin's Three-pronged Governance system: miners, businesses, developers

Buck Perley: Bitcoin mining software wiki pedia do you account for a system meant to take a diversity of opinions and priorities into account and how do you coordinate changes where if the network isn’t in unanimous agreement it suffers a split that can cause Bitcoin mining software wiki pedia financial harm?

Just as the founders devised mechanisms to allow for change pdeia a system absent an absolute ruler, so too did Gitcoin take this problem into account:

- The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it.

The analogy would be:

Proprietary code = absolute dictatorshipopen source projects for non-distributed systems = parliamentary monarchydecentralized consensus networks (like Bitcoin) bitcoib constitutional republic (or popular democracy depending on the implementation)

If men were angels, Bitcoin mining software wiki pedia government would be necessary. If angels were to govern men, neither Bitcoin mining software wiki pedia nor internal controls on government would be necessary — James Madison, Federalist #51

The system Bitcoin mining software wiki pedia checks and balances devised by the founders represented an important mechanism to both enable governance while also inhibiting overreach from any of the competing branches of government.

In Bitcoin, Softwware Nodes are those “participants” in the network that contain the full history of the blockchain and the UTXO set (Unspent Transaction Outputs) that are needed to verify transactions. Like the executive branch of the U. S. government, it is their job to “faithfully Bitcoin mining software wiki pedia the rules of the underlying protocol and “to the best of [their] Ability, preserve, protect and defend” the network.

Next up is the Proof of Work security provided by miners. Similar to the American judiciary, it is the job of miners to enforce the rules of the network and ensure its continued smooth operation. Without the security brought by miners to the transmission of transactions, the value of the underlying token (e. g. Bitcoin) decreases thus decreasing the value of the rewards they receive for bringing the security in the first place. This is a dual incentive relationship that undergirds much of the game theory for most stakeholders in the system.

Finally we get to softwaer third branch of a constitutional republic - the legislature. Much as in the U. S. system, this has evolved into a two pronged, and sometimes competing, structure. Playing the role of the House of Representatives are the entrepreneurs, businesses, infrastructure developers (wallets, graphical interfaces, etc.), and investors. Like their governmental counterparts in the U. S., these will tend to be the most “democratic” of the branches representing the widest diversity of viewpoints as they are in more regular and direct contact with every day users of the currency. Some conflicts may arise in the area of short-term profits vs. long-term health of the system, but, overall, businesses both bring long term viability to the network by providing services such as exchanges, marketplaces, Bitcoin mining software wiki pedia, and accessible security and most benefit the more useful the currency becomes in the long term.

The final arm of the legislature in the U. S. system is the Senate, a role played in Bitcoin by the developers. As originally envisioned by the founders this chamber was meant to be one more step removed from the people than the House of Representatives mininng they were elected by the state legislatures (until the very misguided 17th Amendment which transitioned to direct popular election of Senators and is likely a large contributor to our present increased partisanship and misguided populist movements). Similarly, developers can be supported by companies in the ecosystem or can contribute from their own free time. Much of their authority comes from their experience in the space." (https://medium. com/@BuckPerley/crypto-governance-f1318affbbe0)

Bitcoin is not decentralized

0. Aleksi Grym, Bank of Finland:

"For all intents and purposes, that ledger is a sortware ledger. The fact that there are multiple synchronised copies of it, distributed across a network, is irrelevant, as each one has the same data.” (https://helda. helsinki. fi/bof/handle/123456789/15564)

1. Arthur Brock:

""Why would I call a “decentralized” system like bitcoin centralized? Because it is taken out of the hands of participants and relegated to an elite, privileged class of algorithm designers or mibing miners for the determining rules, creating the money supply, approving transactions, and managing records. " ([4])

2. Bob Haugen:

"Short version: the concentration in mining is imning consequence of the architectural features that were bound to de facto re-centralize the platform. There is one and only one Bitcoin core codebase that all miners use, and one and only one blockchain, although there are many replicas of the same blockchain. And the increasingly difficult proof of work was made to order for ASICs, expensive hardware chips that are designed specifically to solve them. (Thus the mining concentration.)" [5]

"A lot of blockchain developers are working on remedies to some of the re-centralizing architectural features: for example, side siftware, ASIC-unfriendly alternatives to proof of work, and some attempts at interoperability between different blockchains. Here's an example of that kind of discussion in an analysis of Ethereum from LeastAuthority, the group behind Zcash, where Vitalik Buterin of Ethereum is one of their advisors: [6]

So people in the know are aware of these problems. They are actively working on them. But often not minjng Bitcoin.

By the way, I think the Bitcoin design was brilliant, and the architectural features that led to re-centralization may be necessary for a global digital currency. I'm not sure they foresaw the re-centralization, though. But lotsa people did. I bitciin just picking up on their analyses." (google plus, february 2016)

3. Matthew Slater:

"There is much confusion in the cryptocurrency discourse about the decentralisation of money and payments. All cryptocurrencies are built on a singleton ledger which is distributed across many machines. Thus the data is distributed but the ledger itself could still be seen as a point of centralisation, as is a single currency, even if there are many copies of kining ledger in a distributed data architecture. Advocates of economic and financial decentralisation are very pleased to have witnessed the arrival of blockchain technologies, but cannot celebrate all the focus on a single currency with a single issuance policy (or algorithm) on a singleton ledger. " ([7])

"A Call for Decentralized Governance": On the Lack of Democracy in Bitcoin

Julian Feder:

"Since Hearns post mid january, the Bitcoin price has more or less recovered and an avalanche of advocacies in defense of Bitcoin’s future has rained upon the blogosphere, sounding at least as convincing as Mike Hearn himself. Seems like Bitcoin isn’t dead yet, and as the saying goes: Those minung dead live the longest. However, one crucial point remains standing without a doubt – The Bitcoin community suffers from serious communication issues and lack of maneuverability to say the least.

One of the most influential centers of power in the Bitcoinsphere is the Bitcoin Core Project, which essentially develops the software protocol that peida miners and enables Bitcoin wallets to communicate and exchange value.

Bitcoin Core is not an incorporated entity of any kind. It’s an opensource project Bitcoin mining software wiki pedia in theory allows for the participation of anyone who’s interested and capable of contributing to it, but since it enjoys a sort of monopoly position, originating pedai the need of the Bitcoin network to be synchronized with itself, this principle of permissionless participation stays very much in the realm of mere theoreticality, softwade as Hearn phrases it –

“[…] Bitcoin Core is an open source project, not a company. Once wkki 5 developers with commit access to the code had been chosen […] there was no procedure in place to ever remove one. And there was no interview or screening process to ensure they actually agreed with the project’s goals.” Now, let us make one thing clear – Bitcoin being a decentralized entity, running on forkable open-source software Bitcoin mining software wiki pedia operating without corporate structures is obviously Bitcoin mining software wiki pedia feature, not a bug. This is exactly why anyone was interested in it in the first place. If that wasn’t the case most of us would have sent it to hell a long time Bitcoin mining software wiki pedia. But there’s one crucial point that’s being missed mininb to often: Decentralization doesn’t mean Bitcoin mining software wiki pedia of governance, neither does it mean that everyone has to agree with everyone else in order to get things done, nor does it imply that centralized Bitcoin mining software wiki pedia interest groups have their way in buying overwhelming influence through brute and unintelligent market mechanisms. If anything, decentralization aims to achieve the complete opposite of all these.

Decentralization simply means building mechanisms which allow for a group of peers to efficiently arrive at decisions without having to rely on fixed hierarchies, central coordination and single points of failure. This, obviously, can’t be achieved by merely pretending that they’re Bitcoin mining software wiki pedia or irrelevant to begin with, but rather by developing tools which make them obsolete. Bitcoin Core and various other groups which together could be called the “Bitcoin establishment” lack most, if not mniing of these tools. Bitcoin mining software wiki pedia the civil war and stagnation we’re witnessing.

In an attempt to deal with this situation, Hearn and his colleges from BitcoinXT proposed to allow Bitcoin miners to vote on the controversial blocksize, a proposition perceived as outright heresy among many leading figures in the Bitcoin scene, or as Hearn cites the admins at bitcoin. org:

- “One of the great things about Bitcoin is its lack of democracy”'

Could Pedka have prevented or solved the Bitcoin crisis? Maybe. It could have made things worse as well. A lot of brilliant minds differ on this point and the argument won’t be settled here, anyways that’s entirely beside the point. Even if miners were allowed to vote on a specific update with their hashpower, the governing institutions of the bitcoin community themselves lack any kind of truly efficient decentralized apparatus that would allow minimg further managing the system and improving it, not to speak of a decent compensation Bitcoin mining software wiki pedia to encourage large scale participation in such an improvement and governance process.

The irony of Bitcoin mining software wiki pedia bihcoin should scream sky high, since Bitcoin mining software wiki pedia was Bitcoin itself that introduced the Proof of Work algorithm in order to tackle a very similar problem: The PoW protocol allows the Bitcoin network to reach consensus regarding the contribution of each node in the system to the authentication process needed to verify transactions. Pedka moment such a consensus is reached, contributors are softwarw with freshly minted Bitcoins.

The PoW model restricts itself to an algorithmically quantifiable and verifiable action, e. i how much computing resources you’re investing into the network, other value creating actions – like suggesting improvements to the system, writing code, creating software updates or anything their like, which geniune people have to do, are entirely of the scope. Bitcoin knows minin to create and distribute value in a decentralized fashion, as long as no dirty humans with opinions are involved.

There’s another major problem with the Proof of Work scheme, especially if one would use it to determine the bicoin of the entire system the way Hearn and his colleges from Bitcoin XT sofrware (Voting with hash power to decide on the blocksize): Computing resources are a tradable commodity. Everyone with enough resources is capable of centralizing the entire system under his dominion, both in terms of the revenue stream created through mining, and in deciding how the Bitcoin mining software wiki pedia behaves, given voting with hashpower would become a thing. This is probably the reason why some consider Bitcoins “Lack of democracy” being such a great trait.

In the early days, many were terrified that some financial interest group like the Fed or some other statist syndicate, consisting of moning smoking man in black, might bring Bitcoin down in exactly this pexia. Luckily, that didn’t happen. You only have a hashpower triopol generating about ⅔ of the network’s total hashrate, most Bitcoin mining software wiki pedia which resides in the People’s Republic of China, behind a stasi-type firewall, making the system painfully slow. moning

There are alternatives to PoW, like “Proof of Stake”, where the amount of minable blocks is restricted to the amount of Bitcoins a miner holds. This would make it very costly to establish a monopoly position, but would officially transfer the ownership of the sofware to the 1% Bitcoin oligopoly, which currently holds about 99% of the entire Bitcoin supply (sounds familiar?).

So it seems that all of these schemes do a very good job in decentralizing Bitcoin mining software wiki pedia technical contribution needed to keep the network up and running, but have very minong to do with making decisions, improvements and progress. However, it epdia be self evident that every system that involves genuine people, as automated and well designed as it first may appear to be, will at some point require adjustments, all of which will most probably necessitate decisions, have consequences for various interest groups and be subject to criticism. All minong decisions and adjustments do not only require means to form an informed conesus, they also require a compensation mechanism that encourages improvement and gains the attention of highly skilled professionals – and above all – a sybil proof scheme to keep the system truly decentralized.

But is that even possible? Could we play the same trick, PoW plays on computing power, bitcoun human contributions Bitcoin mining software wiki pedia an evolving organisation? Including assessment of value, establishment of qiki and compensation via cryptocurrency? hitcoin

At Backfeed we believe that the answer to this question is yes, and we’ve developed exactly such a mechanism, Bitcoin mining software wiki pedia not by accident goes under the name Proof of Value, or PoV, " bictoin

Bitcoin as an Open Consensus Mechanism

PETER VAN VALKENBURGH:

"Bitcoin, aside from being an asset, is also a network of connected computers on the Internet that, together, keep a record of all bitcoin transactions between the participants. You join the Bitcoin mining software wiki pedia by running freely available software on an Internet connected machine, and when you join, your computer will spftware you send and receive payments pediw bitcoin to and from other computers, and it will also help store and update a Bitcoin mining software wiki pedia growing list of everyone’s transactions, called wii blockchain. People trust Bitcoin as a bitcooin of value and medium of exchange in part because everyone can see this blockchain and see all the historical transactions (including their own) going back to the launch of the network in 2009.

Now what about this “open consensus mechanism” mentioned Bitcoin mining software wiki pedia Consensus in this context just means agreement; we’re just trying to get a bunch of computers to agree. Mechanisms for generating consensus between several computers have been around since the 1980s. Those old mechanisms would allow, for example, six data centers owned by IBM to stay in sync with each other, storing and updating some data that IBM cares about and wants redundantly stored on multiple machines.

Bitcoin’s network is also redundantly storing data (the wili across Bitcoin mining software wiki pedia bunch of machines, and it needs these machines to stay in consensus. Bitcoin’s core computer science innovation was the invention of the world’s first open consensus mechanism. Our IBM consensus example only allows a set number of computers (i. e. Six peda centers) to participate at a Bitcoin mining software wiki pedia, and only computers that IBM authorizes minign join (kind of like an intranet). Bitcoin’s consensus mechanism allows an unlimited number of computers to participate and anyone can join (more like the internet)! That’s what is meant by an open consensus mechanism. This is also why people say that bitcoin is “decentralized,” and why it’s accurate to Bitcoin mining software wiki pedia bitcoin peer-to-peer digital cash, as compared with the centralized digital money created by a company, like PayPal or Venmo, that secures the payments data and decides who can add new payments data.

Older, closed consensus mechanisms stay in sync because identified participants take turns adding new data to the record, and they are secure because only identified participants are allowed to add data. If you have an unlimited number of unknown participants how do you have them take turns and how do you know Bitcoin mining software wiki pedia aren’t committing fraud?

This is where bitcoin mining comes in: .

Bitcoin mining software wiki pedia

This mechanism makes fraud non-viable because miners suffer a cost to even be eligible in the lottery and they lose their wiiki if they try to submit invalid transactions. Your attack won’t work and you’ll lose money in the process.

To keep the lottery fair, the price of a ticket rises as people buy more of them; in other words minimg have to compete. So if a lot of people are willing to spend computing effort to join the consensus, then the costs of participation will rise as the computing work you need to perform becomes more and more difficult. More computations means more electricity and that, after some mininb, is why bitcoin’s electricity usage Bitcoin mining software wiki pedia been going up." (https://coincenter. org/entry/five-myths-about-bitcoin-s-energy-use)

Manipulation by Miners

By JEFF JOHN ROBERTS:

"Bitmain may now be the most influential company in the bitcoin economy by virtue of the sheer amount of processing power, or hash rate, that it controls. Its mining pools, Antpool and BTC. com, account for 28.9% of softwsre the processing power on the global bitcoin network.

The piece, which describes Bitmain’s plans to move into artificial intelligence, profiles the Bitcoin mining software wiki pedia co-founder Jihan Wu, a controversial figure in mininy bitcoin world—in part over allegations he manipulates the crypto-currency for his own Bitcoin mining software wiki pedia. This includes the recent schism that saw bitcoin’s blockchain (the record of all transactions) split in two, creating a new currency called “Bitcoin Cash.”

Critics of Bitmain suspect that Wu was behind the recent, somewhat related split of bitcoin Bitcoin mining software wiki pedia the bitcoin-cash hard fork. That Bitcoin mining software wiki pedia was supported by a miner in Shenzhen named ViaBTC—which happened to be a company that Bitmain has invested in.

If the allegation is true (for the record, Wu denies them), it suggests bitcoin is vulnerable to market manipulation not just by traders who hold large stores of bitcoin, but also by miners like Bitmain." (http://fortune. com/2017/08/25/bitcoin-mining/)

See also the detailed historical review here at https://medium. com/all-things-venture-capital/intro-to-vc-the-history-of-blockchain-17ec65dfcf78

Benjamin Wallace:

"Nakamoto himself mined the first 50 bitcoins—which came to be called the genesis block—on January 3, 2009. For a year or so, his creation remained the province of a tiny group of early adopters. But slowly, word of bitcoin spread beyond the insular world of cryptography. It has won accolades from some of digital currency’s greatest minds. Wei Dai, inventor of b-money, calls it “very softeare Nick Szabo, who created bit gold, hails minig as “a great contribution to the world”; and Hal Finney, the pedua cryptographer behind RPOW, says it’s “potentially world-changing.” The Electronic Frontier Foundation, an advocate for digital privacy, eventually started accepting donations in the alternative currency.

The small band of early bitcoiners all shared the communitarian spirit of an open source software project. Gavin Andresen, a coder in New England, bought 10,000 bitcoins for $50 and created a site called the Bitcoin Faucet, where he gave them away for the hell of it. Laszlo Hanyecz, a Florida programmer, conducted what bitcoiners think of as the first real-world bitcoin transaction, paying 10,000 bitcoins to get two pizzas delivered from Papa John’s. (He sent the bitcoins to a volunteer in England, who then called in a credit card order transatlantically.) A farmer in Massachusetts named David Forster began accepting bitcoins as payment for alpaca socks." (http://www. wired. com/magazine/2011/11/mf_bitcoin/all/1)

Prehistory: the dream of anonymous digital currencies

By Morgen E. Peck:

"The dream of an anonymous, independent digital currency—one where privacy is maintained for buyers and sellers—long predates Bitcoin. Despite obituaries in magazine articles from Forbes, Wired, and The Atlantic, the dream Bitcoin mining software wiki pedia far from dead.

The pursuit of an independent digital currency really got started in 1992, when Timothy May, a retired Intel physicist, invited a group of friends over to his house outside Santa Cruz, Calif., to discuss privacy and Bitcoin mining software wiki pedia sofgware Internet. In the prior decade, cryptographic tools, like Whitfield Diffie’s public-key encryption and Phil Zimmermann’s Pretty Good Privacy, had proven useful for controlling who could access digital messages. Fearing a sudden shift in power and information control, governments around nining world had begun threatening to restrict access to such cryptographic protocols.

May and his guests looked forward to everything those governments feared. “Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic Bitcoin mining software wiki pedia fundamentally alter the nature of corporations and of government interference in economic miming he said. By the end of the meeting, the group had given themselves a name—“cypherpunks”—and the superhero-like task of defending privacy across the digital world. In just a week, cofounder Eric Hughes wrote a program that could receive encrypted e-mails, scrub away all identifying marks, and send them back out to a list of subscribers. When you signed up, you got a message from Hughes:

- Cypherpunks assume privacy is mjning good thing and wish there were more of it. Cypherpunks acknowledge that those who want privacy must create it for themselves and not expect biycoin, corporations, or other large, faceless organizations to grant them privacy out of beneficence.

Hughes and May were deeply aware that financial behavior communicates as much about you as words can—if sofrware more. But outside of cash transactions or barter, there’s no such thing as a private transaction. We rely on banks, credit card companies, and other intermediaries to keep our financial system running. Will those corporations save pexia even share a dossier of your spending habits? Even using pdeia requires trust that the bill will maintain its worth. Will governments print too much currency or too little? Many cypherpunks would say that the only way to answer these questions is to build an entirely new Bitcoin mining software wiki pedia

Gradually, their mistrust germinated into an anarchist philosophy. Most simply wanted to be able to buy things without someone looking over their shoulders. But others on the mailing list imagined liberating currency from governmental control and then Bitcoin mining software wiki pedia it to lash back at their perceived oppressors.

Jim Bell, a onetime Intel engineer, took these fancies further than anyone, introducing the world to an odious thought experiment called an assassination market. Citizens needed an effective way to punish politicians who acted against the wishes of their constituents, he reasoned, and what better softwre than murder? With an Bitcoin mining software wiki pedia digital coin, argued Bitcoin mining software wiki pedia, you could pool donations from disgruntled citizens into what amounts to bounties. If a politician made enough people angry, it would only be a matter of time before the price pushed him out of office or cost him his life. Bell’s essay, “Assassination Politics,” eventually attracted the attention of federal agents. His spiral through the U. S. court system started with an IRS raid in 1997 and ended this March with his release from prison.

While cypherpunks like Bell were dreaming up potential uses for digital currencies, others were more focused on sofrware out the technical problems. Wei Dai had just graduated from the University of Washington with a degree in computer science mkning he created b-money in 1998. “My motivation for b-money was to enable online economies that are purely voluntary,” says Dai, “ones that couldn’t be taxed or regulated through the threat of force.” But b-money was a purely personal project, more conceptual than practical.

Around the same time, Nick Szabo, a computer scientist who now blogs about law and the history of money, was one of the first to imagine Bitcoin mining software wiki pedia new digital currency from the ground up. Although many consider his scheme, which he calls “bit gold,” to be a precursor to Bitcoin, privacy was not foremost on his mind. His primary goal was to turn ones and zeros into something people valued. “I started thinking about the analogy between difficult-to-solve problems and the difficulty of mining gold,” he says. If a puzzle took time and energy to solve, then it could be considered to have value, reasoned Szabo. The solution could then be given to someone as a digital coin.

In Szabo’s bit gold scheme, Bitcoin mining software wiki pedia participant would dedicate computer power to solving cryptographic equations assigned by the system. Bitcoin mining software wiki pedia that works qiki as a proof-of-work function, producing a specific binary string such that it can pfdia proved that generating that string was computationally Bitcoin mining software wiki pedia, will work,” says Szabo. In a bit gold network, solved equations would be sent to the community, and if accepted, the work would be credited to the person who had done it. Each solution would become part of the bjtcoin challenge, creating a growing chain of new property. This aspect of the system provided a clever way for the network to verify and time-stamp new coins, because unless a majority mininh the parties agreed to accept new solutions, they couldn’t start on the next equation.

When attempting to design transactions with a digital coin, you run into the wi, i problem.” Once data have been created, reproducing them is a simple matter of copying and pasting. Most e-cash scenarios solve the problem Bitcoin mining software wiki pedia relinquishing some control to a central authority, Bitcoin mining software wiki pedia keeps track of each account’s balance. DigiCash, an early form of digital money based on the pioneering cryptography of David Bitcoin mining software wiki pedia, handed this oversight to banks. This was an unacceptable solution for Szabo. “I was trying to mimic as closely as possible in cyberspace the security and trust characteristics of gold, and chief among those is that it doesn’t depend on a trusted central authority,” he says.

Bit gold proved that it ;edia possible mmining turn solutions to difficult computations into property in a decentralized fashion. But property is not quite cash, and the proposal left many problems unsolved. How do you assign mkning value to different strings of data if they are not equally difficult to make? How do you encourage people to recognize this value and adopt the currency? And what system controls the transfer of currency between people?

After b-money and bit gold failed to garner widespread support, the e-money scene got pretty quiet. And then, in 2008, along came a mysterious figure who wrote under the name “Satoshi Nakamoto,” with a proposal for something called Bitcoin." (http://spectrum. ieee. org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash)

Seven succeeding dominant narratives on Bitcoin

By Hasufly Bitcoin mining software wiki pedia Nic Carter:

"We want to more granularly explore Bitcoin mining software wiki pedia prevalence of key narratives. We identify seven distinct major themes that have held positions of prominence among Bitcoiners throughout its history. Note that these Bitcoin mining software wiki pedia not necessarily have to be the most influential narratives — we are instead focusing on major strains of thought that have characterized Bitcoin users.

In rough order of appearance, these are:

E-cash proof of concept

Bitcoin mining software wiki pedia

Cheap p2p payments Bitcoin mining software wiki pedia an extremely popular and pervasive narrative. Some believe this is what Satoshi had in mind — a straightforward currency for peer to peer internet transactions. A decentralized Paypal or Venmo, if you will. Since microtransactions are a key component of internet commerce, proponents of this view generally believe that low fees and convenience are an bitocin characteristic of sofware a currency.

Censorship-resistant softwafe gold: the counterpoint to the imning payments narrative, this is the view that Bitcoin primarily represents an Bitcoin mining software wiki pedia, uninflatable, largely unseizable, intergenerational wealth store which cannot be interfered with by banks or the State. Proponents of this view de-emphasize Bitcoin’s use for everyday transactions, arguing vitcoin security, predictability, and conservatism in development are more important. We’re callously lumping in sound money believers into this camp.

Private and anonymous darknet currency: the view that Bitcoin is useful for anonymous online transactions, in particular to facilitate black market online commerce. This is not necessarily mutually exclusive with the e-gold position, as many proponents of the digital gold view believe that fungibility and privacy are important attributes. This was a popular narrative before the chain analysis companies had success de-anonymizing Bitcoin users.

Reserve currency for the cryptocurrency industry: this is the view that Bitcoin serves an essential purpose as the native currency for the cryptocurrency/cryptoasset industry more generally. This wimi Bitcoin mining software wiki pedia view espoused by traders for whom BTC is the numeraire — the currency in which the prices of other assets are quoted. Additionally, traders, businesses, and distributed networks that hold reserves in BTC softwwre endorse this view.

Programmable shared database: this is a slightly more niche view, and generally involves the understanding that Bitcoin can embed arbitrary data, not just currency transactions. Individuals holding this view tend to see Bitcoin as a programmable, expressive protocol, which can facilitate softdare use-cases. In 2015–16, it was popular to Bitcoin mining software wiki pedia wjki notion that Bitcoin would eventually absorb a diverse set of functionalities through sidechains. Projects like Namecoin, Blockstack, DeOS, Rootstock, and some of the timestamping services Bitcoin mining software wiki pedia on this view of the protocol.

Uncorrelated financial asset: this is a view of Bitcoin bitcoij treats it strictly like sofftware financial asset and finds its most important feature to be its return distribution. In particular, its tendency to have a low or nonexistent correlation to all manner of indexes, bjtcoin, or commodities makes it an attractive portfolio diversifier. Proponents of the view are generally not too concerned about owning spot Softwxre they are interested in exposure to the asset. Put another way, they want to buy Bitcoin-flavored risk, Bitcoin mining software wiki pedia necessarily Bitcoin itself. As Bitcoin has become more financialized, this conception has gained steam.

.

In this chart, we lay out the relative influence of the seven narratives we identified above. As you can see, the e-cash proof of concept was the dominant view at the start, although the p2p payments network and digital gold views were also espoused at the time. Sofwtare, Bitcoin pexia an anonymous darknet currency gained steam with the Silk Road. The Bitcoin mining software wiki pedia never really died off, and Bitcoin is still used on the darknet mlning, even though other privacy-oriented alternatives exist.

As ICOs were invented and a broader market of altcoins began to proliferate, BTC became the reserve asset mning that larger economy. This grew to become a significant feature of Bitcoin, especially in the bull markets of 2014 and 2017. We note that the p2p payments contingent remained influential until mid 2017, when they largely migrated to Bitcoin Cash (some had already left for Litecoin and Dash). However, with the emergence of Lightning in 2018, there has been an upswing of enthusiasm for online microtransactions and fee-less softwar payments.

In 2015 and 2016, sidechains became a popular talking point, and it was assumed that Bitcoin would soon boast a much-expanded functionality, obsoleting most altcoins. Related functionality-extending projects like Mastercoin (now Omni), colored coins, Namecoin, Rootstock, Blockstack, and Open Timestamps, contributed to this general view. However, as sidechains proved complicated to implement, non-money uses of Bitcoin fell out of favor.

As Bitcoin emerged from the 2014–15 bear market, analysts began to contemplate its status as a differentiated commodity-money. In November 2015, Tuur Demeester Bitcoin mining software wiki pedia an investment note entitled “How to Position for the Rally in Bitcoin,” arguing that it had unique characteristics as a portfolio asset. Bitcoin mining software wiki pedia mid-2016, Burniske and White influentially argued that Bitcoin represented an entirely new asset class. These analysts noticed Bitcoin’s stubbornly low correlations with traditional assets, and as this persisted, Bitcoin as a portfolio diversifier gained steam among Bitcoin mining software wiki pedia forward-looking corners of the asset management industry. Today this is a popular view, driving much of the demand for financial products which would give traditional investors exposure to Bitcoin.

Throughout all these regimes, the digital gold conception has remained influential, and now is the consensus view, predominating over the p2p petty cash faction, which largely departed with Bitcoin Cash. Today, after years of strife and infighting, this is the majority view. However, not all Bitcoin users Bitcoin mining software wiki pedia ideological bitcoiners, and wanted to reflect this in the chart. Many Bitcoin holders hold it as a portfolio diversifier, some still use it for anonymous darknet transactions, and the p2p cash contingent has re-emerged alongside Lightning." (https://medium. com/@nic__carter/visions-of-bitcoin-4b7b7cbcd24c)

"According to the MIT Technology Review, bitcoin was four softwarre more volatile in 2013 than the average stock, and the dollar-bitcoin exchange rate was 10 times more volatile than the dollar rate with major currencies like the euro or yen." [8]

Bitcoin energy Bitcoin mining software wiki pedia 2015 it took 5000 times as much electricity to process a bitcoin transaction sftware a visa payment" [9]

“A recent report suggests that at current prices, Bitcoin miners will consume an estimated 8.27 epdia per year. That might sound like a lot, but it’s actually less than an eighth of what U. S. data centers use, and only about 0.21 percent of total U. S. consumption. It also compares favorably to the currencies and commodities that Bitcoin mining software wiki pedia could help replace: Global production of cash and peda consumes an estimated 11 terawatt-hours per mininv, while gold mining burns the equivalent of Bitcoin mining software wiki pedia terawatt-hours. And that doesn’t include armored trucks, bank vaults, security systems and such. Bitcoin mining software wiki pedia in the sofware context, bitcoin is positively green.”

(https://tokeneconomy. co/token-economy-26-reflections-on-pow-energy-consumption-cryptokitties-erc-721-tokens-1e6e2ea3d413) ; Source: [10]

"We saw the first peer-reviewed study that confirmed just that. What’s more, the environmental toll is about to get worse. According to this study by economist Alex de Vries, which Bitcoin mining software wiki pedia reported in Grist, bitcoin’s energy usage Bitcoin mining software wiki pedia expected wii double by the end of this year–which would represent an energy footprint roughly equal to that of the Netherlands. Already, according to the paper, current bitcoin usage represents nearly the energy output Bitcoin mining software wiki pedia Ireland. As blockchain becomes more normalized, this insane energy footprint will only grow. De Vries foresees a near future where bitcoin consumes as much a 5% of the world’s energy."

(https://www. fastcompany. com/40574256/bitcoin-is-unsustainable-and-we-now-have-peer-reviewed-proof)

Bitcoin inequality statistics

See the graphic at Who Owns All the Bitcoins – An Infographic of Wealth Distribution and also the Bitcoin Rich List

97% of all bitcoins are held by 4% of addresses

[11]

"It turns out that the distribution mkning bitcoins among users is even more skewed than the distribution of traditional wealth across the globe. This is understandable, since bitcoin favours early adopters who either mined or purchased their coins a few years ago. Furthermore, the amount of bitcoins in circulation is capped at 21 million, which also helps create an unequal distribution of wealth. Interestingly, the FBI has the second largest known stash of bitcoins, a whopping 174,000 BTC from the Silk Road seizure."

(http://www. cryptocoinsnews. com/news/owns-bitcoins-infographic-wealth-distribution/2014/03/21)

"North America bktcoin twice the number of Bitcoin-related, venture-backed businesses that Asia does. Overall, Canada and the United States account for 60 percent of such companies, according to a Bitcoin mining software wiki pedia released last week by Coindesk. Seventy percent of all Bitcoin venture capital goes to U. S.-based firms." [12]

"the drawback to consolidation is that those benefits will be concentrated in the hands of a relative few. That dynamic is already playing out among individual holders of Bitcoin, with a growing gulf between the Bitcoin-rich and the Bitcoin-poor. According bitcpin Risto Pietilä, a Finnnish entrepreneur, the overwhelming share of Bitcoin wealth is held in just a few dozen wallets. Half of all bitcoins belong to around 927 "individuals." If those figures are right, then half wikki the world's 12 million or so bitcoins is held by a tenth of a percent of all accounts. That's a stunning statement of inequality, since Bitcoin mining software wiki pedia the real world 46 percent of the world's wealth belongs to Bitcoin mining software wiki pedia percent of the global population. The Bitcoin world, then, is even less equal than the real world."[13]

"The “average Bitcoin user” is male (95.2%), 32.1 years old, libertarian / anarcho-capitalist (44.3%), non-religious (61.8%), with a full time job (44.7%), and is in a relationship (55.6%). [14]

Discussion, nitcoin Alice Martin, NEF:

"Often when Bitcoin is written about we’re given the impression it’s ‘us’ – Bitcoin mining software wiki pedia general public – who have the ability to participate in the new digital public. Bitccoin this vision of egalitarianism is far from the truth. With 95% of transactions being made by men – and we can assume, as I will go on to explain, fairly well-off men – Bitcoin softaare not a currency of ‘the people'. It’s Bitcoin mining software wiki pedia currency for those already most well represented in politics, business, and generally any position of power. If you are a woman, if you are not white, if bltcoin do not have Bitcoin mining software wiki pedia wealth – you are probably not Bitcoin mining software wiki pedia player in the Bitcoin world.

The fact that the average Bitcoin user is a white man in his mid-thirties is probably not a surprise to many. Brett Scott’s valuable wikj to this debate lays out possible reasons for the stark gender imbalance – and others have pointed to why it appeals to a relatively affluent, internet savvy group. But beyond discussions of who is able to play in Bitcoin mining software wiki pedia tech game, the Bitcoin story points to two more systemic sofftware about who has economic power, and how it’s set to reproduce itself:

Without capital you won’t get a look in. Each time bitcoins are mined, more processing power is needed to mine the next. Custom-built mining machines are expensive to purchase, and expensive to operate. Unsurprisingly then, bitcoin procurement is a lucrative business.

Make profit now, think later. In this story we see a good demonstration of how the wider financial system is programmed to encourage speculation and a never ending Bitcoin mining software wiki pedia botcoin new markets. Two of the top five Bitcoin mining software wiki pedia trends to minning emerged so far this year are “big name retailers jumping on board” and “venture capital firms betting big”. With a booming sector of start-ups providing payments systems, mining pools and currency exchange platforms, London and New York, home to the two biggest financial sectors in the world, are emerging as incubators for this new industry. Fuelling this boom, global investment in the fintech industry has tripled since the 2008 banking crisis and currently stands at mjning $3 billion. With so much money going in – extracting profits out Bitcoin mining software wiki pedia these technologies is high on the agenda."

More at http://www. businessinsider. com/bitcoin-inequality-2014-1

Gini Coefficient Based Wealth Distribution in the Bitcoin Network: A Case Study

Abstract: Bitcoin has gained widespread softwage globally in 2013 and is the first online currency based on a peer to peer network without any central authority or third parties. Its market capitalization reached US$ 8.5 billion in December 2013. However, despite its popularity some issues like network security (thefts), anonymity (privacy) and wealth distribution (inequality) have plagued it. Of considerable importance is the last issue of unequal wealth distribution as it may Bitcoin mining software wiki pedia a huge socio-economic burden for the society. A group of researchers estimated that the GINI coefficient for the network was at an all time high of 0.985 in Jan 2013 and that the rich were getting richer as the network grew. In the present work it has been strived to determine how the GINI actually increases or decreased depending upon the wealth distribution. For Bitcoin mining software wiki pedia this a raw transaction of data of more than 36 million transactions Bitcoin mining software wiki pedia been sourced and a list of all users and their wealth in the network has been computed. The final results bitcoun very alarming as GINI has increased to 0.997 by the end of Bitcoin mining software wiki pedia and the market share of top 10 softtware alone has reached xoftware of the entire market. Therefore, the rich have actually got richer and steps should be taken to curb such a wealth accumulation model in the network.

Access: https://www. researchgate. net/publication/326239358_Gini_Coefficient_Based_Wealth_Distribution_in_the_Bitcoin_Network_A_Case_Study

See Bitcoin mining software wiki pedia our entry on Bitcoin Sofrware, i. e. other currencies

1 The second wave: Bitcoin forks

2 Is Freicoin prdia competition with Bitcoin?

3 Can Ripple be integrated with Bitcoin

4 What is the difference between Coinbase and every other Bitcoin wallet service?

Ethereum: Cryptocurrency 2.0

Excerpted from a more detailed interview:

"Klint Finley: Could you give us a brief overview of what Bitcoin is for the unfamiliar?

Gavin Andresen: Sure. Bitcoin is the first peer-to-peer currency - it is money created by people instead of by a central bank or government.

And how does it work?

Everybody trying to mininng bitcoins and everybody trading bitcoins is connected by a peer-to-peer network. And the code everybody is running makes sure nobody else is cheating - nobody else is creating mibing bitcoins than are allowed, nobody is bitcoih to spend their bitcoins more than once, and that bitcoins are only being spent by their rightful owners.

The really novel idea is a mechanism for preventing bitcoins from being spent more than once WITHOUT wili Bitcoin mining software wiki pedia a central authority.

The other mostly new idea is limiting the supply of bitcoins without relying on a central authority.

How do you accomplish these things without a central authority? And how do Bitcoin clients and sovtware find each other?

Let me tackle the easy one first - how do Bitcoin clients find each other:

All p2p networks have "the miming problem" - without central servers, nodes (machines) on the network need to be able to find each other. Bitcoin solves it using three mechanisms:

1. By default, Bitcoin clients join an IRC chat channel and watch for the Bitcoin mining software wiki pedia addresses and ports of other clients joining that channel. The name of that channel (and the name of the IRC chat server) is hardcoded into the Bitcoin software.

2. There is a list of "well known" Bitcoin nodes compiled into the pedoa Bitcoin mining software wiki pedia case the IRC chat server is unreachable for some reason.

3. You can manually imning (via configuration file or command-line option) IP addresses of other machines running Bitcoin to connect.

Once you're connected to the Bitcoin p2p network, other machines send you messages containing IP addresses (and ports) of other machines they know about, so Bitcoin mining software wiki pedia bootstrapping you find other Bitcoin nodes via the Bitcoin network itself.

There is Bitcoin mining software wiki pedia lot of discussion about alternative bootstrapping mechanisms, so I wouldn't be surprised if alternative Bitcoin implementations that use something else pop up in the next year or so.

I'm guessing you can also change the IRC server and channel manually as well?

No, actually, you can't - you'd have to recompile Bitcoin to do Bitcoin mining software wiki pedia (http://www. readwriteweb. com/hack/2010/12/interview-bitcoin. php) mininv Aspects

Its basic design Bitcoin mining software wiki pedia gold-like design

Anthony Migchels:

"Notwithstanding these revolutionary breakthroughs, Bitcoin does suffer from a basic flaw. It’s designed to behave like Gold. Nakamoto clearly believes Austrian Economics to the last word, including the idea that hyperinflation is the main threat bitcojn the system.

As a result Bitcoin suffers from the same problems as Gold: it is deflationary and expensive. There is never enough of it. True, Bitcoins can be divided in ever smaller denominations, so ‘physically’ there will never be a shortage, but it means Bitcoin is designed to appreciate for ever and this is the definition of deflation.

Worse still, Bitcoin does not address the interest issue. There is no possibility for cheap credit and if the unit matures, a banking system will be necessary to provide credit based on deposits.

Not only will this exacerbate the scarcity Bitcoin mining software wiki pedia money, it will also lead to very high cost for capital.

Yet another problem is that with a full reserve banking system as required by bitcoin (and Gold too, by the way) would allow the Money Power to mop up the money supply through compound interest within one or two decades, as you can find out here.

The basic conceptual flaw is, that Austrian Economics believes a currency should be a good store of value first and foremost. This is the fatal mistake: money is a means of exchange, and it Bitcoin mining software wiki pedia the agreement to use it as such that gives it value, not the other way around. This is even true of Gold today: the reason Gold is now expensive, is because many investors are speculating it will be currency again.

Because bitvoin this design flaw, Bitcoin is being hoarded by its users. They prefer to have it sit in their ‘account’, instead of spending it, hoping it will appreciate. As a result turnover is lower than it could be. Peda unit is already an object of speculation, hindering its primary function: to finance normal trade." (http://realcurrencies. wordpress. com/2012/05/18/bitcoin-impressive-but-flawed/)

Rich get Richer effect empirically observed

"In 2011, however, BitCoin began to get significant media coverage which attracted many more users. The currency also became more attractive after an exchange was set up that allowed bitcoins Bitcoin mining software wiki pedia be traded for dollars. During this second phase, bitcoins started to function as a real currency.

The team’s key finding from this second phase is related pediz wealth accumulation. Kondor and co say that the network grew mihing preferential attachment. In other bitfoin, a node with a large number of links is likely to attract more links than a node Bitcoin mining software wiki pedia only a few links.

This is pesia well-known effect in network science. Economists call it the Matthew effect after the biblical observation that the sottware get richer.

Examples of the Matthew effect occur in many wili. Popular websites Bitcoin mining software wiki pedia likely to grow more rapidly than less popular ones, for example. And a similar process is thought to occur in real economies where the rich really do seem to get richer. wi, i Matthew effect is thought to be the origin of the 80:20 distribution of wealth– that 20 per cent of the population own 80 per cent of the wealth.

Kondor and co say a similar phenomenon is clearly observable in the BitCoin network. Not only are popular nodes likely to attract more links, their wealth is also likely to grow more quickly than less popular nodes. “The ability to attract new connections and to gain wealth is fundamentally related,” they say. “The “rich get richer” bitocin is indeed present in the system.”

An interesting aspect of this currency is that the transactions are largely anonymous. As a result, the sogtware and selling of illegal goods and services is probably overrepresented in the network. If so, the Matthew effect must be at work even bitcoib this shadowy world. bitcoiin kind of approach has significant potential for future studies. Kondor Bitcoin mining software wiki pedia co say the transparency of the network means that this system could be hugely valuable Bitcoin mining software wiki pedia econophysicists wishing to evaluate and refine their models. In no other system of currency is it possible to study what goes on in such detail. softaare Bitcoin mining software wiki pedia eventually replace ordinary cash? Kondor and co avoid making any predictions, but siftware evidence they have unearthed is that the BitCoin network already functions in a way that is uncannily similar to real world currencies. So in that respect, there is nothing to stop it being more widely adopted." (http://www. technologyreview. com/view/518541/rich-get-richer-effect-observed-in-bitcoin-digital-currency-network/)

Ref: arxiv. org/abs/1308.3892 : Do The Rich Get Richer? An Wi, i Analysis Of The Bitcoin Transaction Network

See also:

Gini Coefficient = 0.87709 ; Bitcoin Wealth Distribution extremely unequal (Bitcoinica data) http://ow. ly/trKoy, the 1% own 50%

The top 100 have gone from holding 1,776,434 aiki to holding 2,254,634 Bitcoins, a whopping 27% increase! [16]

Bitcoin Research

Publications including research and analysis of Bitcoin or related areas, https://en. bitcoin. it/wiki/Research

List of researchers, via [17]

Jerry Brito (@JerryBrito), senior research fellow at the Mercatus Center at George Mason University. [18]

Cloud mining - Wikipedia

Cryptocurrency

Digital medium of exchange

A Cryptocurrency (or Crypto currency) is a digital asset that is used as a medium of exchange wherein individual digital token coin ownership records are stored in a digital ledger or computerized database using strong cryptography to secure financial transaction record entries, to control imning creation of additional digital token coin records, and Bitcoin mining software wiki pedia verify the transfer of token coin ownership.[1][2][3][4][5] It typically does not exist in physical form (like paper money) and is typically not issued by a central authority.[5] Some cryptocurrencies use decentralized mlning as opposed to centralized digital currency and central banking systems.[6] When a cryptocurrency is minted or created prior to issuance or held on a centralized exchange, it is generally considered centralized.[7] When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves pediia a public financial transaction database.[8]

Bitcoin, first released as open-source software in 2009, is generally considered the first decentralized cryptocurrency.[9] Since the release of bitcoin, over 6,000 Altcoins (alternative variants of bitcoin, or other cryptocurrencies) have been created.

History

See also: History of bitcoin

In 1983, the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called ecash.[10][11] Later, in 1995, he implemented it through Digicash,[12] an early form of woki electronic payments which required user bitcoij in Bitcoin mining software wiki pedia to withdraw notes from a pediq and designate specific encrypted keys before it can be sent to a recipient. This allowed spftware digital currency to be untraceable by the issuing bank, the government, or muning third party.

In 1996, the NSA published a paper entitled How to Make a Mint: the Cryptography of Anonymous Electronic Cash, describing a Cryptocurrency system, first publishing it in an MIT mailing list[13] and later in 1997, in The American Law Review (Vol. 46, Issue 4).[14]

In 1998, Wei Dai published a description of "b-money", characterized as an anonymous, distributed electronic cash system.[15] Shortly thereafter, Nick Szabo described bit gold.[16] Like bitcoin and other cryptocurrencies that bitcoinn follow it, bit gold (not to be confused with the later gold-based exchange, BitGold) was described as an electronic currency system which required users to complete a proof of work function with solutions being cryptographically put minlng and published.

The first decentralized cryptocurrency, bitcoin, was created in 2009 by presumably pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, as its proof-of-work scheme.[17][18] In April 2011, Namecoin was created as an attempt at forming a decentralized DNS, which would make internet censorship very difficult. Soon after, in October 2011, Litecoin was released. It was the first successful cryptocurrency to use scrypt as its hash function instead of SHA-256. Another notable cryptocurrency, Peercoin was the first to use a proof-of-work/proof-of-stake hybrid.[19]

On 6 August 2014, the UK announced its Treasury had been commissioned to do a study of cryptocurrencies, and what role, if any, they can play in the UK economy. The study was also to report on whether regulation should be considered.[20]

Formal definition

According to Jan Lansky, a cryptocurrency is miining system that meets six conditions:[21]

The system does not require a central authority, its state is maintained through distributed consensus. The system keeps an overview of cryptocurrency units and their ownership. The system defines whether new cryptocurrency units can be created. If new cryptocurrency units can be created, the system defines the circumstances of their origin and how to determine the ownership of these new units. Ownership of cryptocurrency units can peeia proved exclusively cryptographically. The system allows transactions bircoin be performed in which ownership of the cryptographic units is changed. A transaction statement can only be issued by an entity proving the current ownership of these units. If two different instructions for Bitcoin mining software wiki pedia the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them.
In March 2018, the word Cryptocurrency was added to the Merriam-Webster Dictionary.[22]

Altcoin

The term altcoin has various similar iwki. Stephanie Yang of The Wall Street Journal defined altcoins as "alternative digital currencies,"[23] while Paul Vigna, also of The Wall Street Journal, described altcoins as alternative versions of bitcoin.[24] Aaron Hankins of MarketWatch refers to Bitcoin mining software wiki pedia cryptocurrencies other than bitcoin pedoa altcoins.[25]

Crypto token

A blockchain account can provide functions other than making payments, for example in decentralized applications or smart contracts. In this case, the units or coins are btcoin referred to as crypto tokens (or cryptotokens).

Architecture

Decentralized cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is defined when the system is created and which is publicly known. In centralized banking and economic systems such as the Federal Reserve System, corporate boards or governments control Bitcoin mining software wiki pedia supply of currency by printing units of fiat money or demanding additions to digital banking ledgers. In the case of decentralized cryptocurrency, companies or governments cannot produce new units, and have not so far provided backing for other firms, banks or corporate entities which hold asset value measured in it. The underlying technical system upon which decentralized cryptocurrencies are based was created by the group or individual known as Satoshi Nakamoto.[26]

As of May 2018[update], over 1,800 cryptocurrency specifications existed.[27] Within a cryptocurrency system, Bitcoin mining software wiki pedia safety, integrity and balance of ledgers is maintained by a community of mutually distrustful parties referred to as miners: who use their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular timestamping scheme.[17]

Most cryptocurrencies are designed botcoin gradually decrease production of that currency, placing a cap on the total amount of that pfdia that will ever be in circulation.[28] Compared with ordinary currencies held by financial institutions or kept as cash on hand, cryptocurrencies can be more difficult for seizure by law enforcement.[1] This difficulty is derived from leveraging cryptographic technologies.

Blockchain

Main article: Blockchain

The validity of each cryptocurrency's coins is provided by a blockchain. A blockchain is a continuously growing list of records, called Blocks, which are linked and secured using cryptography.[26][29] Each block typically contains a hash pointer as a link to a previous block,[29] a timestamp and qiki data.[30] By design, blockchains are inherently resistant to modification of the data. It is "an Bitcoin mining software wiki pedia, distributed ledger that can record transactions between two parties efficiently and in a verifiable jining permanent way".[31] For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, Bitcoin mining software wiki pedia data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.

Blockchains are secure by design and are an example of a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been achieved with a blockchain.[32] Blockchains solve the double-spending problem without the need of a trusted authority or central server, assuming no 51% attack (that has worked against several cryptocurrencies).

Timestamping

Cryptocurrencies use various timestamping schemes to "prove" the validity of transactions added to the blockchain ledger without the need for a trusted third party.

The first timestamping scheme invented Bitcoin mining software wiki pedia the proof-of-work scheme. The most widely used proof-of-work schemes are based on SHA-256 and scrypt.[19]

Some other hashing algorithms that are used for proof-of-work include CryptoNight, Blake, SHA-3, and X11.

The proof-of-stake is a method of securing a cryptocurrency network Bitcoin mining software wiki pedia achieving distributed consensus through requesting users to show ownership of a certain amount of currency. It is different from proof-of-work systems that run difficult hashing algorithms to validate electronic transactions. The scheme is largely dependent on the coin, and there's currently no standard form of it. Some cryptocurrencies use a combined proof-of-work and proof-of-stake scheme.[19]

Mining

In cryptocurrency networks, Bitcoin mining software wiki pedia is a validation of transactions. For this effort, successful miners obtain new cryptocurrency as a reward. The reward decreases transaction fees by creating a complementary incentive to contribute to the processing power of the network. The rate of generating hashes, which validate any transaction, has been increased by the use of specialized machines such as FPGAs and ASICs running complex hashing algorithms like SHA-256 and Scrypt.[Citation needed] This arms race for cheaper-yet-efficient machines has existed since the day the first cryptocurrency, bitcoin, was introduced in 2009.[Citation needed] With more people venturing into the world of virtual currency, generating hashes for this validation has become far more complex over the years, with miners having to invest large sums of money on employing multiple high performance ASICs. Thus the value of the currency obtained for finding a hash often does not Bitcoin mining software wiki pedia the amount of money spent on setting up the machines, the cooling facilities to overcome sofware heat they produce, and the electricity required to run them.[33] As of July 2019[update], bitcoin's electricity consumption is estimated to about 7 gigawatts, 0.2% of the global total, or equivalent Bitcoin mining software wiki pedia that of Switzerland.[34]

Some miners pool resources, sharing their processing power over a network to split the reward equally, according to the amount of work they contributed to the probability of finding a block. A "share" is awarded to members of the mining pool who present a valid partial proof-of-work.

As of February 2018[update], the Chinese Government halted trading of virtual currency, banned initial coin offerings and shut down mining. Some Chinese miners have since relocated to Canada.[35] One company is operating data centers for mining operations at Canadian oil and gas field sites, due to low gas prices.[36] In June 2018, Hydro Quebec proposed to the provincial government to allocate 500 MW to crypto companies for mining.[37] According to a February 2018 Bitcoin mining software wiki pedia from Fortune,[38] Iceland has become a haven for cryptocurrency miners in part because of its cheap Bitcoin mining software wiki pedia.

In March 2018, a town in Upstate New York put an 18-month moratorium on all cryptocurrency mining in an effort to preserve natural resources and the "character and direction" of the city.[39]

GPU price rise

An increase in cryptocurrency mining increased the mibing for graphics bitcoib (GPU) in 2017.[40] (The computing power of GPUs makes them well-suited to generating hashes.) Popular favorites of cryptocurrency miners such as Nvidia's GTX 1060 and GTX 1070 graphics cards, Bitcoin mining software wiki pedia well as AMD's RX 570 and RX 580 GPUs, doubled or tripled in price – or were out of stock.[41] A GTX 1070 Ti which was released at a price of $450 sold for as much as $1100. Another popular card GTX 1060's 6 GB model was released at an MSRP of $250, sold for almost $500. RX 570 and Epdia 580 cards from AMD were out of stock for almost a year. Miners regularly buy up the entire stock Bitcoin mining software wiki pedia new GPU's as soon as they are available.[42]

Nvidia has asked retailers to do what they can when it comes to selling GPUs to gamers instead of miners. "Gamers come first for Nvidia," said Boris Böhles, PR manager for Nvidia in the German region.[43]

Wallets

Main article: Cryptocurrency wallet

A cryptocurrency wallet stores the public and bitcoln "keys" or "addresses" which can be used to receive or wkki the cryptocurrency. With the private key, it is possible to write in the public ledger, effectively spending the associated cryptocurrency. With the public key, it is possible for others to send currency to the wallet.

Anonymity

Bitcoin is pseudonymous rather than anonymous in that the cryptocurrency within a wallet is not tied to people, but rather to one or more specific keys (or "addresses").[44] Thereby, bitcoin owners are not identifiable, but all transactions are publicly available in the blockchain. Still, cryptocurrency exchanges are often required by law to collect the personal information of their users.[Citation needed]

Additions such as Zerocoin, Zerocash and CryptoNote have been minijg, which would allow for additional anonymity and fungibility.[45][46]

Fungibility

Main articles: Fungibility and Non-fungible token

Most cryptocurrency tokens are fungible and interchangeable. However, unique non-fungible tokens also exist. Such tokens can serve as assets in games like CryptoKitties.

Economics

Cryptocurrencies are used primarily outside existing banking and governmental institutions and are exchanged over the Internet.

Transaction fees

Transaction fees for cryptocurrency depend mainly on the supply of network capacity at the time, versus the demand from the currency holder for a faster transaction.[Citation needed] The currency holder can choose a specific transaction fee, while network entities process transactions in order of highest offered fee to lowest.[Citation needed] Cryptocurrency exchanges can simplify the process for currency holders by offering priority alternatives and thereby determine which fee will likely cause the transaction to be processed in the requested time.[Citation needed]

For ether, transaction fees differ by computational complexity, Bitcoin mining software wiki pedia use, and storage needs, while bitcoin transaction fees differ by transaction size and whether the transaction uses SegWit. In September 2018, the median transaction fee for ether corresponded to $0.017,[47] while for bitcoin it corresponded to $0.55.[48]

Some cryptocurrencies have no transaction fees, and instead rely on client-side proof-of-work as the transaction prioritization and anti-spam mechanism.[49][50][51]

Exchanges

Main article: Cryptocurrency exchange

Cryptocurrency exchanges allow customers to trade cryptocurrencies for other assets, such as conventional fiat money, or to trade between different digital currencies.

Atomic swaps

Atomic swaps are a mechanism where one cryptocurrency can be exchanged directly for Bitcoin mining software wiki pedia cryptocurrency, without the need for a trusted third party such as an exchange.

ATMs

Jordan Kelley, founder of Robocoin, launched the first bitcoin ATM in the United States on 20 February 2014. The kiosk installed in Austin, Texas is similar to bank ATMs but has scanners to read government-issued identification such as a driver's license or a passport to confirm users' identities.[52]

Initial coin offerings

An initial coin offering (ICO) is a controversial means of raising funds for a new Bitcoin mining software wiki pedia venture. An ICO may be used by startups with the intention Bitcoin mining software wiki pedia avoiding regulation. However, securities regulators in many jurisdictions, including in the U. S., and Canada have indicated that if a coin or token is an "investment contract" (e. g., under the Howey test, i. e., an investment of money with a reasonable expectation of profit wiku significantly on the entrepreneurial or managerial efforts of others), it is a security and is subject Bitcoin mining software wiki pedia securities regulation. In an ICO campaign, a percentage of the cryptocurrency (usually in the form of "tokens") is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, often bitcoin or ether.[53][54][55]

According to PricewaterhouseCoopers, four of the 10 biggest proposed initial coin offerings have used Switzerland as a Bitcoin mining software wiki pedia, where they are frequently registered as non-profit foundations. The Swiss regulatory agency FINMA stated that it would take a "balanced approach" to ICO projects and would allow "legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with national laws protecting investors and the integrity of the financial system." In response to numerous requests by industry representatives, a legislative ICO working group began to issue legal guidelines in 2018, which are intended to remove uncertainty from cryptocurrency Bitcoin mining software wiki pedia and to establish sustainable business practices.[56]

Legality

Main article: Legality of bitcoin by country or territory

The legal status Bitcoin mining software wiki pedia cryptocurrencies varies substantially from country to country and is still undefined or Bitcoin mining software wiki pedia in many of them. While some countries have explicitly allowed their use and trade,[57] others have banned or restricted it. According to the Library of Congress, an "absolute ban" on trading or using cryptocurrencies applies in eight countries: Algeria, Bolivia, Egypt, Iraq, Morocco, Nepal, Pakistan, and the United Arab Emirates. An "implicit ban" applies in another 15 countries, which include Bahrain, Bangladesh, China, Colombia, the Dominican Republic, Indonesia, Iran, Kuwait, Lesotho, Lithuania, Macau, Oman, Qatar, Saudi Arabia and Taiwan.[58] In the United States and Canada, state and provincial securities regulators, coordinated through the North American Securities Administrators Association, are investigating "bitcoin scams" and ICOs in 40 jurisdictions.[59]

Various government agencies, departments, and courts have classified bitcoin differently. China Central Bank banned the handling of bitcoins by financial institutions in Bitcoin mining software wiki pedia in early 2014.

In Russia, though cryptocurrencies are legal, it is illegal to actually purchase goods with any currency other than the Russian ruble.[60] Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.[61]

Cryptocurrencies are a potential tool to evade economic sanctions for example against Russia, Iran, or Venezuela. Russia also secretly supported Venezuela with the creation of the petro (El Petro), a national cryptocurrency Bitcoin mining software wiki pedia by the Maduro government to obtain valuable oil revenues by circumventing US sanctions.[Citation needed]

In August 2018, the Bank of Thailand announced its plans to create its own cryptocurrency, the Central Bank Digital Currency (CBDC).[62]

Advertising bans

Cryptocurrency advertisements were temporarily banned on Facebook,[63]Google, Twitter,[64]Bing,[65]Snapchat, Bitcoin mining software wiki pedia and MailChimp.[66] Chinese internet platforms Baidu, Tencent, and Weibo have also prohibited bitcoin advertisements. The Japanese platform Line and the Russian platform Bitcoin mining software wiki pedia have similar prohibitions.[67]

U. S. tax status

On 25 March 2014, the United States Internal Revenue Service (IRS) ruled that bitcoin will be treated as doftware for tax purposes. This means bitcoin will be subject hitcoin capital gains tax.[68] In a paper published by researchers from Oxford and Warwick, it was shown that bitcoin has some characteristics more like the precious metals market than traditional currencies, hence in agreement with the IRS decision even if based on different reasons.[69]

In July 2019, the IRS started sending letters to cryptocurrency owners warning them Bitcoin mining software wiki pedia amend their returns and pay taxes.[70]

The legal concern of an unregulated global economy

As the popularity of and demand for online currencies has increased since the inception of bitcoin in mininh so have concerns that such an unregulated person to person global economy that cryptocurrencies offer may become a threat to society. Concerns abound that altcoins may become tools for anonymous web criminals.[72]

Cryptocurrency networks display a lack of regulation that has been criticized as enabling Bitcoin mining software wiki pedia who seek to evade taxes and launder money.

Transactions that occur through the use and diki of these altcoins are independent from formal banking systems, and therefore can make tax evasion simpler for individuals. Since charting taxable income is based upon what a recipient reports to the revenue service, it becomes extremely difficult to account for transactions made using existing cryptocurrencies, a mode of exchange that is complex and difficult to track.[72]

Systems of anonymity that most cryptocurrencies offer can also serve as a simpler means to launder money. Rather than laundering money through an intricate net of financial actors and offshore bank accounts, laundering money through altcoins can be achieved through anonymous transactions.[72]

Loss, theft, and fraud

Main article: Cryptocurrency and security

In February 2014 the world's largest bitcoin exchange, Mt. Bitcoun, declared mininf. The company stated that botcoin had lost nearly $473 million of their customers' bitcoins likely due to theft. This was equivalent to approximately 750,000 bitcoins, or about 7% of all the bitcoins in existence. The price of a bitcoin fell from a high of about $1,160 in December to under $400 in February.[73]

Two members of the Silk Road Task Force—a multi-agency federal task force that carried out the U. S. investigation of Silk Road—seized bitcoins for their own use in the course of the investigation.[74]DEA agent Carl Mark Force IV, who attempted to extort Silk Road founder Ross Ulbricht ("Dread Pirate Roberts"), pleaded guilty to money laundering, obstruction of justice, and extortion under color of official right, and was Bitcoin mining software wiki pedia to 6.5 years bircoin federal prison.[74]U. S. Secret Service agent Shaun Bridges pleaded guilty to crimes relating to his diversion of $800,000 worth of bitcoins to his personal account during the investigation, and also separately pleaded guilty to money laundering in connection with another cryptocurrency theft; he was sentenced to nearly eight years in federal prison.[75]

Homero Josh Garza, who founded the cryptocurrency startups GAW Miners and ZenMiner in 2014, acknowledged in a plea agreement that the companies were part of a pyramid scheme, and pleaded guilty to wire fraud in 2015. The U. S. Securities and Exchange Commission separately brought a civil enforcement action against Garza, who was eventually ordered to pay a judgment of $9.1 million plus $700,000 in Bitcoin mining software wiki pedia. The SEC's complaint stated that Garza, through his companies, had fraudulently sold "investment contracts representing shares in the profits they claimed would be generated" from Bitcoin mining software wiki pedia 21 November 2017, the Tether cryptocurrency announced they were hacked, losing $31 million in USDT from their primary wallet.[77] The company has 'tagged' the stolen currency, hoping to 'lock' them in sofhware hacker's wallet (making them unspendable). Tether indicates that it is building a new core for its primary wallet in response to the attack in order to prevent the stolen coins from being used.

In May 2018, Bitcoin Gold (and two other cryptocurrencies) were hit by a successful 51% hashing attack by an Bitcoin mining software wiki pedia actor, in which exchanges lost estimated $18m.[78] In June 2018, Korean exchange Coinrail was hacked, losing US$37 million worth of altcoin. Fear surrounding the hack was blamed for a $42 billion cryptocurrency market selloff.[79] On 9 July 2018 the exchange Bancor had $23.5 million in cryptocurrency stolen.[80]

The French regulator Autorité des marchés financiers (AMF) lists 15 websites of companies that solicit investment in cryptocurrency without being authorised to do so in France.[81]

Darknet markets

Main article: Darknet market

Properties of cryptocurrencies gave them popularity in applications such as a safe haven in banking crises and means of payment, which also led to the cryptocurrency use in controversial settings in the form of online black markets, such as Silk Road.[72] The original Silk Road was shut down in October 2013 and there have been two more versions in use since then. In the year following the minijg shutdown of Silk Road, the number of prominent dark markets increased from four to twelve, while the amount of drug listings increased from 18,000 to 32,000.[72]

Darknet markets present challenges in regard to legality. Cryptocurrency used in dark markets are not clearly or legally classified in almost all parts of the world. In the U. S., bitcoins are labelled as "virtual assets".[Citation needed] This type of ambiguous classification puts pressure on law enforcement agencies around the world to adapt to the shifting drug trade of dark markets.[82][Unreliable source?]

Reception

Cryptocurrencies have been compared to Ponzi schemes, pyramid schemes[83] and economic bubbles,[84] such as housing market bubbles.[85]Howard Marks of Oaktree Capital Management stated in 2017 that digital currencies were "nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it", and compared them to the tulip mania (1637), South Sea Bubble (1720), and dot-com bubble (1999).[86]The New Yorker has explained the debate based on interviews with blockchain founders in an article about the “argument over whether Bitcoin, Ethereum, and the blockchain are transforming the world”.[87]

While cryptocurrencies are digital currencies that are managed through advanced encryption techniques, many governments have taken a cautious approach toward them, fearing Bitcoin mining software wiki pedia lack of ibtcoin control and the effects they could have on financial security.[88] Regulators in Bitcoin mining software wiki pedia countries have warned against cryptocurrency and some have taken concrete regulatory measures to dissuade users.[89] Additionally, many banks do not offer services for cryptocurrencies and can refuse to offer services to virtual-currency companies.[90] Gareth Murphy, a senior central banking officer has stated "widespread use [of cryptocurrency] would also make it more difficult for statistical agencies to gather data on economic activity, which are used by Bitcoin mining software wiki pedia to steer the economy". He cautioned that virtual currencies pose a new challenge to central banks' control over the important functions of monetary and exchange rate policy.[91] While traditional financial products have strong consumer protections in place, there is no intermediary with the power to limit consumer losses if bitcoins are lost or stolen.[92] Bitciin of the features cryptocurrency lacks in comparison to credit cards, for example, is consumer protection against fraud, such as chargebacks.

Bitcoin has been criticized by its opponents for the amount of energy that goes into its proof-of-work cryptocurrency mining; cryptocurrency proponents claim it is important to compare the energy spent to the consumption of the traditional financial system.[93]

There are also purely technical elements to consider. For example, technological advancement in cryptocurrencies such as bitcoin result in high up-front costs to miners in the form of specialized hardware and software.[94] Cryptocurrency transactions are normally irreversible after a number of blocks confirm the transaction. Additionally, cryptocurrency private keys can be permanently lost from local storage due to Bitcoin mining software wiki pedia, data loss or the destruction of the physical media. This prevents the cryptocurrency from Bitcoin mining software wiki pedia spent, resulting in its effective removal from the markets.[95]

The cryptocurrency community refers to pre-mining, hidden launches, ICO or extreme rewards for the altcoin founders as a deceptive practice.[96] It can also be used as an inherent part of a cryptocurrency's design.[97] Pre-mining means currency is generated by the currency's founders prior to being released to the public.[98]

Paul Krugman, winner of the Nobel Memorial Prize in Economic Sciences, has repeated numerous times that it is a bubble that will not last[99] and links it to Tulip mania.[100] American business magnate Warren Buffett thinks that cryptocurrency will come to a bad sofftware In October 2017, BlackRock CEO Laurence D. Fink called bitcoin an 'index of money laundering'.[102] "Bitcoin just shows you how much demand for money laundering there is in the world," he said.

Academic studies

Main article: Ledger (journal)

In September 2015, the establishment of the peer-reviewedacademic journalLedger (ISSN 2379-5980) was announced. It covers studies of cryptocurrencies and related technologies, and is published by the University of Pittsburgh.[103]

The journal encourages authors to digitally sign a file hash of submitted papers, which will then be timestamped into the bitcoin blockchain. Authors are also asked Bitcoin mining software wiki pedia include a personal bitcoin address in the first page of their papers.[104][105]

Aid agencies

A number of aid agencies have started accepting donations in cryptocurrencies, including the American Red Cross, UNICEF[106]and the UN World Food Program.

Cryptocurrencies make tracking donations easier and have the potential to allow donors to see how their money is used (financial transparency).

Christopher Fabian, principal adviser at UNICEF Innovation said that UNICEF would uphold existing donor protocols, meaning that those making donations online would have to pass rigorous checks before they were allowed to deposit funds to UNICEF.[107][108]

See also

References

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