https://bitcointalk.org/index.php?topic=346134.0;all
Further to my previous message on bitcoin, I still have only a partial understanding of this. I am yet to read the paper: http://bitcoin.org/bitcoin.pdf Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System and this: http://bitcoinmagazine.com/7781/satoshis-genius-unexpected-ways-in-which-bitcoin-dodged-some-cryptographic-bullet/ I just discovered a site which is probably a good source of explanations: https://en.bitcoin.it/wiki/Protocol_specification Like many technical fields, it can be hard to find a good explanation. The primary documents assume a deep knowledge of the field and the mass-market consumery level stuff has no accurate technical content, uses false analogies, like coins and wallets, and is at times execrable (excreable?), as I find the video at: http://bitcoin.org/en/ . For a spoof on this current trend in videos: https://www.thebouqs.com/en/content/8-how-it-works The USD$ price of a bitcoin is close to a new high, around $955 - 10 hours ago it was USD$840. http://markets.blockchain.info http://mtgoxlive.com/orders (I don't understand the main graph.) https://www.mtgox.com (Orange chart button at top left.) All people have to do is believe in this for it to become a substantial currency. I think this has already happened. It is not backed by anything, but it is a currency which cannot be diluted by governments or anyone, since the total number of bitcoins has already been defined by the algorithm at 21 million, and just over half of these have now been "mined". Bitcoin "mining" involves CPU power. At first an ordinary PC was good enough. As the difficulty has risen over the past few years, https://blockchain.info/charts/difficulty (The last year.) as part of the algorithm, bitcoin miners adopted graphics card CPUs, then Field Programmable Gate Arrays - see the Icarus mining rig at: http://www.joeydevilla.com/2013/04/15/how-to-mine-bitcoins-for-fun-and-probably-very-little-profit/ and now Application Specific Integrated Circuits (ASICs). For a serious, liquid cooled, industrial scale, ASIC bitcoin mining farm, see: https://bitcointalk.org/index.php?topic=346134.0;all As best I understand it, to "mine a block", a body of information based on recent bitcoin transactions all over the world is processed by a search system which tries to find a number which will hash to the same value as the hash of the block. The number needs to be smaller than a certain limit, which is repeatedly adjusted downwards to make the process more difficult. There's no way of calculating the desired number - it just requires a lot of searching, and for each possible number, a hash operation must be done to see if it is the right one for this block. When a bit coin miner (which may be a pool using thousands of individuals' own mining hardware) finds a suitable number, they publish this to others in the network and this is accepted as a valid new block, which other miners begin working on in the same way. A present, every such block earns the miner 25 bitcoins - which can be traded at present for about $USD22,675. The value of currently mined bitcoins is about USD$10B: https://blockchain.info/charts/market-cap You can see the real-time progress of bitcoin mining at: https://blockchain.info Every 8.52 minutes, on average: https://blockchain.info/stats a new block is mined. So that's about USD$2.5k a minute. The other stats there I am not so sure about, such as electricity consumption of all mining, since this would vary enormously with the technology used. 5 x 10^15 hashes per second is probably quite reliable for the total global mining effort. My graphics card is working at night doing about 25 million hashes a second but I think there connection problems with the pool server. So far my total earnings as contributor to "slush's pool" http://mining.bitcoin.cz is still only worth 0.0000053 bitcoins. This is about half a cent - about enough to buy 20cm of cheap but perfectly effective Chinese dental floss ($2 for 80 metres at a $2 shop). Bitcoins and fractions thereof (BTC) are not stored anywhere. Each transaction is published globally and recorded forever, with checking to ensure there is no double-spending. A simple and secure way to "store" bitcoins and fractions thereof is to generate a suitable key pair with an open-source javascript program: https://www.bitaddress.org This can be run on a computer which is not connected to the Net and never will be. The two keys are presented as alphanumeric strings and as QR codes. The public key is the "bitcoin address". This can be told to anyone. The private key belongs with the public key and should not be revealed to anyone. If someone, perhaps yourself, uses their private key to sign a transaction of some BTC to your bitcoin address, the whole bitcoin world knows this and the transaction is effectively archived forever - without any specific linkage between the sender's or the recipient's bitcoin addresses and their true identity. After this, the particular BTC of the transaction (some small fraction of the entire number of bitcoins "in existence" (meaning recognised by the global distributed system) can only be transferred to another bitcoin address by a digital signature made with the recipient's private key. So if you run the above javascript software, print the result, close the computer without any chance that the screen image or data within the computer could have been seen by anyone, then you can have someone (perhaps yourself) transfer BTC to the newly generated bitcoin address. Since you are the only person with a record of the corresponding private key, you own this BTC. If you lose the piece of paper without making any copy of the private key, that BTC value will forever remain owned (as far as the global bitcoin network is concerned) by the bitcoin address, since neither you nor anyone else can generate the private key to transfer it to another address. A solitary piece of paper, or even the human memory of the private key, can be the sole physical means of transferring the BTC to another bitcoin address. I think that when bitcoins are "stolen" or "lost" in some bitcoin exchange, it is because the attacker somehow got hold of the matching private key. This could be done by hacking a computer which has a fully functional bitcoin "wallet" (software which can send BTC to other bitcoin addresses by digital signing with the private key and publishing the result to the bitcoin network. Since many companies offer web-based "wallets" which don't require the user to remember or store the private key, these sites must store the private key of each of the one or more bitcoin addresses of each user. So if that site is hacked, the attacker gets all the private keys, uses them to transfer BTC to a bitcoin address of their choosing, and can then send the money from their to further bitcoin addresses, perhaps many per hour or minute. Also if a user's computer or cell phone has been hacked to reveal their password for the "wallet" site, then the attacker can log in as them and send the victim's BTC to a bitcoin address the attacker controls. A physical form of bitcoin currency can be made by generating a key pair, transferring X BTC to the bitcoin address and then ensuring that the only copy of the private key is contained in a single physical object. This could be a piece of paper, or a code or piece of printing on a physical object with a tamperproof seal. If you buy such an object, and the tamperproof seal is unbroken, then you know no-one else could have transferred the BTC from this bitcoin address. Anyone can look up the current BTC which the network recognises for a given bitcoin address. (This is perhaps an oversimplification.) For instance, the liquid cooled miner article ends with the bitcoin address of the author who is soliciting donations. The transactions and a balance of that address can be looked up: http://blockexplorer.com/address/1AftZ6QoWcdmaNWZsJyT9GVVdRAT5mVtTB https://blockchain.info/address/1AftZ6QoWcdmaNWZsJyT9GVVdRAT5mVtTB The QR code http://en.wikipedia.org/wiki/QR_code was invented by Toyota subsidiary Denso Wave. It is patented in several countries but the company does not enforce the patents. Bitcoin was devised by an anonymous person with a Japanese pseudonym. They both rely on complex mathematics, including asymmetrical cryptography (Bitcoin) and the exceedingly complex Read Solomon error correction coding (don't even think about trying to understand it unless you fully understand the Galois field, which I don't) which was first widely used by Sony in their work with Philips on the CD in the early 1980s. Reed Solomon error correction is used for DVDs, digital video transmission (I think) and certainly for all DSL services. These technologies have profound social and economic implications and they are all based on mathematics which is way beyond conventional numbers, logarithms, trigonometry, set theory, calculus etc. Bitcoin is a form of digital, or rather mathematical, rather than physical cash. Physical cash is easy to understand - in its actual nature and the systems which surround it which give it value. Bitcoin's value system is similar to physical cash - if enough people value it, it has value. However, the details of how it works are really hard to understand. Non-mathematical people can understand how to use it via various software and web services. Electronic hardware and software development is known for its urgent product development cycles, but I find it hard to imagine a faster-moving field than that of ASIC bitcoin mining in the last month or two. The field was already exceedingly speedy as companies developed and sold ASICs which vastly increased the total capacity of all miners. Now the value of a bitcoin has multiplied a factor of 8 in the last month: https://blockchain.info/charts/market-price this puts even greater pressure on the developers and those who would buy and run the gear. The danger is that by the time you get the gear, someone else will have something even better, or will soon have something even better, that there will be little or no window of opportunity to make money from it. The more ASIC mining capacity there is, the faster the difficulty will rise: https://blockchain.info/charts/hash-rate https://blockchain.info/charts/difficulty If the value of a bitcoin stabilises, or drops, then that will make almost any kind of new hardware obsolete within weeks or months, even if the technology doesn't change, since more and more of the ASICs of a given generation will be produced and used for mining. As long as the value of a bitcoin keeps going up, that will provide even more impetus to develop the next generation ASICs, figure out how to acquire and run them - and so to get the electricity and necessary cooling arrangements. ASIC bit coin mining hardware which can't earn the cost of the electricity it consumes is no use for anything else. eBay has plenty already: http://www.ebay.com/sch/i.html?_sacat=0&_nkw=bitcoin+miner - Robin http://www.firstpr.com.au _______________________________________________ Link mailing list [email protected] http://mailman.anu.edu.au/mailman/listinfo/link
