I disseminate the writings of Satoshi Nakamoto, one quote at a time.
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npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Profile Code
nprofile1qqsgw4cxgl9rka2fuektd39m35vh7k7frhnnkk8trt083jxa6hlv06cpz3mhxue69uhhyetvv9ujuerpd46hxtnfduqs6amnwvaz7tmwdaejumr0ds327w4u
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2026-09-17T08:27:42Z Event JSON
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Last Notes npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The Bitcoin network might actually reduce spam by diverting zombie farms to generating bitcoins instead. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi 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 impractical. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi A transaction will quickly propagate throughout the network, so if two versions of the same transaction were reported at close to the same time, the one with the head start would have a big advantage in reaching many more nodes first. Nodes will only accept the first one they see, refusing the second one to arrive, so the earlier transaction would have many more nodes working on incorporating it into the next proof-of-work. In effect, each node votes for its viewpoint of which transaction it saw first by including it in its proof-of-work effort. If the transactions did come at exactly the same time and there was an even split, it's a toss up based on which gets into a proof-of-work first, and that decides which is valid. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Only people trying to create new coins would need to run network nodes. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi It can already be used for pay-to-send e-mail. The send dialog is resizeable and you can enter as long of a message as you like. It's sent directly when it connects. The recipient doubleclicks on the transaction to see the full message. If someone famous is getting more e-mail than they can read, but would still like to have a way for fans to contact them, they could set up Bitcoin and give out the IP address on their website. "Send X bitcoins to my priority hotline at this IP and I'll read the message personally." npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi I believe I've worked through all those little details over the last year and a half while coding it, and there were a lot of them. The functional details are not covered in the paper, but the sourcecode is coming soon. I sent you the main files. (available by request at the moment, full release soon) npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The problem of course is the payee can't verify that one of the owners did not double-spend the coin. A common solution is to introduce a trusted central authority, or mint, that checks every transaction for double spending. After each transaction, the coin must be returned to the mint to issue a new coin, and only coins issued directly from the mint are trusted not to be double-spent. The problem with this solution is that the fate of the entire money system depends on the company running the mint, with every transaction having to go through them, just like a bank. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi For greater privacy, it's best to use bitcoin addresses only once. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The target time between blocks will probably be 10 minutes. Every block includes its creation time. If the time is off by more than 36 hours, other nodes won't work on it. If the timespan over the last 6*24*30 blocks is less than 15 days, blocks are being generated too fast and the proof-of-work difficulty doubles. Everyone does the same calculation with the same chain data, so they all get the same result at the same link in the chain. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Some places where generation will gravitate to: npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The recipient just needs to verify it back to a depth that is sufficiently far back in the block chain, which will often only require a depth of 2 transactions. All transactions before that can be discarded. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi For future reference, here's my public key. It's the same one that's been there since the bitcoin.org site first went up in 2008. Grab it now in case you need it later. http://www.bitcoin.org/Satoshi_Nakamoto.asc npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The network is robust in its unstructured simplicity. Nodes work all at once with little coordination. They do not need to be identified, since messages are not routed to any particular place and only need to be delivered on a best effort basis. Nodes can leave and rejoin the network at will, accepting the proof-of-work chain as proof of what happened while they were gone. They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi We're not "on the lookout" for double spends to sound the alarm and catch the cheater. We merely adjudicate which one of the spends is valid. Receivers of transactions must wait a few blocks to make sure that resolution has had time to complete. Would be cheaters can try and simultaneously double-spend all they want, and all they accomplish is that within a few blocks, one of the spends becomes valid and the others become invalid. Any later double-spends are immediately rejected once there's already a spend in the main chain. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi To Sepp's question, indeed there is nobody to act as central bank or federal reserve to adjust the money supply as the population of users grows. That would have required a trusted party to determine the value, because I don't know a way for software to know the real world value of things. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The timing is strange, just as we are getting a rapid increase in 3rd party coverage after getting slashdotted. I hope there's not a big hurry to wrap the discussion and decide. How long does Wikipedia typically leave a question like that open for comment? npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Simplified Payment Verification is for lightweight client-only users who only do transactions and don't generate and don't participate in the node network. They wouldn't need to download blocks, just the hash chain, which is currently about 2MB and very quick to verify (less than a second to verify the whole chain). If the network becomes very large, like over 100,000 nodes, this is what we'll use to allow common users to do transactions without being full blown nodes. At that stage, most users should start running client-only software and only the specialist server farms keep running full network nodes, kind of like how the usenet network has consolidated. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Excellent choice of a first project, nice work. I had planned to do this exact thing if someone else didn't do it, so when it gets too hard for mortals to generate 50BTC, new users could get some coins to play with right away. Donations should be able to keep it filled. The display showing the balance in the dispenser encourages people to top it up. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi It can already be used for pay-to-send e-mail. The send dialog is resizeable and you can enter as long of a message as you like. It's sent directly when it connects. The recipient doubleclicks on the transaction to see the full message. If someone famous is getting more e-mail than they can read, but would still like to have a way for fans to contact them, they could set up Bitcoin and give out the IP address on their website. "Send X bitcoins to my priority hotline at this IP and I'll read the message personally." npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi When a node receives a block, it checks the signatures of every transaction in it against previous transactions in blocks. Blocks can only contain transactions that depend on valid transactions in previous blocks or the same block. Transaction C could depend on transaction B in the same block and B depends on transaction A in an earlier block. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi We consider the scenario of an attacker trying to generate an alternate chain faster than the honest chain. Even if this is accomplished, it does not throw the system open to arbitrary changes, such as creating value out of thin air or taking money that never belonged to the attacker. Nodes are not going to accept an invalid transaction as payment, and honest nodes will never accept a block containing them. An attacker can only try to change one of his own transactions to take back money he recently spent. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The root problem with conventional currency is all the 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. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The incentive can also be funded with transaction fees. If the output value of a transaction is less than its input value, the difference is a transaction fee that is added to the incentive value of the block containing the transaction. Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services. With the possibility of reversal, the need for trust spreads. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The heat from your computer is not wasted if you need to heat your home. If you're using electric heat where you live, then your computer's heat isn't a waste. It's equal cost if you generate the heat with your computer. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi A transaction will quickly propagate throughout the network, so if two versions of the same transaction were reported at close to the same time, the one with the head start would have a big advantage in reaching many more nodes first. Nodes will only accept the first one they see, refusing the second one to arrive, so the earlier transaction would have many more nodes working on incorporating it into the next proof-of-work. In effect, each node votes for its viewpoint of which transaction it saw first by including it in its proof-of-work effort. If the transactions did come at exactly the same time and there was an even split, it's a toss up based on which gets into a proof-of-work first, and that decides which is valid. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Those coins can never be recovered, and the total circulation is less. Since the effective circulation is reduced, all the remaining coins are worth slightly more. It's the opposite of when a government prints money and the value of existing money goes down. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Broadcasts will probably be almost completely reliable. TCP transmissions are rarely ever dropped these days, and the broadcast protocol has a retry mechanism to get the data from other nodes after a while. If broadcasts turn out to be slower in practice than expected, the target time between blocks may have to be increased to avoid wasting resources. We want blocks to usually propagate in much less time than it takes to generate them, otherwise nodes would spend too much time working on obsolete blocks. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Actually, it works well to just PM me. I'm the one who's going to be fixing it. If you find a security flaw, I would definitely like to hear from you privately to fix it before it goes public. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi In this sense, it's more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Actually, it works well to just PM me. I'm the one who's going to be fixing it. If you find a security flaw, I would definitely like to hear from you privately to fix it before it goes public. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The incentive may help encourage nodes to stay honest. If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi It should be noted that fan-out, where a transaction depends on several transactions, and those transactions depend on many more, is not a problem here. There is never the need to extract a complete standalone copy of a transaction's history. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi When someone tries to buy all the world's supply of a scarce asset, the more they buy the higher the price goes. At some point, it gets too expensive for them to buy any more. It's great for the people who owned it beforehand because they get to sell it to the corner at crazy high prices. As the price keeps going up and up, some people keep holding out for yet higher prices and refuse to sell. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi A generation ago, multi-user time-sharing computer systems had a similar problem. 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 of 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 way that was physically impossible for others to access, no matter for what reason, no matter how good the excuse, no matter what. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The heat from your computer is not wasted if you need to heat your home. If you're using electric heat where you live, then your computer's heat isn't a waste. It's equal cost if you generate the heat with your computer. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi If it gets tiresome working with small numbers, we could change where the display shows the decimal point. Same amount of money, just different convention for where the ","'s and "."'s go. e.g. moving the decimal place 3 places would mean if you had 1.00000 before, now it shows it as 1,000.00. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi I don't know anything about any of the bug trackers. If we were to have one, we would have to make a thoroughly researched choice. We're managing pretty well just using the forum. I'm more likely to see bugs posted in the forum, and I think other users are much more likely to help resolve and ask follow up questions here than if they were in a bug tracker. A key step is other users helping resolve the simple stuff that's not really a bug but some misunderstanding or confusion. I keep a list of all unresolved bugs I've seen on the forum. In some cases, I'm still thinking about the best design for the fix. This isn't the kind of software where we can leave so many unresolved bugs that we need a tracker for them. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The steps to run the network are as follows: npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi When there are multiple double-spent versions of the same transaction, one and only one will become valid. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi A lot of people automatically dismiss e-currency as a lost cause because of all the companies that failed since the 1990's. I hope it's obvious it was only the centrally controlled nature of those systems that doomed them. I think this is the first time we're trying a decentralized, non-trust-based system. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi When a node finds a proof-of-work, the new block is propagated throughout the network and everyone adds it to the chain and starts working on the next block after it. Any nodes that had the other transaction will stop trying to include it in a block, since it's now invalid according to the accepted chain. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi I am not Dorian Nakamoto. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi As you figured out, the root problem is we shouldn't be counting or spending transactions until they have at least 1 confirmation. 0/unconfirmed transactions are very much second class citizens. At most, they are advice that something has been received, but counting them as balance or spending them is premature. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Difficulty just increased by 4 times, so now your cost is US$0.02/BTC. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi When a node receives a block, it checks the signatures of every transaction in it against previous transactions in blocks. Blocks can only contain transactions that depend on valid transactions in previous blocks or the same block. Transaction C could depend on transaction B in the same block and B depends on transaction A in an earlier block. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi If SHA-256 became completely broken, I think we could come to some agreement about what the honest block chain was before the trouble started, lock that in and continue from there with a new hash function. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The receiver of a payment must wait an hour or so before believing that it's valid. The network will resolve any possible double-spend races by then. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi I very much wanted to find some way to include a short message, but the problem is, the whole world would be able to see the message. As much as you may keep reminding people that the message is completely non-private, it would be an accident waiting to happen. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The race is to spread your transaction on the network first. Think 6 degrees of freedom -- it spreads exponentially. It would only take something like 2 minutes for a transaction to spread widely enough that a competitor starting late would have little chance of grabbing very many nodes before the first one is overtaking the whole network. During those 2 minutes, the merchant's nodes can be watching for a double-spent transaction. The double-spender would not be able to blast his alternate transaction out to the world without the merchant getting it, so he has to wait before starting. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The proof-of-work chain is itself self-evident proof that it came from the globally shared view. Only the majority of the network together has enough CPU power to generate such a difficult chain of proof-of-work. Any user, upon receiving the proof-of-work chain, can see what the majority of the network has approved. Once a transaction is hashed into a link that's a few links back in the chain, it is firmly etched into the global history. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The proof-of-work chain is a solution to the Byzantine Generals' Problem. I'll try to rephrase it in that context. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The fact that new coins are produced means the money supply increases by a planned amount, but this does not necessarily result in inflation. If the supply of money increases at the same rate that the number of people using it increases, prices remain stable. If it does not increase as fast as demand, there will be deflation and early holders of money will see its value increase. Coins have to get initially distributed somehow, and a constant rate seems like the best formula. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi I anticipate there will never be more than 100K nodes, probably less. It will reach an equilibrium where it's not worth it for more nodes to join in. The rest will be lightweight clients, which could be millions. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The result is a distributed system with no single point of failure. Users hold the crypto keys to their own money and transact directly with each other, with the help of the P2P network to check for double-spending. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi We should have a gentleman's agreement to postpone the GPU arms race as long as we can for the good of the network. It's much easer to get new users up to speed if they don't have to worry about GPU drivers and compatibility. It's nice how anyone with just a CPU can compete fairly equally right now. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi It's very attractive to the libertarian viewpoint if we can explain it properly. I'm better with code than with words though. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi 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. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains. To modify a past block, an attacker would have to redo the proof-of-work of the block and all blocks after it and then catch up with and surpass the work of the honest nodes. We will show later that the probability of a slower attacker catching up diminishes exponentially as subsequent blocks are added. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Announcing version 0.3 of Bitcoin, the P2P cryptocurrency! Bitcoin is a digital currency using cryptography and a distributed network to replace the need for a trusted central server. Escape the arbitrary inflation risk of centrally managed currencies! Bitcoin's total circulation is limited to 21 million coins. The coins are gradually released to the network's nodes based on the CPU power they contribute, so you can get a share of them by contributing your idle CPU time. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi When there are multiple double-spent versions of the same transaction, one and only one will become valid. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The average total coins generated across the network per day stays the same. Faster machines just get a larger share than slower machines. If everyone bought faster machines, they wouldn't get more coins than before. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Actually, it works well to just PM me. I'm the one who's going to be fixing it. If you find a security flaw, I would definitely like to hear from you privately to fix it before it goes public. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Bitcoin isn't currently practical for very small micropayments. Not for things like pay per search or per page view without an aggregating mechanism, not things needing to pay less than 0.01. The dust spam limit is a first try at intentionally trying to prevent overly small micropayments like that. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions. The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The target time between blocks will probably be 10 minutes. Every block includes its creation time. If the time is off by more than 36 hours, other nodes won't work on it. If the timespan over the last 6*24*30 blocks is less than 15 days, blocks are being generated too fast and the proof-of-work difficulty doubles. Everyone does the same calculation with the same chain data, so they all get the same result at the same link in the chain. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi It is a global distributed database, with additions to the database by consent of the majority, based on a set of rules they follow: npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi We're not "on the lookout" for double spends to sound the alarm and catch the cheater. We merely adjudicate which one of the spends is valid. Receivers of transactions must wait a few blocks to make sure that resolution has had time to complete. Would be cheaters can try and simultaneously double-spend all they want, and all they accomplish is that within a few blocks, one of the spends becomes valid and the others become invalid. Any later double-spends are immediately rejected once there's already a spend in the main chain. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Think of it as a cooperative effort to make a chain. When you add a link, you must first find the current end of the chain. If you were to locate the last link, then go off for an hour and forge your link, come back and link it to the link that was the end an hour ago, others may have added several links since then and they're not going to want to use your link that now branches off the middle. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The steps to run the network are as follows: npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi It is a global distributed database, with additions to the database by consent of the majority, based on a set of rules they follow: npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi At equilibrium size, many nodes will be server farms with one or two network nodes that feed the rest of the farm over a LAN. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous. The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the "tape", is made public, but without telling who the parties were. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi We're not "on the lookout" for double spends to sound the alarm and catch the cheater. We merely adjudicate which one of the spends is valid. Receivers of transactions must wait a few blocks to make sure that resolution has had time to complete. Would be cheaters can try and simultaneously double-spend all they want, and all they accomplish is that within a few blocks, one of the spends becomes valid and the others become invalid. Any later double-spends are immediately rejected once there's already a spend in the main chain. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Lost coins only make everyone else's coins worth slightly more. Think of it as a donation to everyone. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi In this sense, it's more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi I'll try and hurry up and release the sourcecode as soon as possible to serve as a reference to help clear up all these implementation questions. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Lost coins only make everyone else's coins worth slightly more. Think of it as a donation to everyone. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi It should be noted that fan-out, where a transaction depends on several transactions, and those transactions depend on many more, is not a problem here. There is never the need to extract a complete standalone copy of a transaction's history. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi null npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi It's not a problem if transactions have to wait one or a few extra cycles to get into a block. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi To Sepp's question, indeed there is nobody to act as central bank or federal reserve to adjust the money supply as the population of users grows. That would have required a trusted party to determine the value, because I don't know a way for software to know the real world value of things. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi Those coins can never be recovered, and the total circulation is less. Since the effective circulation is reduced, all the remaining coins are worth slightly more. It's the opposite of when a government prints money and the value of existing money goes down. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi The current system where every user is a network node is not the intended configuration for large scale. That would be like every Usenet user runs their own NNTP server. The design supports letting users just be users. The more burden it is to run a node, the fewer nodes there will be. Those few nodes will be big server farms. The rest will be client nodes that only do transactions and don't generate. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi It's the same situation as gold and gold mining. The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi There would be many smaller zombie farms that are not big enough to overpower the network, and they could still make money by generating bitcoins. The smaller farms are then the "honest nodes". (I need a better term than "honest") The more smaller farms resort to generating bitcoins, the higher the bar gets to overpower the network, making larger farms also too small to overpower it so that they may as well generate bitcoins too. According to the "long tail" theory, the small, medium and merely large farms put together should add up to a lot more than the biggest zombie farm. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi By making some adjustments to the database settings, I was able to make the initial block download about 5 times faster. It downloads in about 30 minutes. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi At the moment, generation effort is rapidly increasing, suggesting people are estimating the present value to be higher than the current cost of production. npub1satsv3728d65nenvkmzthrge0aduj8088dvwkxk70rydm407cl4s87sfhu Quotable Satoshi It is possible to verify payments without running a full network node. A user only needs to keep a copy of the block headers of the longest proof-of-work chain, which he can get by querying network nodes until he's convinced he has the longest chain, and obtain the Merkle branch linking the transaction to the block it's timestamped in. He can't check the transaction for himself, but by linking it to a place in the chain, he can see that a network node has accepted it, and blocks added after it further confirm the network has accepted it.
