History of bitcoin

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Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto [11] and released as open-source software in Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, [13] products, and services. As of Februaryovermerchants and vendors accepted bitcoin as payment.

The word bitcoin first occurred and was defined in the white paper [5] that bitcoin wikipedia romana languages published on 31 October There is no uniform convention bitcoin wikipedia romana languages bitcoin capitalization.

Some sources use Bitcoincapitalized, to refer to the technology and network and bitcoinlowercase, to refer to the unit of account. The unit of account of the bitcoin system is a bitcoin. Named in homage to bitcoin's creator, a satoshi is the smallest amount within bitcoin representing 0. As with most new symbols, font support is very limited. Typefaces supporting it include Horta.

On 18 Augustthe domain name "bitcoin. In Januarythe bitcoin network came into existence after Satoshi Nakamoto mined the first ever block on the chain, known as the genesis block. This note has been interpreted as both a timestamp of the bitcoin wikipedia romana languages date and a derisive comment on the instability caused by fractional-reserve banking.

The receiver of the first bitcoin transaction was cypherpunk Hal Finneywho created the first reusable proof-of-work system RPOW in In the early days, Nakamoto is estimated to have mined 1 million bitcoins.

So, if I get hit by a bus, it would be clear that the project would go on. Over the history of Bitcoin there have been several spins offs and deliberate hard forks that have lived on as separate blockchains.

These have come to be known as "altcoins", short for alternative coins, since Bitcoin was the first blockchain and these are bitcoin wikipedia romana languages of it.

These spin offs occur bitcoin wikipedia romana languages that new ideas bitcoin wikipedia romana languages be tested, when the scope of that idea is outside that of Bitcoin, or when the community bitcoin wikipedia romana languages split about merging such changes.

Since then there have been numerous forks of Bitcoin. See list of bitcoin forks. The blockchain is a public ledger that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: The blockchain is a distributed database — bitcoin wikipedia romana languages achieve independent verification of the chain of ownership of any and every bitcoin amount, each network node stores its own copy of the blockchain.

This allows bitcoin software to determine when a particular bitcoin amount has been spent, which is necessary in order to prevent double-spending in an environment without central oversight.

Whereas a conventional ledger records the transfers of actual bills bitcoin wikipedia romana languages promissory notes that exist apart from it, the blockchain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions.

Transactions are defined bitcoin wikipedia romana languages a Forth -like scripting language. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output.

To prevent double spending, each input must refer to a previous unspent output in the blockchain. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction. As in a cash transaction, the sum of inputs coins used to pay can exceed the intended sum of payments.

In such a case, an additional output is used, returning the change back to the payer. Paying a transaction fee is optional. Because the size of mined blocks is capped by the network, miners choose transactions based on the fee paid relative bitcoin wikipedia romana languages their storage size, not the absolute amount of money paid as a fee. The size of transactions is dependent on the number of inputs used to create the transaction, and the number of outputs.

In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address is nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse computing the private bitcoin wikipedia romana languages of a given bitcoin wikipedia romana languages address is mathematically unfeasible and so users can tell others and make public a bitcoin address without compromising its corresponding private key.

Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds. The vast number of valid private keys makes it unfeasible that brute force could be used for that. To be able to spend the bitcoins, the owner must know the corresponding private key and digitally sign the transaction. The network verifies the signature using the public key. If the private key is lost, the bitcoin network will not recognize any other evidence of ownership; [9] the coins are then unusable, and effectively lost.

Mining is a record-keeping service done through the use of computer processing power. To be accepted by the rest of the network, a new block must contain a so-called proof-of-work PoW.

Every 2, blocks approximately 14 days at roughly 10 min per blockthe difficulty target is adjusted based on the network's recent performance, with the aim of keeping the average time between new blocks at ten minutes. In this way the system automatically adapts to the total amount of mining power on the bitcoin wikipedia romana languages. The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted.

Computing power is often bundled together or "pooled" to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment. In a pool, all participating miners get paid every time a participating server solves a block. This payment depends on the amount of work an individual miner contributed to help find that bitcoin wikipedia romana languages.

The successful miner finding the new block is rewarded with newly created bitcoins and transaction fees. To claim the reward, a special transaction called a coinbase is bitcoin wikipedia romana languages with the processed payments.

The bitcoin protocol specifies that the reward for adding a block will be halved everyblocks approximately every four years. Eventually, the reward will decrease to zero, and the limit of 21 million bitcoins [f] will be reached c. Their numbers are being released roughly every ten minutes and the rate at which they are generated would drop by half every four years until all were in circulation.

A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold [60] or store bitcoins, [61] due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger.

A better way to describe a wallet is something that "stores the digital credentials for your bitcoin holdings" [61] and allows one to access and spend them.

Bitcoin uses public-key cryptographyin which two cryptographic keys, one public and one private, are generated. There are three modes which wallets can operate in. They have an inverse relationship with regards to trustlessness and computational requirements. Third-party internet services called online wallets offer similar functionality but may be easier to use.

In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware. A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen.

An example of such a security breach occurred with Mt. Physical wallets store offline the credentials necessary to spend bitcoins. Another type of wallet called a hardware wallet keeps credentials offline while facilitating transactions. The first wallet program — simply named "Bitcoin" — was released in by Satoshi Nakamoto as open-source code. While a decentralized system cannot have an "official" implementation, Bitcoin Core is considered by some to be bitcoin's preferred implementation.

Bitcoin was designed not to need a central authority [5] and the bitcoin network is considered to be decentralized. In mining pool Ghash. The pool has voluntarily capped their hashing power at Bitcoin is pseudonymousmeaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through "idioms of use" e.

To heighten financial privacy, a new bitcoin address can be generated for each transaction. Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility. Researchers have pointed out that bitcoin wikipedia romana languages history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility.

The blocks in the blockchain were originally limited to 32 megabyte in size. The block size limit of one megabyte was introduced by Satoshi Nakamoto inas an anti-spam measure. Transaction records traditionally contain a certain amount of data that is mostly only used while confirming the block in question; it does not serve any real purpose once the block is safely on the chain.

SegWit introduces a new transaction format that segregates these record fields from record fields of lasting value such as ID, sender, recipient, or amount. The segregated data, the so-called witnessis not written into the block but is thrown away upon successful confirmation.

This lowers the size of the average transaction, thereby increasing the effective carrying capacity of each block without having to alter the physical block size. Bitcoin is a bitcoin wikipedia romana languages asset designed by its inventor, Satoshi Nakamoto, to work as a currency. The question whether bitcoin is a currency or not is still disputed.

According to research produced by Cambridge Universitythere were between 2. The number of users has grown significantly sincewhen there wereto 1. Inthe number of merchants accepting bitcoin exceededReasons for this fall include high transaction fees due to bitcoin's scalability issues, long transaction times and a rise in value making consumers unwilling to spend it. Bitcoin wikipedia romana languages accepting bitcoin ordinarily use the services of bitcoin payment service providers such as BitPay or Coinbase.

When a customer pays in bitcoin, the payment service provider accepts the bitcoin on behalf of the merchant, converts it to the local currency, bitcoin wikipedia romana languages sends the obtained amount to merchant's bank account, charging a fee for the service. Bitcoins can be bought on digital currency exchanges. According to Tony Gallippia co-founder of BitPay"banks are scared to deal with bitcoin companies, bitcoin wikipedia romana languages if they really want to".

In a report, Bank of America Merrill Lynch stated that "we believe bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers.

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An important paper was published this week:. Sidechains themselves are not new — the idea, and how to build them, has been discussed for some time and the key breakthrough was outlined earlier in the year.

But this paper gives more detail on the concept and has attracted a lot of comment. The key to understanding most innovations in the Bitcoin space is to make sure you have the right mental model for how Bitcoin itself works.

First, clear your head of anything related to money, currency or payments. And clear your head of the word ledger , too.

The only data structures that matter are transactions and blocks of transactions. What more do you need? This three-part structure to a Bitcoin transaction works well and it turns out that you can do some really interesting things with it.

Some people would like to transmit richer forms of information across these sorts of systems. For example, a decentralized exchange needs a way for participants to place orders. Projects such as Mastercoin, Counterparty, NXT and others either build layers on top of Bitcoin or use entirely different codebases to achieve their goals.

I said above that you can build sophisticated rules into Bitcoin transactions to specify how ownership is proved. However, the Bitcoin scripting language is deliberately limited and many ideas in the Smart Contracts space are difficult or impossible to implement.

So projects such as Ethereum are building an entirely new infrastructure to explore these ideas. And you pay for this in fees and time. What if you were prepared to trade safety for speed? Today, your only real option is to send the coins to a centralized wallet provider, whom you must trust not to lose or steal your coins.

You can then do all the transactions you like on their books, with their other customers and you never need touch the Bitcoin blockchain. But now you lose all the benefits of a decentralized value-transfer network. Now, making experimental or rapid changes to Bitcoin is very risky and so change happens slowly.

You either have to use an entirely different cryptocurrency or build one! Or you have to use or build a centralized service, which brings new risks. This is very inconvenient. It creates risk and fragmentation and slows the build-out of products, services and infrastructure.

Think about what happens if you send Bitcoins to a centralized wallet such as circle. From the perspective of the Bitcoin network, Circle is a black box. And at some point later, you had control of some coins again. What if you could send Bitcoins not only to individuals, addresses and centralized services but to other blockchains? Maybe it has a faster block confirmation interval and a richer scripting language.

You have Bitcoins already. So developers get the opportunity to experiment with different types of cryptocurrency rules without needing to create their own currency. We now have a way to move coins from Bitcoin onto another platform a sidechain and move them back again. That would be identical to a single-company wallet, but with full visibility of transactions. Going further, you could imagine a sidechain that is mined by different companies in a loose federation. Not totally decentralized, but harder to censor or subvert than if it were just one.

And there are lots of other possibilities. The key is that you can build these experiments and products and services without also needing to create a new currency or fall back into the old centralised style. Now there are some serious issues with the scheme. Peter Todd has raised doubts about how secure it might be and it might require a one-off change to Bitcoin.

I thought it was a genius idea at the time and it will allow experimenting. THis concept opens up doors to Central banks taking part in the blockchain under a defined set of rules! That might be fun to see unfold. For now we wait and see. Hi Richard- How does this concept differ from http: Reblogged this on Global-hardware. Reblogged this on Maverisk and commented: In one sense, a dilution. In another, a move to widespread adoption and acceptance. From which, probably, some unforeseeable, maybe even weird, whole new societal developments may spring.

Frankly, secure implementation of Bitcoin is already a pain in the ass.. Adding turing complete or not scripts with arbitrary outcomes, multiple versions of the official client cooperating, multiple clients, and now multiple blockchains is basically the nail in the coffin in terms of widespread implementation.

However, I am wondering about one thing. The expected time before the next block is always 10 minutes. Richard- Sidechains appear to be an awkward implementation of Ripple gateways. My view is that counterparties e.

Counterparty risk remains in both versions, and Ripple is designed to automatically mitigate the degree of risk. That said — I think some camps would strongly disagree — counterparty risk seems like a reasonable price to pay for systemic scalability and stability, especially when the risk can be mitigated with rules and governance that institutions like SWIFT and the Bank of England provide today.

Despite best technical efforts, human problems remain within the realm of probability. The effects of a public herd mentality at the time of the [insert catastrophe here] are depicted, all too recognizably, as unstoppable. Reblogged this on Insufficiently Edited Ty Danco. However, the technical breakthrough that is the blockchain really is a historical break.

Sticking only to the historical, tried-and-true surface-crawling after the invention of heavier-than-air man-made flying in the early s would be missing the fundamentally new possibility uncovered: I need to read more about Ripple.

Some concerns with the article: There is something similar going on here with dollars. The fact that printed dollars have serial numbers tends to confuse this notion. I have not had a chance to read the original article on side chains, but I am sure they deal with my next problem quite adequately.

However it is not addressed in the above article. The primary problem that must be addressed with the notion of side chains, as I see it, would be the issue of the mining required to authenticate transactions and enter them into the block chain. But for any user, they would need to be both considered and understood.

The validation process requires mining in much the same sense as mining new coin. None of this is mentioned or discussed in the article.

As a result, the verification of side chain transactions outside the block chain introduces whole new layers of risk into the Bitcoin model, and new layers of unknowns. My chief concern is not with the concept of side chains per se yet. I have still much to learn about how they are being considered.

I am only concerned with the way the concept is being presented here. However, I am sure that much of this was due to space restrictions as much as anything. The concept of side chains is an intriguing one. It is also clearly attempting to address a major problem with the whole Bitcoin scheme- namely the verification latency it introduces for transactions. This is only one of the hurdles facing Bitcoins acceptance into the world of commerce, but it is a considerable one. But how that happens is a matter for the sidechain.

Gendal, how do you suppose private chains will be secured? For example, the CEO may decide to adjust history and there is not much stopping him, since he controls all the mining.

One approach is the periodic checkpoints sent to the blockchain. I think sidechains become a huge security hole that might corpse whole Bitcoin eco-system. But the situation is no different than a firm today that offers bitcoin safekeeping services, right?

Am I missing something? I see the benefits for the organization in using the private chain as another form of internal database, with better security properties.

It can also be used where a service bus product would be today, to facilitate integration, conformance, monitoring, audit. Anything else on the benefits side that I missed? Buy what is lost with private chains is non-repudiation of transactions, as PoW can now be manipulated, by the company itself, hackers and the governments.

Checkpointing with the main chains is a good start, but is not enough. I am interested in discussing possible solutions to the problem. It all comes down to the table I drew in this post: My take is that the Bitcoin architecture is a solution to the problem of how to maintain consensus about a ledger when the participants are unknown and many of them are adversarial I know this is loose language… computer scientists working in the consensus space are more precise but I think this captures the essence….

Security is so bad, employees are so untrustworthy, etc. But they are both problematic. Any thoughts on how one might do this?