The Book Of Satoshi: The Collected Writings of Bitcoin Creator Satoshi Nakamoto pdf by Phil Champagne
BITCOIN HAS BEEN DESCRIBED as libertarian in nature, but not all libertarians and those in favor of a gold-backed currency appreciate it however, and some, in point of fact, actively despise it. In our experience, some fundamental concepts related to Bitcoin are not well understood by these. To fully understand Bitcoin, knowing how and, just as importantly, philosophically why it works is essential.
How can a distributed system composed of several different groups and managed by several individuals at the same time maintain its integrity and avoid the condition termed “tragedy of the commons” by Garrett Hardin? In this economic condition, individuals, acting independently and rationally according to self-interest, behave contrary to the whole group’s long-term best interests by depleting common resources.
A typical example is where a group of farmers share a common pasture for grazing their cattle. Overuse and depletion of the common resource, the pasture, can occur since it is in no one farmer’s individual self-interest to conserve it by limiting his cattle’s consumption of the pasture.
Let’s begin with a discussion of how Bitcoin works. To appreciate and understand most of this book, some basic understanding of Bitcoin’s key concepts is necessary. This chapter will provide that and will conclude with a perspective on why Bitcoin, as a payment system, has been proven so far to be a viable solution. To complete our discussion, we will elaborate Bitcoin’s economic implications.
At its core, Bitcoin incorporates the following concepts:
- A public ledger (called Bitcoin’s block chain). Consider this as essentially a giant book that is publicly available and contains the bookkeeping records of all transactions ever made in the Bitcoin system, with new pages constantly being added.
- A cryptographic algorithm called asymmetric encryption used for authorization of the transactions.
- A distributed network of computer nodes (also commonly known as miners) that verify and validate Bitcoin transactions and update the public ledger.
Let’s explore these concepts in greater detail.
Bitcoin’s block chain: public bookkeeping
All members of the Bitcoin network share its public ledger, the block chain. Imagine a giant accounting book with each page listing a series of transactions. A new page containing the latest Bitcoin transactions sent by payers across the world is added approximately every 10 minutes. This giant book is constantly available on the Internet to anyone who runs the Bitcoin software. Note that software programs called Bitcoin wallets can run on smartphones or personal computers and allow a user to make payments over the Bitcoin network.
In the context of Bitcoin, the pages forming the ledger are called blocks because they represent “blocks” of data. The block chain, composed of many individual blocks, grows constantly in length and contains all transactions performed in Bitcoin since its launch in January 2009.
A Bitcoin transaction request contains the following:
1. The Bitcoin address of the payer, which contains the source of funds for the payment,
2. The recipient’s (payee’s) Bitcoin address, and
3. The amount of bitcoins being transferred.
Since the block chain contains the history of all outgoing and incoming payments associated with the payer’s Bitcoin address, miners, who also manage the Bit-coin network, can validate that the payer has sufficient funds to cover the payment. At any time, anyone can view the amount of bitcoins linked to (or, in an abstract way, held in) any specific Bitcoin address. See for yourself. Go to blockchain.info and enter the following address.
Under “Search”, the number of bitcoins associated with this address will be returned.
Although the owner’s identity cannot be known from his Bitcoin address without his having provided this information, any transfers in and out of his account, as well as his current balance, are publicly available for viewing.
Asymmetric encryption: who gets to spend those bitcoins
Encryption keys are associated with a transaction such as the one described above. Bitcoin employs a system of asymmetric encryption (also known as public-key cryptography), so called because the encryption algorithm requires a pair of keys, each consisting of a long series of digits. One is public and controls the decryption operation, while the other, the private key, governs the encryption operation, or vice versa.
It is easy for the algorithm to create a private key and to derive its corresponding public key. However, determining a private key from the corresponding public key is computationally unfeasible, thus allowing the public key to, as its name implies, be made public. With the public key, the payee can retrieve the transaction information, allowing the transfer of bitcoins to proceed. The following Figure 2 conceptually illustrates Bitcoin’s double key system, which provides part of the basis for Bitcoin’s operation….
About the Cover Picture
Who This Book is Intended For
2. How and Why Bitcoin Works
3. The First Post on Crypto Mailing List
4. Scalability Concerns
5. The 51% Attack
6. About Centrally Controlled Networks Versus Peer-to-Peer Networks
7. Satoshi on the Initial Inflation Rate of 35%
8. About Transactions
9. On the Orphan Blocks
10. About Synchronization of Transactions
11. Satoshi Discusses Transaction Fees
12. On Confirmation and Block Time
13. The Byzantine General’s Problem
14. On Block Time, an Automated Test, and the Libertarian Viewpoint
15. More on Double Spend, Proof-of-Work and Transaction Fees
l6. On Elliptic Curve Cryptography, Denial of Service Attacks, and Confirmation
17. More in the Transaction Pool, Networking Broadcast, and Coding Details
18. First Release of Bitcoin
19. On the Purpose For Which Bitcoin Could Be Used First
20. “Proof-of-Work” Tokens and Spammers
21. Bitcoin Announced on P2P Foundation
22. On Decentralization as Key to Success
23. On the Subject of Money Supply
24. Release of Bitcoin Vo.1.3
25. On Timestamping Documents
26. Bitcointalk Forum Welcome Message
27. On Bitcoin Maturation
28. How Anonymous Are Bitcoins?
29. A Few Questions Answered By Satoshi
30. On “Natural Deflation”
31. Bitcoin Version 0.2 is Here!
32. Recommendation on Ways to Do a Payment for An Order
33. On the Proof-of-Work Difficulty
34. On the Bitcoin Limit and Profitability of Nodes
35. On the Possibility of Bitcoin Address Collisions
36. QR Code
37- Bitcoin Icon/Logo
38. GPL License Versus MIT License
39. On Money Transfer Regulations
40. On the Possibility of a Cryptographic Weakness
41. On a Variety of Transaction Types
42. First Bitcoin Faucet
43. Bitcoin 0.3 Released!
44. On The Segmentation or “Internet Kill Switch”
45. On Cornering the Market
46. On Scalability and Lightweight Clients
47. On Fast Transaction Problems
48. Wikipedia Article Entry on Bitcoin
49. On the Possibility of Stealing Coins
50. Major Flaw Discovered
51. On Flood Attack Prevention
52. Drainage of Bitcoin Faucet
53. Transaction to IP Address Rather Than Bitcoin Address
54. On Escrow and Multi-Signature Transactions
55. On Bitcoin Mining as a Waste of Resources
56. On an Alternate Type of Block Chain with Just Hash Records
57. On the Higher Cost of Mining
58. On the Development of an Alert System
59. On the Definition of Money and Bitcoin
60. On the Requirement of a Transaction Fee
61. On Sites with CAPTCHA and Paypal Requirements
62. On Short Messages in the Block Chain
63. On Handling a Transaction Spam Flood Attack
64. On Pool Mining Technicalities
65. On WikiLeaks Using Bitcoin
66. On a Distributed Domain Name Server
67. On a PC World Article on Bitcoin and WikiLeaks Kicking the Hornet’s Nest
68. Satoshi’s Last Forum Post: Release of Bitcoin 0.3-19
69. Emails to Dustin Trammell
70. Last Private Correspondence
71. Bitcoin and Me (Hal Finney)
Bitcoin: A Peer-to-Peer Electronic Cash System Terms & Definitions Index
Size: 969 kb
eBook The Book Of Satoshi: The Collected Writings of Bitcoin Creator Satoshi Nakamoto pdf by Phil Champagne