The development of blockchain from 2008 to 2020

From 2008 to 2020, the blockchain industry has formed a certain influential blockchain industry chain, including upstream, midstream, and downstream.#

Since the birth of Bitcoin in 2008, blockchain has gradually been discovered by people, and countries around the world have been laying out blockchain technology and applications. Currently, China's blockchain industry is thriving, with the scale of the industry and the number of enterprises continuously increasing, international competitiveness significantly enhanced, and vertical industry application projects continuously emerging. Various ministries and local governments have launched nearly 300 policies to encourage the innovation and development of blockchain technology and industry. Domestic internet giants have also been laying out blockchain applications, including Alibaba, Huawei, Baidu, Tencent, JD.com, and others, which have launched blockchain platforms. A total of 36 banking institutions, including the central bank and the four major state-owned commercial banks, have also developed blockchain applications and achieved excellent results. From 2008 to 2020, China's blockchain industry has formed a certain influential blockchain industry chain, including upstream, midstream, and downstream. The upstream of the industry chain mainly includes hardware infrastructure and underlying technology platforms, which consist of hardware companies such as mining machines and chips, as well as companies involved in basic protocols and underlying platforms; midstream companies focus on general blockchain applications and technology expansion platforms, including smart contracts, information security, data services, distributed storage, and other enterprises; downstream companies focus on serving end users, customizing various types of blockchain industry applications according to the needs of end users, mainly targeting fields such as finance, supply chain management, healthcare, and energy.

The upstream of the industry chain mainly includes hardware infrastructure and underlying technology platforms, which consist of hardware companies such as mining machines and chips, as well as companies involved in basic protocols and underlying platforms; midstream companies focus on general blockchain applications and technology expansion platforms, including smart contracts, information security, data services, distributed storage, and other enterprises; downstream companies focus on serving end users, customizing various types of blockchain industry applications according to the needs of end users, mainly targeting fields such as finance, supply chain management, healthcare, and energy.

01 Development of Blockchain#

Emergence Phase

When it comes to the financial crisis, we all become wary. The most recent world-class financial crisis occurred in 2008, which gradually led many pioneers to become disillusioned with the modern financial system. In this historical context, Bitcoin was born. Its inventor, Satoshi Nakamoto, keenly realized that most internet trade settlements rely on trusted third-party financial institutions, even though these systems generally operate well most of the time. However, once an extreme trust crisis occurs, the imbalance in trust relationships can lead to a structural collapse of the modern financial system.

Conventional thinking almost fails, but Nakamoto took a different approach and proposed a brand new solution, marking the beginning of a story about a liberalist saving the world. The most remarkable aspects of this solution are twofold: first, it restores the original nature of payments; second, it innovatively introduces payment scripts, which I will explain separately.

What is the original nature of payments? You can understand it this way: the essence of trade payments is actually the supply and demand relationship between buyers and sellers. It is only due to the distrust between the two parties that a trusted third party is needed to provide guarantees and endorse the buying and selling behavior of both parties.

In Nakamoto's view, this operation model mediated by trust is problematic.

Therefore, Nakamoto thought of the possibility of eliminating third-party guarantees and designed a digital currency system based on cryptography that allows payments to be completed without mutual trust between buyers and sellers. By removing the trust link, Bitcoin also innovatively introduces payment scripts for currency payments. The script is essentially a piece of computer program code; if you can input the correct parameters, the successful execution of the script means you have the right to use the currency. Thus, we can say that Bitcoin achieves a digital currency transfer mechanism that operates strictly according to computer logic through program scripts. However, the scripting function of Bitcoin is not perfect; it only supports sequential execution of instructions. Generally, well-functioning computer programming languages support sequences, branches, and loops. Indeed, a script based solely on sequential execution can achieve conditional payments in Bitcoin, but only to that extent. Here we can assume you have such a requirement:

Mortgage a property of yours to exchange for 10 Bitcoins, agreeing to unlock the property with 11 Bitcoins one year later; if you fail to keep your promise, the property will be auctioned off. Nakamoto wrote:

I believe more people are interested in the systems based on trusted third parties in the 1990s (like digital cash), but after more than a decade of failures, people think this is destined to fail. I hope everyone can distinguish; Bitcoin is the first attempt at a system not based on trust that I know of.

It is precisely this main characteristic of being not based on trust that caught my attention. The real difficulty lies in getting people to value Bitcoin, thus making it a currency.

If electronic currency is not popular in ten years, I would be very surprised. Now we know that this method of Bitcoin might persist when trusted third parties retreat.

It can first be used in small niche markets, such as reward points, donation cards, game currencies, etc. Initially, it can be used in those proof-of-work applications that are almost free services.

Bitcoin can already be used to send paid emails. The size of the sending box can be adjusted, and any length of message can be entered. When it connects to the network, it is sent directly. The recipient can double-click the transaction to view the full message. If a celebrity receives so many emails that they can't read them all but still want fans to have a way to contact them, they can install the Bitcoin system and publicly disclose their IP address. "Send X Bitcoins to this IP's VIP hotline, and I will personally read your message."

There are also subscription websites that, to avoid free trials affecting paid subscriptions, can charge Bitcoins from free trial users by adding some extra proof of work.

Perhaps one should keep some Bitcoins on hand, just in case it becomes popular. If more people think this way, the prophecy will self-fulfill. Once it starts, many applications will emerge, making it as easy to pay a few cents on websites as putting coins into vending machines.

Nakamoto

http://www.bitcoin.org This topic was later brought up again in the BitcoinTalk forum.

Bitcoin version 0.1 released Nakamoto, Sunday, January 25, 2009, 08:34:34 UTC-8 Hal Finney wrote:
- Spam zombie networks can easily paralyze the filtering systems for paid emails.
If POW tokens are useful, especially if they can be monetized, machines will no longer be idle. Users will expect their computers to make money. The situation where the computer's earnings are stolen by zombie networks will become more concerning than it is now, and users will work harder to maintain their computers and clean them to avoid infection by zombie networks.

Another way to reduce spam is to give POW tokens value: people will set up numerous fake email accounts to harvest POW tokens from spam. They use automated mailboxes to collect POW but do not read the messages. The ratio of fake accounts to real people will be high enough to make spamming unprofitable.

This process has the potential to form the value of POW tokens; those spammers without zombie networks can buy tokens from harvesters. Although this buying and selling will temporarily generate more spam, too many harvesters squeezing spammers will only accelerate the process of self-destruction.

Interestingly, the e-gold system already has a form of spam advertising called "dusting." Spammers must pay a small amount of gold dust to post spam messages in the transaction comment section. The system allows users to set a minimum compensation amount they are willing to receive for spam messages.

Bitcoin releases P2P currency source code Nakamoto, February 11, 2009, 22:27 I developed a new open-source P2P electronic cash system called Bitcoin. It is completely distributed, with no central server or trusted party; everything is based on cryptographic protection rather than trust. Try it out or check out the screenshots and design paper:

Download Bitcoin version 0.1 from http://www.bitcoin.org

The fundamental problem with traditional currency lies in the trust required by its operating mechanism. One must trust that the central bank will not devalue the currency, but the history of fiat currency is full of breaches of this trust. One must trust banks to hold our money and transfer it electronically, yet they repeatedly lend in credit bubbles, keeping only a small portion in reserves. We must entrust our privacy to them, trusting that they will not let identity thieves drain our accounts. Their enormous operating costs make small payments hopeless.

The previous generation of multi-user time-sharing computer systems also faced similar issues. Before strong encryption was adopted, users had to rely on password protection to ensure file security, trusting system administrators to protect information privacy. The considerations of privacy principles and other issues from administrators or commands from their superiors always took precedence over privacy. When strong encryption came to the public, trust was no longer necessary. Data is secured in ways that others cannot physically access, regardless of the reason or how good the excuse is.

It is time to apply this technology to currency. With password-protected electronic currency, there is no need to trust third-party intermediaries to ensure currency safety and facilitate transactions easily.

The basic components of this system are digital signatures. Digital currency contains the public key of the coin's owner. When transferring, the coin's owner signs the digital currency along with the public key of the next owner. Anyone can check this signature to verify the ownership chain. This protects ownership well but leaves a significant unresolved issue: double spending. Any owner can attempt to sign the already paid digital currency again and make another payment. The usual approach is to have a trusted company with a central database check for double spending, but that returns to the trust model. A company in a central position can override users, and supporting these companies requires enormous costs, making small payments impractical.

The Bitcoin solution is to use a peer-to-peer network to check for double spending. In short, this network acts like a distributed timestamp server, timestamping the first transaction of digital currency payment. This leverages the nature of information being easy to spread but hard to block. For detailed working mechanisms, please refer to the design paper at http://www.bitcoin.org/bitcoin.pdf.

The result is the establishment of a distributed system without a single point of failure. Users keep their encrypted private keys for their coins and trade directly with others, checking for double spending with the help of the P2P network.

Nakamoto

http://www.bitcoin.org

Bitcoin releases P2P currency source code Nakamoto, February 15, 2009, 16:42 Cypherpunk wrote:

Does Bitcoin have synergy with this project?

http://opencoin.org/

Maybe. They are discussing those old things about Chaum's central mint, but perhaps just because that is the only available option. Maybe they will be interested in a new direction.

Many people believe that electronic currency is destined to fail and automatically reject it because all companies that have worked in this area since the 1990s have failed. It is clear that it is the centrally controlled nature of these systems that doomed their failure. I believe Bitcoin is our first attempt at a distributed and trustless system.

Bitcoin releases P2P currency source code Nakamoto, February 18, 2009, 20:50 This is a global distributed database that can be added to under the agreement of most people, based on a set of rules to follow:

· Whenever someone finds the proof of work for generating a block, they will receive some new Bitcoins.
The number of Bitcoins generated per block is halved every four years.

It can be said that Bitcoins are issued by the majority. They are issued in a limited and predetermined quantity.

For example, if there are 1,000 nodes, and 6 nodes can receive Bitcoins every hour, one node may take an average of a week to receive Bitcoins.

Regarding Cypherpunk's question, in fact, when the number of users increases, no one will adjust the money supply like a central bank or the Federal Reserve. Because I do not know how software can know the real-world prices, a trusted party will be needed to determine the value of Bitcoins. If there is a clever way, or if I hope to trust someone to actively manage the money supply to tie it to something, I can program the rules to make it so.

In this sense, Bitcoin is more like a typical precious metal. The supply is predetermined and the value will fluctuate, rather than changing the supply to keep the value stable. When the number of users increases, the value of each Bitcoin also increases. It has the potential to enter a positive feedback loop; as the number of users increases, the value of Bitcoin rises, which attracts more users to enjoy the benefits of appreciation.

Bitcoin version 0.1.3 released Nakamoto, January 12, 2009, 22:48:23 It seems we have passed the worst of the internet connection issues. Version 0.1.3 fixes the problem where node communication would shut down after a period of time. Now this new version runs more smoothly.

If a block has been successfully generated, a mature countdown will be seen before it can be paid. Once mature, the credit bar will change from 0.00 to 50.00. To make the block valid, it must be broadcast to the network and added to the blockchain, which is why Generate will not run if not connected to the network. If a block is generated while not connected, the network will not know of its existence and will continue to build a chain that does not include it, leaving it behind, and when nodes see it as unused, the mature countdown will change to "not accepted." The display of the status bar decreasing by 1 means there is one block linked behind your block.

Bitcoin version 0.1.5 released Nakamoto, March 4, 2009, 16:29:12 Hal Finney wrote:

Sounds good. I also hope to run multiple Bitcoin/block generators on multiple machines, hiding their addresses behind a NAT address. I haven't tried it yet, so I don't know if it fits the current software.

The current version can. They connect through the internet, and incoming connections only reach the host routed to port 8333.

As an optimization, I will define a switch parameter "-connect=1.2.3.4" to specify a connection address. Additional nodes can be connected to the main node, and only the main node connects to the internet. This issue is not so important now because the network will become huge, and bandwidth will become a big issue.

By the way, I don't remember if we ever talked about this, but one day someone mentioned the security timestamp issue. To prove that a file existed at some point in the past, in my opinion, the Bitcoin blockchain is a perfect solution.
Bitcoin is indeed a distributed secure timestamp server for transactions. A few lines of code can create a transaction with an additional hash value containing the data that needs to be timestamped. I should add a command in the software specifically for timestamping files.

Later, I will add an interface that can make server-side languages easier to integrate with websites.

Yes, and I hope to see more interfaces for programming languages or scripting languages to call, which can also be called on the client side.

That's right.

Welcome to the new Bitcoin forum! Nakamoto, November 22, 2009, 18:04:28 Welcome to the new Bitcoin forum!

The original forum can still be accessed at:

http://bitcoin.sourceforge.net/boards/index.php

I will repost some selected posts here and answer questions as much as possible.

FAQ address:

http://bitcoin.sourceforge.net/wiki/index.phppage=FAQ

Download address:

http://sourceforge.net/projects/bitcoin/files/

Has Bitcoin matured? Nakamoto, November 22, 2009, 18:31:44 Bitcoin's maturity

Posted: Thursday, October 1, 2009 (14:12 UTC)

From the user's perspective, the maturity process of Bitcoin can be divided into 8 stages.
1. The initial network transaction that occurs when the minting (Generate Coins) is clicked for the first time.
2. From the initial network transaction to Bitcoin appearing in all transaction lists.
3. Bitcoin transfers from the out-of-domain to the in-domain.
4. From Bitcoin appearing in all transfer lists to the description changing from pending to matured (50.00 Bitcoins matured after x blocks).
1. The description changes to matured (50.00 Bitcoins matured after x blocks).
2. From the description showing matured (50.00 Bitcoins matured after x blocks) to pending changing to matured.
3. The description changes to matured.
4. The description changes to matured afterward.
How is Bitcoin's anonymity? Nakamoto, November 25, 2009, 18:17:23 Do network nodes know the ins and outs of Bitcoin? Do blocks contain the history of incoming and outgoing transactions?

The addresses that send and receive Bitcoins are essentially random numbers with no identifying information.

Transactions sent to an IP address are still recorded with the Bitcoin address. The IP address is only used to connect to the recipient's computer to request a new Bitcoin address, deliver the transaction directly to the recipient, and get confirmation.

Blocks contain the history of incoming Bitcoin addresses. If the person using that Bitcoin address is anonymous and each address has only been used once, then the historical information will only indicate that some anonymous person transferred money to another.

The possibility of anonymity and using pseudonyms depends on whether identity information related to the Bitcoin address is disclosed. If someone publicly discloses their Bitcoin address online, then that address, the transactions it contains, and the name used at the time of disclosure can be linked. If a pseudonym is used that has no connection to real identity information, then it is anonymous.

To better protect privacy, it is best to use a Bitcoin address only once. This can be adjusted by modifying the frequency of address changes in Options->Change.

Do nodes know which IP a Bitcoin address belongs to?

No.

Was there a command line option to control the server port proxy when Bitcoin first started?

The next version (0.2) will provide command line control via proxy at startup:

The problem with TOR is that when discovering other nodes, Bitcoin's IRC servers prohibit TOR exit nodes, and all IRC servers do the same. If it has previously connected, then there is already a seed, but the first time you need to provide a node address like the one below:

If a node uses a static IP address to accept incoming connections, it can use that IP for -addnode, which would be great.

What happens if Bitcoin is sent to an IP address, and there are multiple clients behind that IP connecting via NAT?

The client forwarded through NAT port 8333 will receive the transaction. If the router can change the port during forwarding, it can allow multiple clients to receive Bitcoins. For example, if port 8334 forwards the transaction to port 8333 on one computer, then the payer can pay Bitcoins to "x.x.x.x:8334".

If NAT cannot perform port translation, then there is currently no command line option to change the receiving port that Bitcoin is bound to, but I will continue to investigate.

Questions about Bitcoin Nakamoto, December 10, 2009, 20:49:02 SmokeTooMuch wrote:

Hello! I stumbled upon this great payment method yesterday.

Although I have consulted many websites, I still have some questions that I haven't clarified.
1. Is Bitcoin really anonymous? I mean completely and utterly anonymous. Can ISPs detect Bitcoin income or expenditure activities? They might even see that I am currently running the Bitcoin system, right?
2. If I understand correctly, payment partners cannot see who I am. Does this mean they can only see the Bitcoin address and not the real IP address? Even if they are monitoring network connections, etc.?
3. If ISPs can probe that I am using the Bitcoin system, or payment partners have a way to find out my IP address, would using a VPN be safer (for example, paying with a prepaid card like Paysafecard)? Isn't this also dangerous because the VPN provider can obtain my payment information?
4. To ensure the safety of Bitcoins, which files do we need to back up? wallet.dat or the entire AppData directory of Bitcoin?
. Can the wallet be copied to different machines for use? This way, without doing anything, the Bitcoins can double. Are there precautions against such cases?
1. When someone loses their wallet, is there a way to re-mint the lost coins within the system? Otherwise, the 21 million Bitcoin cap would be incorrect (I don't mean to restore lost coins for someone; if all 21 million Bitcoins are created, but someone loses a wallet containing 1 million Bitcoins, can others not recreate those 1 million Bitcoins? Does that mean those Bitcoins are completely lost in the network?).
2. I forgot where I read that there are currently about 130,000 blocks. But I can only see 24,000 on my computer. Is this normal or is there a problem?
3. I have limited knowledge about Bitcoin generation. How many Bitcoins does a machine generate on average per day?
4. I know that requests on port 8333 should be forwarded to the Bitcoin system. My question is whether TCP or UDP protocol is used here? Is that port necessary for minting or is it only used for payment transactions?
5. I see that the Bitcoin source code is open to everyone. Is this risky? If the code is manipulated, can some people create more Bitcoins than others? This could be a huge security vulnerability.

I have seen a formula for calculating the number of Bitcoins generated over a period of time. It relates to the maximum speed of the CPU and availability. But I can't find it now, so please explain the Bitcoin generation mechanism. Do slow machines and high-end machines generate the same amount of coins?
Besides the new free standard, are there other exchange systems or potential payment partners?
What happens if my system crashes? Will the wallet be automatically saved? Or is it only when the Bitcoin system is manually closed that it can be saved? (Or perhaps it only needs to be saved in real-time when Bitcoins are generated or paid?).
Is there a way to see how many Bitcoins have been generated so far? How old is Bitcoin?

I know I asked a bunch of questions, but I am genuinely interested in your service and want to understand everything before using it more frequently.

1~3: The level of anonymity you mentioned requires a TOR connection, which can be done with the Bitcoin software version 0.2 released a few weeks later. At that time, I will publish instructions for using TOR.

4: For version 0.1.5, back up the entire %appdata%\Bitcoin directory. For version 0.2: only back up wallet.dat.

5: No. The entire system is designed to prevent this from happening.

6: Those Bitcoins cannot be recovered, and the total circulating supply will decrease as a result. Due to the decrease in effective circulating supply, the value of the remaining coins will slightly increase. This is the opposite of how government printing money reduces the value of existing currency.

7: There are currently 29,296 blocks. The circulating supply is the number of blocks multiplied by 50, so the current circulating supply is 1,464,800 Bitcoins. If there are only 24,000 blocks, it must be that the initial block download has not been completed. Exit the Bitcoin system and restart. The initial block download for version 0.2 will be better and faster.

8: Usually, there will be a few hundred. It is easy now, but it will become increasingly difficult as the network develops.

9: Good question, it is TCP. The website should update to indicate TCP port 8333.

Port forwarding is to allow other nodes to connect, so it will help you maintain connections, as this allows you to connect to more nodes. It is also necessary to receive payments through IP addresses and ports.

10: No, other nodes will not accept it.

Open source means anyone can independently review the code. If the source code is closed, no one can verify its security. I believe programs of this nature must be open source.

11: Slower machines produce fewer coins. It is proportional to CPU speed.

12: More Bitcoins will be produced.

13: Bitcoin uses a transactional database called Berkeley DB. Data will not be lost when the system crashes. The system writes to the database immediately when it receives a transaction.

14: You can multiply the total number of blocks by 50. The Bitcoin network has been running for almost a year. Design and coding began in 2007.

Assuming we know our neighbor is using Bitcoin, and we also know he will receive a payment (perhaps because he has an online store and accepts Bitcoin as payment).

Additionally, we know he is using a wireless LAN (WLAN), and his network is insecure or poorly protected. The router's configuration is the same.

Now we can log into his router, find the configuration, and change the IP address for port 8333 forwarding to our system's IP. Now every payment will be received by our Bitcoin client.

Could this actually succeed?

I know this is highly criminal behavior and that this scenario is extremely shameful; it is also unusual, but theoretically, it should work, right? (Not that I like to harm others, but I know criminals will try many ways to steal money.)

By the way, this method would also work if the local area network router configuration is unprotected.

Edit: These scenarios may not be possible at all because no matter which IP the port is using, payments will only be sent to the Bitcoin address or IP address defined by the payer?

Indeed, using the send-to-IP option will send to anyone responding to that IP. Sending to a Bitcoin address does not have this problem.

The plan is to implement an IP + Bitcoin address option, which would have the benefits of both sides. In this case, each transaction would still use a different address, but the payee would sign a one-time address with the given Bitcoin address to prove it belongs to the intended recipient.

Bitcoin version 0.2 is here! Nakamoto, December 16, 2010, 22:45:36 Bitcoin version 0.2 is here!

Download links are as follows:

http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.2.0-win32-setup.exe/download

http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.2.0-win32.zip/download

http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.2.0-linux.tar.gz/download

New features · Martti Malmi.

· Streamlined options for the system tray.

· Set automatic startup features in system startup options to ensure it runs in the background automatically.

· New dialog layout options set for future expansion.

· Windows installer.

· Linux version (tested on Ubuntu).

· Support for multi-processor Bitcoin generation.

· Proxy support provided for use with TOR.

· Resolved some issues with slow initial block downloads.

Thanks to Martti Malmi (sirius-m) for coding and hosting the new website and this forum, and the new free standard was tested on the Linux version with his help.

Newbie test—Does anyone want to spend $1 to buy a painting? Nakamoto, January 29, 2010, 12:22:13 Recommended order payment methods:

The merchant has a static IP, and the customer pays to that IP with a simple note attached.
The merchant creates a new Bitcoin address and sends it to the customer, who pays to that address. This will be the standard way for online payments.

Compared to RSA: ECDSA focuses on small data rather than small executable files. I think if the blockchain, Bitcoin address, disk space, and bandwidth requirements all increase by an order of magnitude, it will be impractical. Moreover, even if RSA is used for messages, it is necessary to use ECDSA throughout the Bitcoin network, while only using RSA for the message part. That would be exactly the same as what has already been implemented.

Better methods may emerge later. Messages could be transmitted using email or instant messaging infrastructure instead of RSA, perhaps just needing to include the hash of the message in the transaction to prove that the transaction indeed corresponds to the order described in the message. Messages must be encrypted to avoid brute-forcing the hash value and leaking information.

Increasing the difficulty of proof of work Nakamoto, February 5, 2010, 19:19:12 On December 30, 2009, the difficulty of proof of work was first automatically adjusted.

The minimum difficulty is 32 zeros, so even if only one person is running a Bitcoin node, the difficulty will not be lower than this. For most of last year, the difficulty hovered at the minimum level. On December 30, the difficulty was broken, and the adjusted algorithm became more difficult. Since then, it has become harder after each adjustment.

Since the adjustment on February 4, the difficulty has risen from 1.34 last year to 1.82. This means that the same amount of work can only generate about 55% of the original Bitcoins.

The adjustment of difficulty is proportional to the total amount of work in the entire network. If the number of nodes doubles, the difficulty will also double, bringing the total output back to the target yield.

For those tech enthusiasts, you can check the proof of work difficulty by searching for "target:" in debug.log. The search result is a 256-bit unsigned hexadecimal number whose SHA-256 value must be less than the value that can successfully generate a block. This value is adjusted every 2016 blocks, which takes about two weeks. At this time, debug.log will output the message "GetNext-WorkRequired RETARGET."

On February 21, 2010, 17:44:24 xc wrote:

Don't worry about it. No one has ever died from a "deflationary spiral." :) I agree with "I-am-not-anonymous" that the market will choose the best currency like Bitcoin. However, I also believe that the rules established by Nakamoto for Bitcoin are sufficient to support a prosperous Bitcoin economy in the future.

The rate at which Bitcoin will grow is well known, as it is solidified in the program and Bitcoin network. Although there is currently no perfect Bitcoin market, markets and exchanges of this kind are being developed. For future Bitcoin producers, the question is not "How much is needed to compensate?" but rather "Is the current market value of Bitcoin worth the electricity and computing power spent to produce it?" If it is worth it, then participate. Otherwise, stop mining and use Bitcoin as an appropriate intermediary for trading tangible assets. If unsure, one can try for a while and then make a final decision. The number of nodes and corresponding computing power will continue to change, and ongoing competition will bring costs closer to value (not the other way around). Value is determined by the market and the demand for the use of Bitcoin as a medium of exchange. Future competition in transaction costs will have a significant impact on potential node operators.

Your proposed savings paradox is the opposite; hoarding and saving Bitcoins with the hope of profiting from deflation is not a bad thing. This can accumulate Bitcoin capital for larger investments. In the future, Bitcoin banks may emerge, lending out saved Bitcoins at market-set interest rates, thereby reducing the impact of hoarding. However, all these beautiful savings come at the cost of delaying the satisfaction of current desires. From the perspective of potential savers, there is always a struggle between the desire to restrain the purchase of tangible assets now and the possibility of buying more assets in the future. Timing choices will naturally vary with different people and environments.

The electronic nature of Bitcoin makes it easy to split, and it is easy to adjust the value of Bitcoin to adapt to deflationary pressures. If the savings rate is too high, prices will fall, and interest rates will also decline. Therefore, it encourages demand (lower prices) while reducing the willingness to save (low interest rates). Your comments are excellent.

The reasonable market price of something expected to appreciate has already reflected the anticipated future growth of its current value. The human brain makes probability estimates weighing the chances of sustained growth.

In the absence of a market to determine prices, the new free standard's assessment based on production costs is a reliable inference and a beneficial service (thank you). The prices of any goods tend to gravitate towards production costs. If the price is below cost, production will slow down. If the price is above cost, expanding production and sales can yield more profit. At the same time, increased output leads to increased difficulty, pushing production costs closer to prices.

When the output of new coins only accounts for a small portion of the existing supply, market prices will dominate production costs.

Bitcoin's current production capacity is rapidly increasing, indicating that people estimate the current value to be higher than the current production costs.

Concerns have been expressed about the possibility of address conflicts arising from generating Bitcoin addresses based on public addresses' hash values, that is, the chance of assigning the same Bitcoin address to two different individuals. Note that a 160-bit hash calculation can produce 2^160 (1.46×10^48) possibilities, so the probability of a conflict occurring is negligible.

On February 23, 2010, 09:22:47 New Free Standard wrote:

If two Bitcoin clients generate the same Bitcoin address (although this is almost impossible), what would happen? Would Bitcoin be paid to the first client encountered? Is there a prevention mechanism in place? Please explain.

Each Bitcoin address has its own independent public and private key pair. There is no private key that can unlock all public keys. A Bitcoin address is a 160-bit hash of the public key, and other addresses in the system are 256 bits.

If a conflict occurs, the conflicted party can spend all Bitcoins sent to that address. But only the Bitcoins sent to that address, not the entire wallet.

If someone deliberately tries to create a conflict, it would take about 2,126 times longer to generate a conflict than to generate a block in the current situation. The money earned from generating a block is far more than this.

Random seeds are considered very carefully. All performance monitoring data from Windows is used, including measurements of disk performance, network card metrics, CPU time, and paging after startup. Linux has a built-in entropy collector. Additionally, entropy is generated and captured by disk operations every time the mouse moves in the Bitcoin window.

Bitcoin's URI scheme Nakamoto, February 24, 2010, 05:57:43 This is great for POS. The cash register displays a QR code containing the Bitcoin address and transaction amount, which the customer can scan with their phone.

https://bitcointalk.org/index.phptopic=177.msg1814#msg1814

Reply: Bitcoin Mobile Version Nakamoto, June 26, 2010, 20:58:26 Quoting: sirius-m, June 10, 2010, 13:51:16

Of course, you can use services like vekja.net or mybitcoin.com to store money in a place you trust on mobile browsers.

I think this is currently the best option. Just like cash, you wouldn't put all your wealth in your pocket; you generally only carry a small amount of cash for emergencies.

A small website could be specifically optimized for mobile devices, with an app as the front end, whose main function is to read QR codes, or the website could be designed to be read by a universal QR code application.

If there is an iPhone app that functions solely as a front end for vekja or mybitcoin and does not involve P2P, would Apple approve it? What terms would it not approve? There will definitely be an Android version of the app. Although the app is not that necessary, it is just a mobile version of the website the size of a phone screen.

Providing a network interface for the Bitcoin server running at home is not suitable for everyone. Most users do not have static IPs, and setting up port forwarding is too troublesome.

On July 10, 2010, 16:26:01 Quoting: llama, July 1, 2010, 22:21:47

Nakamoto, if SHA is broken (of course, it is more likely to collapse), that would be a solution because it would still be possible to identify valid Bitcoin owners through signatures (private keys remain secure).

However, if signatures are also broken (perhaps quantum computers solve the integer factorization problem), then even reaching consensus on the last valid block would be worthless.

If things happen suddenly, then that would be the case. If things happen gradually, we can switch to a more robust system. When the upgraded software is first run, all coins will be re-signed with a new, stronger signature algorithm (by creating a transaction that pays the coins back to oneself with a stronger signature).

Reply: Hash() function is not secure Nakamoto, July 16, 2010, 16:13:53 The advancements in SHA-256 are not like the leap from 128 bits to 160 bits.

To explain by analogy, it is more like the leap from 32-bit to 64-bit address space. The address space of 16-bit computers quickly ran out, and 32-bit computers ran out of address space when they reached 4GB of memory, but that does not mean we will soon run out of 64-bit address space again.

In our lifetime, SHA-256 will not be compromised by the increase in computing power governed by Moore's Law. If it can be compromised, it should be through breakthrough cracking methods. The ability to completely defeat SHA-256 within a computable range also has a high likelihood of causing SHA-512 to collapse.

If weaknesses in SHA-256 gradually emerge, we can switch to a new hash function after a specific block number. Everyone must update their software after that block number. The new software will retain the new hash values for all old blocks to ensure they are not replaced by other blocks with the same old hash value.

For example, can a script (OP_2DROP OP_TRUE...) be created to produce a Bitcoin that can be paid by anyone?

Does the flexibility of Bitcoin types stem from this coding method?

The nature of Bitcoin is that once version 0.1 is released, its core design will not change for the remainder of its lifecycle. Therefore, I want to design it to support various possible transaction types. The problem is that whether or not these types are used, special support code and data fields are needed, and only one case can be covered each time, which will produce a massive number of special cases. The solution is to use scripts to generalize the problem, allowing transacting parties to describe transactions as assertions evaluated by network nodes. Nodes only need to understand transactions to the extent that they can evaluate whether the payer meets the conditions.

Scripts are essentially assertions. They are just equations used to evaluate truth or falsehood. Assertion is a rare word, so I call it a script.

The payee matches templates on the script. Currently, the payee only accepts two types of templates: direct payment and Bitcoin address. Future versions can provide more templates for more transaction types, and nodes running that version or higher can receive these transaction types. Nodes of all versions in the network can verify and process any new transactions and then move them into blocks, even if they may not know how to read these new transaction types.

This design supports various possible transaction types that I designed many years ago, including escrow transactions, collateral transactions, third-party arbitration, multi-signature, etc. If Bitcoin grows large enough, these are the areas we want to explore in the future, but they must all be designed from the beginning to ensure they become possible in the future.

I do not believe that a second implementation compatible with Bitcoin is a good idea. So many designs rely on all nodes consistently achieving exactly the same results, and a second implementation would threaten the network. Since the MIT license is compatible with all other licenses and commercial use, there is no need to rewrite the code from a licensing perspective.

A second version means a lot of development and maintenance work for me. It would be difficult to maintain backward compatibility without locking the second version during network upgrades. If the second version has major issues, both versions will have a poor user experience, although this will enhance the importance of users staying on the official version. If someone is preparing a fork for the second version, I must raise many disclaimers about the risks of using the forked version. This design benefits the main version in case of divergence, which may not be fair to the forked version, and I do not want to do this; as long as there is only one version, I do not have to do these things.

I know most developers do not like their software to be forked, but there are real technical reasons for this.

Quoting: Gavin Andresen, June 17, 2010, 19:58:14

I admire the flexibility of the transaction script design, but my evil little mind immediately starts to think about how to abuse that scheme. I can encode various information in the TxOut script, and if those unbroken clients validate and ignore those transactions, it will be a useful modified broadcast communication channel.

This feature is cool; once it becomes popular, someone will broadcast Lady Gaga's latest video to all friends through millions of transactions because it is fun to flood the payment network like this...

This is one of the reasons for charging transaction fees. If necessary, we have other means.

Quoting: Laszlo, June 17, 2010, 18:50:31

Satoshi, how long have you been working on this design? It seems very well thought out, not like a project that sat down to write code without a lot of brainstorming and discussion. Although everyone is full of doubts looking for loopholes, it has remained unbreakable so far.

It started in 2007. One day, I was convinced that there was a way to do this without any trust, so I kept thinking about it. More work was in design rather than coding.

Fortunately, so far, the questions they have raised are all things I have considered and planned before. Gavin Andresen is now the head of the Bitcoin core development team and announced that he wrote a "Bitcoin faucet" that would give each customer 5 Bitcoins for free. Nakamoto responded that if others hadn't thought of this idea, he would have had the same idea.

Reply: Claim 5 free Bitcoins from freebitcoins.appspot.com Nakamoto, June 18, 2010, 23:08:34 Quoting: Gavin Andresen, June 11, 2010, 17:38:45

As my first Bitcoin coding project, I decided to do something that sounds silly: I developed a website that dispenses Bitcoins. Its URL is: https://freebitcoins.appspot.com/.

Each customer gets 5 Bitcoins, first come first served, and I prepared 1,100 coins as startup capital. Once everything is running smoothly, I will add more.

Why do this? Because I want the Bitcoin project to succeed, and I think if people can get some Bitcoins to try, it is more likely to succeed. The wait for nodes to produce Bitcoins is quite tedious (and will be even more frustrating later), and buying Bitcoins is not that easy.

Please try to claim some free Bitcoins, even if you already have so many that you don't know what to do with them. You can claim some and then immediately donate back to this address:

The first project was really well chosen, good job. I was going to do it myself if no one else did, so that when ordinary people find it difficult to produce 50 Bitcoins, new users can immediately get a few coins to play with. Donations should meet the demand. The balance displayed by the dispenser can encourage people to raise that number.

You should put a Bitcoin donation address on the page for those who want to donate, ideally this address should change to a new one immediately after receiving money.

The value of Bitcoin later increased. Nakamoto suggested reducing the output of the Bitcoin faucet to 1 Bitcoin.

Reply: freebitcoins.appspot.com urgently needs donations! Nakamoto, July 16, 2010, 02:02:07 Quoting: Gavin Andresen, June 12, 2010, 19:15:46

The Bitcoin faucet is indeed very useful; the only downside is that it has drained all my Bitcoins. Since restocking last night, the faucet has already dispensed over 5,000 Bitcoins.

Is there any early user who mined tens of thousands of Bitcoins willing to send some to the faucet so that more people can try using Bitcoin? I know most of the coins sent out will likely be lost (I suspect many of the freebie seekers won't last until they spend that $5), but if so, that will only increase the value of the Bitcoins you hold...

Donation address for the faucet:

In this new version, Nakamoto not only provided technology but also issued a sales and marketing voice: "Get rid of the arbitrary inflation risk of centrally managed currency! The total issuance of Bitcoin is limited to 21 million."

Bitcoin version 0.3 has been released! Nakamoto, June 6, 2010, 18:32:35 Released P2P encrypted currency—Bitcoin version 0.3! Bitcoin is a digital currency that uses cryptographic technology and a distributed network to replace centrally trusted servers. It is free from the arbitrary inflation risk of centrally managed currency! The total issuance of Bitcoin is limited to 21 million. New Bitcoins are gradually released to network nodes based on their contribution of computing power, so you can earn some by contributing idle CPU time.

Updates:

· Command line and JSON-RPC control.

· Includes a daemon version without a user graphical interface (GUI).

· Transaction filter tab.

· Hash speed increased by 20%.

· Hash performance display.

· Mac OS X version thanks to Laszlo.

· Translations in German, Dutch, and Italian thanks to DataWraith, Xunie, and Joozero.

Available for download at http://www.bitcoin.org or this forum.

What happens when the network splits for a long time and then reconnects? em3rgentOrdr posted, August 1, 2010, 11:07:24

Assuming Bitcoin is widely used globally. Suppose all internet connections between two countries are blocked, and people continue to trade within their respective networks. All transactions in each network are broadcast to all nodes within that network, but not to other networks. In each network, the longest chain will be considered valid, and the Bitcoin economy will continue to exist within each network.

After years of independent existence, what will happen when the two networks reconnect?

Reply: What happens when the network splits for a long time and then reconnects? kiba posted, August 2, 2010, 03:19:08

Maybe they won't reconnect. Instead, we actually have two currencies. This will lead to the birth of a Bitcoin foreign exchange market between the East and West.

Reply: What happens when the network splits for a long time and then reconnects? throughput posted, August 2, 2010, 06:07:08

As a merchant, I only care whether my network is a large network, and whether my transactions will be accepted after reconnecting. Therefore, being able to monitor the current number of different nodes is enough for me. Putting the monitoring situation into a chart, if I monitor that the number of nodes suddenly drops by half, I will stop processing transactions. This could be a service running on a network server on Bitcoin nodes.

But is there any way to monitor this number? If not, a smart approach would be to add several features to the standard that allow real-time determination of the number of different nodes currently running.

Reply: What happens when the network splits for a long time and then reconnects?

creighto posted, August 3, 2010, 20:01:22 Quoting: throughput, August 3, 2010, 13:33:08

Yes...

But the situation you describe is only possible if someone notices and proves that the network is splitting. Have you proposed a method to detect network splits?

I initiated another discussion on this topic in other forums, but for independent vendors, a simple monitoring daemon could do it: track the average time between blocks since the last difficulty change, and if the time taken for a single block exceeds twice the average, alert the vendor, perhaps pausing the acceptance of new Bitcoins until the vendor clarifies the current situation. The continuous occurrence of blocks taking longer than the average time would further confirm the emergence of the problem. Therefore, if a block takes twice the average time, followed by a string of blocks taking more than 75% of the average time, it can basically be concluded that you are no longer on the large network.

Reply: What happens when the network splits for a long time and then reconnects? Nakamoto posted, August 3, 2010, 22:45:07 Creighto: I agree with that approach. If the flow of blocks drops quickly, exceeding random variation, then a few hours later, the client may notice. Thus, it can be determined that the world has moved away from it.

Quoting: knightmb, August 3, 2010, 19:02:13

Quoting: Gavin Andresen, August 3, 2010, 18:38:44

Or if the split lasts long enough (more than 100 blocks), the Bitcoin transactions generated on the short chain will be invalid when merged.

This information is interesting; aside from the double spending issue, as long as the blockchain is isolated for no more than about 100 blocks (or more than 16 hours), there is no problem.

In fact, splits are likely to be asymmetric. It is difficult to separate the world from the middle. It is more likely to be a single country from others, for example, a 1:10 split. In that case, the minority fork would take ten times longer to generate 100 blocks, which is about 7 days. Additionally, the client would easily realize something is wrong due to the very few blocks received.

Quoting: knightmb, August 3, 2010, 19:02:13

What if there is a hard-coded limit on split delays? This means that if a small network splits from the public network, pays some Bitcoins within it, and then synchronizes them back to the public network a few days later, aside from the mining output of Bitcoins, other transactions should be fine?

There is no time limit. If you did not mine Bitcoins in the minority fork and did not use the received double-spent Bitcoins, then your transactions can be written into another chain at any time.

Nakamoto responded to comments about someone wanting to buy all Bitcoins and cited the example of the Hunt brothers and the silver market at the end of the 1970s. The leveraged positions in COMEX (New York Mercantile Exchange) futures trading destroyed them. Note that the shares purchased by the Hunt brothers actually represented only a small portion of the silver market. However, COMEX modified the rules to set limits on the total amount of contracts held by everyone, forcing those who exceeded the limit to sell, thus the Hunt brothers were forced to liquidate. See Mike Maloney's detailed article on WealthCycles.com:

http://wealthcycles.com/features/the-hunt-brothers-capped-the-price-of-gold-not-50-silver

Reply: Bitcoin vulnerabilities? (Is a large-scale attack on the Bitcoin system realistic?) Nakamoto posted, July 9, 2010, 15:28:46 Quoting: user, July 7, 2010, 18:15:28

Hello everyone. (Sorry, I'm a newbie). What if an intruder buys all the Bitcoins and then deletes all the binary data? This could destroy the Bitcoin system. Can the Bitcoin network defend against such attacks?

This operation is called "market monopolization." When someone tries to buy up a scarce asset worldwide, the more they buy, the higher the price goes. At some point, it becomes too expensive to buy anymore. This is great for those who already own it because they can sell it at a high price to the monopolist. As the price continues to rise, some people will hold out for a rise, refusing to sell.

The bankruptcy case of the Hunt brothers, who attempted to monopolize the silver market in 1979, is very well known:

"Nelson Bunker Hunt and Herbert Hunt attempted to monopolize the global silver market in the late 1970s and early 1980s; at one point, they even owned more than half of the world's deliverable silver. During the Hunt brothers' acquisition of precious metals, the price of silver rose from $11 per ounce in September 1979 to nearly $50 per ounce in January 1980. Two months later, the price of silver eventually collapsed to less than $11 per ounce, with the sharp decline occurring on a day known as Silver Thursday, due to changes in the rules for margin trading in commodities."

http://en.wikipedia.org/wiki/Cornering_the_market

As time goes on, the blockchain containing all transaction records since January 2009 continues to grow. If a Bitcoin wallet contains multiple Bitcoin addresses along with their corresponding private keys and Bitcoin balances, the Bitcoin system must know which address to use to complete a transaction. For example, suppose Bitcoin addresses A, B, and C have 0.1, 0.2, and 0.3 Bitcoins respectively, and 0.5 Bitcoins need to be paid. The Bitcoin wallet must select two or more Bitcoin addresses to make up the 0.5 Bitcoins since any single address is insufficient to complete the payment. Unless the Bitcoin client has the complete blockchain, which allows it to know the current balance of each address, it must connect with a server that has the blockchain. Simplified payment verification was first described in Nakamoto's original Bitcoin paper, allowing clients to rely on a server participating in the Bitcoin network that has the complete blockchain but does not necessarily participate in the mining process. This type of server was later implemented, benefiting lightweight clients.

Bitcoin vending machine (quick transaction issues) Nakamoto, July 17, 2010, 22:29:13 Quoting: Insti, July 17, 2010, 02:33:41

How does the Bitcoin vending machine work?

Walk up to the machine. Give it one Bitcoin.
What does this step do?
Leave the machine and enjoy the snack. (Profit!)

You don't want to wait an hour for the transaction to be confirmed.

The vending machine company does not want to give away a bunch of free candy.

What exactly does the second step do?

I believe payment processing companies could potentially provide quick transaction processing services, performing thorough checks within no more than 10 seconds.

Network nodes only accept the first version of a transaction to merge it into the block being generated. When broadcasting a transaction, if someone else simultaneously broadcasts a double spending transaction, it is called a node propagation race. If one party's action is slightly earlier, it will geometrically propagate quickly to the entire network, reaching most nodes.

A rough simple example:

On July 30, 2010, 10:42, Polargeo (dialog | submission) deleted "Bitcoin" (Wikipedia: deletion post/Bitcoin)

Reply: The Bitcoin Wikipedia page was deleted!!! sirius posted, September 30, 2010, 16:45:26 Can we make different language versions of the deleted page without being deleted? If so, let's start. I can write a Finnish version.

Reply: The Bitcoin Wikipedia page was deleted!!! Nakamoto posted, September 30, 2010, 17:50:32 If you want to do it, I think it should be a very short article, about a hundred words long, simply defining what Bitcoin is.

I would rather hope that instead of deleting the article, they would limit its length. If it is not well-known enough, at least there can be some articles to introduce what it is. I often encounter annoying red links; this is something that Wikipedia people should have at least heard of.

This article can be as simple as:

"Bitcoin is a peer-to-peer distributed electronic currency."

A more standard Wikipedia should introduce Bitcoin as an example of electronic currency or electronic cash in a more generalized category. We might be able to create a paragraph there. Also, try to keep it brief. Just explain what it is.

Bitcoin minting is anti-thermodynamic Gavin Andresen posted, August 10, 2010, 21:26:14 Quoting: throughput, August 10, 2010, 12:27:30

Therefore, Bitcoin incentivizes the theft of computing power from innocent computer owners.

Of course, credit cards also incentivize the theft of credit card numbers from innocent credit card owners.

Bank accounts incentivize hackers to try to break into systems to find bank account numbers.

Cars incentivize some people to steal gasoline from innocent gas station owners.

I believe the benefits of Bitcoin will outweigh the harms it brings, and I am more confident in my ability to make moral judgments. I could be wrong and may regret having participated in these activities, but if one only does things that are 100% certain to yield good results, then one will never be able to do anything fresh and interesting.

Reply: Not a suggestion Insti posted, August 10, 2010, 09:34:14 In your system, you cannot get transaction information from the blockchain; I must monitor each transaction (after all, I can see them) and record them on my secret server.

You are strengthening security by creating mysteries.

Reply: Not a suggestion Reb posted, August 10, 2010, 14:09:36 Quoting: Insti, August 10, 2010, 09:34:14

You are strengthening security by creating mysteries.

I have mentioned this point. I do not expect to make currency more secure. I just hope that the system can run alongside the existing system.

However, it is well known that privacy mysteries have value. Your neighbor or the FBI may be monitoring your every move all day long. But they may not be. If you happen to be "watched," then they will definitely start to keep an eye on you from that moment on.

But the additional legal powers that the system seems to want are: "Let me check everyone's records!" (call records, communication towers, mail correspondence, Facebook connections, credit card/debit card transactions, Google search history, browser access history, etc.). Other systems gain security through power. The Bitcoin system does not have that power.

Reply: Potential disaster scenarios Nakamoto posted, August 15, 2010, 16:37:16

Minting tends to occur in the following places:

Cheap or free places.
People who want to help for idealistic reasons.
People who want to get some Bitcoins but find it troublesome to purchase.

There are legitimate free places. Producing in any electrically heated place is essentially free because the heat generated by the computer offsets the heat generated by the electric heating equipment. Many small apartments use electric heating for convenience.

How expensive is civilian fuel oil? Now that oil prices are so high, if it is already more expensive than electricity, then minting will generate negative costs.

There are also kids who factor this part of the cost into their parents' electricity bills, employees who leech off their employers, zombie networks, etc.

The third type accounts for a small proportion. If only a small amount of pocket money is needed, then the overhead generated by the exchange is not worth it. Compared to fiat currency, I think this is a good thing to give a reasonable amount of minting costs to those who need to save a small amount of change, rather than giving all minting taxes to a large entity.

Bitcoin does not violate Mises' regression theorem xc posted, July 27, 2010, 02:09:27 Currency regression and the emergence of currency from barter economy

The entire purpose of the regression theorem is to help explain the apparent paradox of currency: if currency is priced as a medium of exchange, then how does it obtain value as a medium of exchange? Menger and Mises helped break this apparent circularity by explaining the missing basic time element in the wording of the paradox.

As Rothbard explains in "Man, Economy, and State," "The price of money at the end of day X is determined by the marginal utility of the money and goods that exist at the beginning of day X. But as we have seen, the marginal utility of money is based on the previously existing set of money prices. Money is needed and considered useful because of the previously existing money prices. Therefore, the price of goods on day X is determined by the marginal utility of goods and money on day X, while the marginal utility of money on day X is correspondingly dependent on the prices of goods on day X-1. The economic analysis of money prices is therefore not circular. If today's prices depend on today's marginal utility of money, the latter depends on yesterday's money prices."

Rothbard goes on to explain that for money to emerge from a barter economy, there must first be pre-existing commodity values. This commodity value arises from the barter demand for potential money. This value gives rise to the future value of money as a medium of exchange. The natural emergence of the money market is thus explained.

Monetary economy

However, once the economy is monetized and a memory of the price ratios of goods and services is established, money may lose its direct commodity value but still be used as money. Rothbard explains:

"On the other hand, the following analysis does not hold that if existing money loses its direct utility, it may no longer be used as money. Therefore, if gold suddenly loses its value in jewelry or industrial uses after becoming money, it may not lose its monetary properties. Once the medium of exchange is established as money, the money price remains unchanged. If gold loses its direct utility on day X, the previously established money prices from day X-1 still exist, forming the basis for the marginal utility of gold on day X. Similarly, the money prices determined on day X form the basis for the marginal utility of money on day X+1. From day X onward, gold can generate demand solely due to its exchange value, no longer because of its direct utility. Therefore, while the origin of money is absolutely necessary for goods with direct utility, once established as money, it no longer needs to maintain its direct utility."

This explains the history of fiat currency. Fiat currency initially developed from commodity money (silver) that emerged during the barter economy period before the emergence of money. Although later, due to government intervention, it lost its connection with direct commodity value, paper currency still maintained its status as money due to the memory of previous money prices. This factor is so strong that the relationship between gold and the dollar has been somewhat reversed. Gold is no longer circulated as a common medium of exchange. Prices are set by the dollar, not gold. Most people wishing to operate with gold do so based on their understanding of the dollar/gold price ratio. ("Hi, let me buy your $100 sofa with gold." "Okay, the dollar/gold is $1,000 per ounce. Give me 1/10 ounce of gold.") The laws governing fiat currency, government taxation, and the entire financial regulatory environment maintain the inertia of the dollar price and are unlikely to return to the era of direct use of gold as currency, even if fiat currency brings about destructive inflation.

The emergence of the Bitcoin economy

The earliest businesses in the Bitcoin economy are traders (New Free Standard, Bitcoin Market, Bitcoin Exchange...). This is not accidental but a natural manifestation of the above analysis. To make Bitcoin a medium of exchange with no commodity use value other than indirect exchange, there must also be explanatory knowledge of money prices. Market traders fill this gap, providing Bitcoin users with such knowledge. Bitcoin may thus become a currency intermediary between PayPal and dollars/pecunix/euros. But why use Bitcoin instead of directly using dollars? This is due to the inherent properties of the Bitcoin system, such as anonymity, distributed clearing, trust based on cryptography, predetermined growth rates, built-in deflation, divisibility, low transaction fees, etc., which lead to subjective evaluations.

The key is that once a direct exchange between currency (dollars) and Bitcoin can occur, providers of goods can view Bitcoin as a potential medium of exchange. This aligns with the regression theorem of money, as it can always be traced back to traditional commodity money: Bitcoin > Dollar > Commoditized gold and silver (beginning of monetary economy) > (end of barter economy) Commoditized gold and silver.

Of course, if a major collapse occurs, all knowledge of price ratios will be erased, and Bitcoin may not directly become money (assuming Bitcoin has limited value outside exchanges). Fiat currencies with no direct barter value will certainly not become money. Commodities with direct value that are widely recognized in barter exchanges, such as gold and silver, will emerge first. At that time, the economy will be monetized to the price ratio with gold and silver. Then, Bitcoin may become valued for its interchangeable intrinsic properties and may thus become popular in trade. Initially, value creators will continue to calculate price value ratios in real money (gold ounces/Bitcoin ratios), but over time, the price of Bitcoin may emerge (vekja.net can be seen as a case). We are currently in the initial stage of this development.

Therefore, as long as Bitcoin exchanges with currencies like dollars/euros, the Bitcoin economy can leverage existing knowledge of price ratios. After a period, as Bitcoin becomes increasingly marketized, these price ratios between fiat currencies and Bitcoin will generate prices for directly using Bitcoin. Thus, the Bitcoin economy emerges. This aligns with Mises' regression theorem.

Edit: Clarified the possibility of Bitcoin emerging directly from the barter economy to become money.

Reply: Bitcoin does not violate Mises' regression theorem Nakamoto posted, August 27, 2010, 17:32:07 As a thought experiment, imagine a base metal as rare as gold but with the following characteristics:

· Monotonous gray.

· Poor conductivity.

· Not particularly hard, but not malleable or easy to forge.

· No practical or decorative uses.

And a special, magical property:

· Can be transmitted through communication channels.

If for some reason, in some way, it gains a little value, then those who want to transfer wealth over long distances can buy some, transmit it, and let the recipient sell it.

Perhaps, as you suggested, it may cyclically gain initial value due to people's foresight of its potential use in exchange. (I would definitely want some) Perhaps collectors, any random reason could trigger this process.

I believe the traditional qualification of currency assumes that there are many competitive scarce items, and things with spontaneous intrinsic value will certainly outperform those without intrinsic value. However, if there are no items in the world with intrinsic value that can be used as currency, only scarce items without intrinsic value, I think people would still accept it.

(The term scarcity used here only refers to its limited potential supply.)

Here is another post on the same topic.

Reply: Bitcoin does not violate Mises' regression theorem epaulson posted, August 17, 2010, 18:45:18 There has been much debate about what Bitcoin is (whether it is currency or commodity). Additionally, there are endless debates about Bitcoin's inflation and deflation, whether people will lend, at what interest rates, etc.

I think the most appropriate description of Bitcoin is that it is the stock of the Bitcoin enterprise we jointly operate. It's very much like joining a company (now a very small company) and being paid in stock. There is a fixed number of Bitcoins, just as a company has a fixed number of shares (no additional issuance, etc.).

Currently, the main value of Bitcoin is the expectation that it will be worth much more in the future than it is now. To achieve this, the Bitcoin enterprise as a whole needs to generate collective value. As employees or owners of the Bitcoin enterprise, we need to create added value. The most obvious way is to exchange Bitcoin for other goods, facilitating internet commerce. By keeping records of every transaction, the total computing power of all employees/owners helps ensure the fairness of exchanges. The individual efforts of some Bitcoin holders help make Bitcoin exchanges easier or more helpful.

Regarding lending Bitcoin, to me, it is similar to borrowing or mortgaging stock. The main reason for borrowing Bitcoin is that you believe Bitcoin is overvalued, and when it needs to be repaid, it should be worth less. When borrowing Bitcoin, one can sell it immediately (exchange it now), hoping to buy it back at a lower price when returning it to the lender (perhaps adding a fee).

Essentially, Bitcoin is like the "direct public offering" of the Bitcoin enterprise.

Nakamoto posted, August 27, 2010, 16:39:26 Bitcoin has no dividends, nor will it ever have dividends, so it is not like stocks.

It is more like collectibles or commodities.

Other possible avenues for Bitcoin applications. Nakamoto's reply discussed websites that require verification codes and PayPal payments.

Project list kiba posted, September 23, 2010, 16:00:16 This is an economic growth initiative. Our mission is to develop the Bitcoin economy by having everyone focus on a niche market of goods and services.

In simple terms, state what you want to consume, and I will add it to the project list. Then someone will announce their entry into that market. Small markets may also have competition, but there will always be other opportunities.

We will hold these people accountable for their projects, encouraging them to work hard and motivate them. Open a new thread and let everyone express their disappointment with online service issues, etc.

List of projects needing to be claimed:

Local classified ads similar to Craigslist.
Websites like Mechanical Turk, posting simple jobs in a crowdsourced manner. Suggested by the no-agenda market of "Stable Exchange"? This is a topic on the economic forum.
Breweries, malt, yeast, hops, etc.
Plant shops selling various herbs, etc.
Hacker academies, free teaching videos, affordable tuition courses, installment payment private tutoring.
Dating websites that accept Bitcoin.
Foolproof encryption and backup services.

List of projects that have already been claimed and developed:

Advertising exchange websites like http://projectwonderful.com. Suggested by mskwik. (I made a little money with projectwonderful. I wonder if I can earn more from Bitcoin advertising exchange.) No agenda provided a large bounty for this, and it is currently being developed by Biomike.
Websites like RapidShare and other lousy download sites. Suggested by kiba, the project was taken over by Hippich, ultimately producing three competitors. These sites all have very inconvenient verification codes and require payment via PayPal. Bitcoin has the potential to replace both roles and simplify the entire process.
Freelancer websites taken over by whichspace.
Pizza ordering systems. Taken over by mizerdearia. Pizzas can be ordered via website, command line, smartphone, SMS, etc.

Reply: Project list Nakamoto posted, October 6, 2010, 23:10:31 Quoting: kiba, September 23, 2010, 16:00:16

Websites like RapidShare and other lousy download sites... These sites all have very inconvenient verification codes and require payment via PayPal. Bitcoin has the potential to replace both roles and simplify the entire process.

Reiterating, but there is already open-source software for this, so the key issue is integrating the Bitcoin payment mechanism. I found Mihalism Multi Host to be a good example. This is a free website that just needs some adjustments to lift the payment-related restrictions.

ibuck's description is completely correct.

Mining pool operators can modify their getwork to include an additional parameter, which is the receiving address for dividends.

For mining pool operators, the simplest method is to wait until the next block is discovered and distribute it proportionally as: user qualifying counts / total qualifying counts of everyone.

This is easier and safer for the startup phase. At the same time, it has the advantage of merging multiple qualifying counts from the same user into one transaction. Many qualifying counts usually come from the same person.

A quick return method is to pay a fixed amount immediately for each qualifying count, taking on the risk of the difference in qualifying counts before finding the block.

Regardless of the method used, the person who submits the hash value that discovers the block should receive a larger share from the total income, such as 10 Bitcoins.

New users do not even need Bitcoin software. They can download a miner, create an account on Mt.Gox or MyBitcoin, input their deposit address into the miner, and point it to any mining pool server. When the miner says it has found one, some Bitcoins will soon appear in their account.

The author of the miner should ensure that the miner does not falsely report qualifying counts. Users will check whether the mining pool operator is cheating based on this. If the miner falsely reports, and the user checks their account and finds nothing, the mining pool operator will be in trouble.

Someone suggested creating a Bitcoin clone (an alternative coin) to run a distributed peer-to-peer domain name server system (DNS). In addition to currency, transactions stored in the blockchain also contain DNS information and can be updated with new transactions.

An alternative coin called Namecoin (see http://www.namecoin.org/) has now emerged, allowing people to register domain names ending in .bit and associate them with IP addresses. Nakamoto shares his insights on such systems here.

Reply: BitDNS and General Bitcoin Nakamoto posted, December 9, 2010, 21:02:42 I believe BitDNS could become a completely independent network and a separate blockchain, but share computing power with Bitcoin. The only overlap is that miners can simultaneously search for proof of work on both networks.

No coordination is needed between networks. Miners would join both networks simultaneously. They scan SHA for targets, and if found, they can solve problems on both sides simultaneously. If one network has lower difficulty, the target may only apply to that network.

I believe external miners can call getwork from both sides to merge work. Perhaps calling Bitcoin to get work, then handing it to BitDNS's getwork, merging it into one job.

These networks would not only avoid fragmentation but could also enhance each other's total computing power through sharing. This would solve the potential mutual threat of coexistence of multiple networks, preventing available computing power from colluding against a particular network. All networks in the world share combined computing power, thus enhancing overall strength. This makes it easier for small networks to start on the basis of existing miners.

Reply: BitDNS and General Bitcoin nanotube posted, December 9, 2010, 21:20:40 Quoting: Nakamoto, December 9, 2010, 21:02:42

I believe BitDNS could become a completely independent network and a separate blockchain, but share computing power with Bitcoin. The only overlap is that miners can simultaneously search for proof of work on both networks.

Theoretically, it sounds great...

Quoting: Nakamoto, December 9, 2010, 21:02:42

I believe external miners can call getwork from both sides to merge work. Perhaps calling Bitcoin to get work, then handing it to BitDNS's getwork, merging it into one job.

It seems miners have to do some "extra work." If mining extra on BitDNS does not yield rewards (of course, this work slows down the main Bitcoin mining), what is the incentive for miners to participate in BitDNS (and other side chains)?

I am very curious about this and hope to hear your further thoughts.

The incentive is that the same work can yield rewards from the extra side chain as well.

Why not use the same work to get free domain names during minting?

If currently 50 Bitcoins are minted weekly, then in the future, one could get 50 Bitcoins plus some domain names.

If completing one job results in both minting and generating a new BitDNS block. Conceptually,