The development of blockchain from 2008 to 2020

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

Since the birth of Bitcoin in 2008, blockchain has gradually been discovered by people, and countries around the world have begun to layout 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 national ministries and local governments have successively introduced nearly 300 policies to encourage the innovation and development of blockchain technology and industry. Domestic internet giants have also been laying out blockchain applications, with companies like Alibaba, Huawei, Baidu, Tencent, and JD launching blockchain platforms. A total of 36 banking institutions, including the central bank and the four major state-owned commercial banks, have also begun to develop blockchain applications and have achieved excellent results. From 2008 to 2020, China's blockchain industry has formed a certain influential blockchain industry chain that includes upstream, midstream, and downstream. The upstream of the industry chain mainly includes hardware infrastructure and underlying technology platform layers, 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 platform layers, 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 anxious. 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. The inventor of Bitcoin, Satoshi Nakamoto, keenly realized that most internet trade settlements rely on trusted third-party financial institutions to process, even though these systems generally operate well most of the time. However, once an extreme trust crisis occurs, the imbalance of 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 to you.

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 needs to be introduced to provide guarantees and endorse the buying and selling behavior of both parties.

In Nakamoto's view, this operating 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 can complete payments without mutual trust between buyers and sellers. By eliminating the trust bond, 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, scripts based solely on sequential execution can achieve conditional payments in Bitcoin, but that is all. Here we can assume you have a need like this:

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

I think 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 believe this is doomed to fail. I hope everyone can treat Bitcoin differently; it is the first attempt at a non-trust-based system that I know of.

It is precisely this main characteristic of being non-trust-based that caught my attention. The real difficulty lies in getting people to value Bitcoin, thus making it a currency.

If electronic currency has not become popular in ten years, I would be surprised. Now we know that this method of Bitcoin may 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 almost free service applications based on proof of work.

Bitcoin can already be used to send paid emails. The size of the sending box can be adjusted, and messages of any length can be entered. When it connects to the network, it sends 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 it is wise to keep some Bitcoins on hand, just in case it takes off. If more people think this way, the prophecy will become self-fulfilling. 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 on 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 cripple the filtering systems for paid email.
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 computer 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 a large number of fake email accounts to harvest POW tokens from spam. They use automated inboxes to collect POW but do not read the messages. The ratio of fake accounts to real people will be so high that spam will become unprofitable.

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

Interestingly, the e-gold system already has a form of spam called "dusting." Spammers have to pay a small amount of gold dust to post spam messages in the trading comment area. 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. Come 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. We must trust that the central bank will not devalue the currency, but the history of fiat currency is full of breaches of this trust. We must trust banks to hold our money and transfer it electronically, but they repeatedly lend in credit bubbles, keeping only a small fraction in reserves. We must entrust our privacy to them, trusting that they will not let identity thieves drain our accounts. Their enormous operational management 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 the security of files, trusting system administrators to protect the confidentiality of information. The considerations of administrators regarding privacy principles and other issues, or commands from their superiors, always took precedence over privacy. When strong encryption appeared in the public eye, trust was no longer necessary. Data is secured in ways that others cannot physically access, regardless of the reason, and no excuse can change that.

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 the security of the currency 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 effectively protects ownership but leaves a significant unresolved issue: double spending. Any owner can attempt to sign the already spent digital currency again and then 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 payments. This takes advantage of the nature of information being easy to spread but difficult 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 with no 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 thing available. Maybe they will be interested in a new direction.

Many people believe that electronic currency is doomed to fail and automatically reject it because all companies that have made efforts in this area since the 1990s have failed. It is clear that it is the central control nature of these systems that doomed their failure. I believe Bitcoin is our first attempt at a distributed and non-trust-based 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 1000 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 don't know how software can know the real-world prices, it will require a trusted party to determine the value of Bitcoin. 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 that way.

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 maintain a constant value. 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 will attract 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 while. Now this new version runs the network more smoothly.

If a block has been successfully generated, a mature countdown will be seen before it can be paid. Once matured, 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 to the network, 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 is unused, the mature countdown will change to "not accepted." The display of the status bar decreasing by 1 means there is 1 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 will 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, as 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 transaction with an additional hash value can be created in just a few lines of code, 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 it easier for server-side languages 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.

Frequently asked questions can be found at:

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

Download link:

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 as 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 after.
How anonymous is Bitcoin? 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 receive confirmation.

Blocks contain the history of incoming Bitcoin addresses. If the identity of the person using that Bitcoin address is unknown, 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 one 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 is not associated with 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 the Bitcoin address belongs to?

No.

When Bitcoin was first launched, was there a command line option to control the proxy server for the service port?

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

The problem with TOR is that when discovering other nodes, Bitcoin IRC servers prohibit TOR exit nodes, and all IRC servers do the same. If it has previously connected, then it indicates that a seed exists, but the first time it needs 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 Bitcoins are sent to an IP address, and there are multiple clients behind that IP address connecting via NAT?

The client forwarded by 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 of a 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, then would using a VPN be safer? (For example, paying with a prepaid card like Paysafecard?) Isn't that also dangerous because the VPN provider can obtain my payment information?
4. To ensure the security of Bitcoin, which files do we need to back up? wallet.dat or the entire AppData directory of Bitcoin?
5. Can the wallet be copied to different machines for use? This way, Bitcoin can double without doing anything. Are there safeguards against such cases?
6. 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, and others cannot re-mint those 1 million Bitcoins, does that mean those Bitcoins just completely disappear from the network?).
7. 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?
8. I have limited knowledge about the events generated by Bitcoin. On average, how many Bitcoins does one machine create per day?
9. 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 for payment transactions?
10. 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 flaw.
11. I have seen a formula for calculating the number of Bitcoins created over a period of time. This 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 produce the same amount of coins?
12. Besides the new free standard, are there any other exchange systems or potential payment partners?
13. What happens if my system crashes? Will the wallet be saved automatically? Or is it only saved when the Bitcoin system is manually closed? (Or perhaps it only needs to be saved in real-time when generating or paying Bitcoins?)
14. Is there a way to see how many Bitcoins have been produced so far? How old is Bitcoin?

I know I have asked a lot 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 will be available in the Bitcoin software version 0.2 released after a few weeks. 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: just 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. With the effective circulating supply reduced, the value of the remaining coins will increase slightly. This is the opposite of government printing money, which 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 was not completed. Exit the Bitcoin system and restart it. The initial block download for version 0.2 will be better and faster.

8: Usually, there are 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 so that other nodes can connect, which will help you maintain connections, as this allows you to connect to more nodes. Additionally, it is also necessary to receive payments via IP address and port.

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

In addition, we know he uses a wireless local area network (WLAN), and his network is insecure or poorly protected. The router's configuration is the same.

Now we can log into his router to 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.

Can this actually succeed?

I know this is highly criminal behavior and this scenario is extremely shameful, and it is 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 also works when the local area network router configuration is unprotected.

Edit: These scenarios may not be possible at all, because regardless of which IP the port is using, payments will only be sent to the Bitcoin address or IP address defined by the payer?

Indeed, if you use the send-to-IP option, it will send to anyone responding to that IP. There is no such problem when sending to a Bitcoin address.

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 system tray options.

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

· 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 initial block download slowdown issues.

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

Newbie test—Does anyone want to buy a painting for $1? 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.
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 passed 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 to leak information.

Increased 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 done across the 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 produce a block. This value is adjusted every 2016 blocks, which is roughly every two weeks. At this time, debug.log will output the message "GetNext-WorkRequired RETARGET."

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

Don't worry about it. No one has ever died from "the deflationary vortex." :) 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, and it is solidly embedded 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 do I need to compensate?" but rather "Is the current market value of Bitcoin worth the electricity and computing power to produce?" If it is worth it, then participate. Otherwise, stop mining and use Bitcoin as an appropriate intermediary for trading tangible assets. If uncertain, one can try for a while and then make a final decision. The number of nodes and corresponding computing power will constantly change, and continuous competition will bring costs close to value (not the other way around). Value is determined by the market and the demand for Bitcoin as a medium of exchange. Future competition in transaction costs will have a significant impact on potential node operators.

Your proposed savings paradox, on the contrary, is not a bad thing to hoard and save Bitcoins with the expectation of profiting from deflation. This can accumulate Bitcoin capital for larger investments. In the future, Bitcoin banks may even emerge, lending out saved Bitcoins at market-set interest rates, thus 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 digital nature of Bitcoin makes it easy to divide, and it is easy to adjust the value of Bitcoin to accommodate deflationary pressures. If the savings rate is too high, prices will fall, and interest rates will also drop. Thus, it encourages demand (lower prices) while reducing the willingness to save (low interest rates). Your comments are insightful.

The reasonable market price of something expected to appreciate has already reflected the anticipated future growth of its current value. The human brain will weigh the probability estimates 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 price of any good tends to gravitate towards its production cost. If the price is below cost, production will slow down. If the price is above cost, expanding production and sales will yield more profit. At the same time, increased output leads to increased difficulty, pushing production costs closer to prices.

When the production 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 its current value to be higher than its current production costs.

Some have expressed concern about the possibility of address conflicts arising from generating Bitcoin addresses based on public addresses' hash values, i.e., 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, at 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, while other addresses in the system are 256-bit.

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 currently takes about 2126 times longer to generate a conflict than to generate a block. 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 every time the mouse moves in the Bitcoin window and is captured by disk operations.

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

If there is an iPhone app that only serves 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 a 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, at 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 valid Bitcoin owners can still be identified 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 this happens suddenly, then the result is indeed so. If it happens 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 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.

If we were to use an analogy to explain, 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 this does not mean we will quickly 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 a breakthrough cracking method. 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 become apparent, 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 of all old blocks to ensure they are not replaced by other blocks with the same old hash value.

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

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

The nature of Bitcoin is that once version 0.1 is released, its core design will not change throughout its remaining 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 required, and only one case can be covered each time, which will generate 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 the transaction well enough to evaluate whether the payer meets the conditions.

Scripts are essentially assertions. They are just equations used to evaluate truth or falsehood. Assertion is an obscure term, 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 will be able to receive these transaction types. Nodes of all versions in the network can verify and process any new transactions and then move them to blocks, even if they may not know how to read these new transaction types.

This design supports various possible transaction types that I designed years ago, including escrow transactions, collateral transactions, third-party arbitration, multi-signature, etc. If Bitcoin scales up enough, these are what we want to explore in the future, but they must be designed from the start to ensure they can 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 stepping in sync to get exactly the same results, and a second implementation would threaten the network. Since the MIT license is compatible with all other licenses and commercial uses, 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 challenging to maintain backward compatibility when upgrading the network without locking the second version. If the second version runs into major trouble, the user experience for both versions will be poor, although this will enhance the importance of users staying on the official version. If someone is preparing a fork of the second version, I must issue 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 am not willing to do that; 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 interesting information in the TxOut script, and if those clients that haven't been hacked validate and ignore those transactions, it will be a useful modification for broadcasting communication channels.

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

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 just sat down to write code without doing 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 went into the design 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, announcing that he has written a "Bitcoin faucet" that will give every customer 5 Bitcoins for free. Nakamoto replied that if no one else had thought of this idea, he would have 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 funds. 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 out, it is more likely to succeed. The process of waiting for nodes to produce Bitcoins is quite tedious (and will become even more frustrating later), and buying Bitcoins is not that easy either.

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 chosen very well, 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 be changed to a new one immediately after receiving money.

The value of Bitcoin later increased. Nakamoto suggested lowering 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 that most of the coins sent out will probably be lost (I suspect many of the freeloaders won't last until they spend this $5), but if so, that will only increase the value of the Bitcoins you hold...

Faucet donation address:

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 central trusted servers. It eliminates 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 a portion of it by contributing CPU idle time.

Updates:

· Command line and JSON-RPC control.

· Daemon version without 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 within 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, what I care about is whether my network is the big 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 the network server of Bitcoin nodes.

But is there a 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 that are 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

Right...

But the situation you described 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. Continuous occurrences of blocks taking longer than the average time would further confirm the emergence of a problem. Therefore, if a block takes twice as long on average, followed by a string of blocks taking more than 75% longer than average, it can be basically concluded that you are no longer on the big 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 fluctuations, 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 (over 100 blocks), those 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 can easily realize that something is wrong due to receiving too few blocks.

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 and pays some Bitcoins within it, and then synchronizes them to the public network days later, other transactions should be fine except for the Bitcoin mining output?

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 to 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 in the late 1970s. The leveraged positions in COMEX (New York Mercantile Exchange) futures trading destroyed them. Note that the shares purchased by the Hunt brothers actually accounted for 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 limits 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, July 9, 2010, 15:28:46 Quoting: user, July 7, 2010, 18:15:28

Hello everyone. (Sorry, I am 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 "monopolizing the market." When someone tries to buy up all of a scarce asset in the world, the more they buy, the higher the price goes. At some point, it will become 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 prices continue to rise, some people will hold out for a rise and refuse to sell.

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

"Nelson Bunker Hunt and Herbert Hunt attempted to corner the global silver market in the late 1970s and early 1980s, at one point owning 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 ultimately crashed 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 of commodities."

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

As time goes on, the blockchain, which contains all transaction records since January 2009, continues to grow. If a Bitcoin wallet contains multiple Bitcoin addresses and the 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 because any single address is insufficient to complete this payment. Unless the Bitcoin client has the complete blockchain, which allows it to know the current balance of each address, it must connect to 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 server was later implemented, benefiting lightweight clients.

Bitcoin vending machine (quick transaction issue) 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 snacks. (Profit!)

You don’t want to wait an hour to confirm the transaction.

The vending machine company does not want to send out a bunch of free candy.

What exactly does the second step do?

I believe payment processing companies have the potential to provide fast 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, this is called a node propagation race. If one party's action is slightly earlier, it will geometrically propagate quickly to the entire network and reach most nodes.

A rough simple example:

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

Reply: The Bitcoin Wikipedia page has been 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 doing it. I can write a Finnish version.

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

I would prefer that instead of deleting the article, they limit its length. If it is not well-known enough, at least there can be some articles introducing what it is. I often encounter annoying red links; these are things that Wikipedia people should have at least heard of.

This article could be as simple as:

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

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

Bitcoin minting is anti-thermodynamic Gavin Andresen posted, August 10, 2010, 21:26:14 Quoting: throughput, August 10, 2010, 00:27:30

Thus, 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 I only do things that I am 100% sure will lead to good results, I will never be able to do anything fresh and interesting.

Reply: Not a suggestion Insti posted, August 10, 2010, 21:34:14 In your system, you cannot get transaction information from the blockchain; I must monitor each transaction (since 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, 21:34:14

You are strengthening security by creating mysteries.

I have mentioned this point before. I do not expect to make currency more secure. I just hope that the system can run alongside the current 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 maybe not. If you happen to be "watched," then they will definitely start to keep an eye on you, and from that moment on.

But the extra legal powers that the system wants the most seem to be: "Let me check everyone's records!" (call records, communication towers, email correspondence, Facebook connections, credit card/debit card transactions, Google search history, browser access history, etc.) Other systems seek "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 them.

There are legitimate free places. Producing in any electrically heated place is basically free because the heat generated by the computer offsets the heat generated by the electric heating device. 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 into their parents' electricity bills, employees who take advantage of their employers, zombie networks, etc.

The third category occupies a small proportion. If only a small amount of pocket money is needed, then the exchange costs incurred are not worth it. Compared to fiat currency, I think this is a good thing to send a reasonable amount of minting fees 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 currency at the end of day X is determined by the marginal utility of the currency and goods that exist at the beginning of day X. But as we have seen before, the marginal utility of currency is based on the previously existing set of currency prices. Currency is needed and considered useful because of the previously existing currency prices. Therefore, the price of goods on day X is determined by the marginal utility of goods and currency on day X, while the marginal utility of currency on day X is correspondingly dependent on the prices of goods on day X-1. The economic analysis of currency prices is therefore not circular. If today's prices depend on today's marginal utility of currency, the latter depends on yesterday's currency prices."

Rothbard goes on to explain that for currency to emerge from a barter economy, there must first be pre-existing commodity value. This commodity value arises from the barter demand for potential currency. This value gives rise to the future value of currency as a medium of exchange. The natural emergence of the currency 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, currency may lose its direct commodity value but still be used as currency. Rothbard explains:

"On the other hand, the following analysis does not hold that if existing currency loses its direct utility, it may no longer be used as currency. Therefore, if gold suddenly loses its value in jewelry or industrial use after becoming currency, it may not lose its monetary attributes. Once the medium of exchange is established as currency, the currency price remains unchanged. If gold loses its direct utility on day X, the previously established currency prices from day X-1 still exist, which form the basis for the marginal utility of gold on day X. Similarly, the currency price determined on day X forms the basis for the marginal utility of currency 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 currency is absolutely necessary to be a commodity with direct utility, once established as currency, it no longer needs to maintain its direct utility."

This explains the history of fiat currency. Fiat currency originally developed from commodity-weighted currency (silver) during the barter economy period before the emergence of currency. Although later, due to state intervention, it lost its connection to direct commodity value, paper money still maintained its monetary status due to the memory of previous currency prices. This factor is so strong that the relationship between gold and the dollar has been somewhat reversed. Gold is no longer circulating as a common medium of exchange. Prices are set by dollars, not gold. Most people wishing to operate with gold do so based on their understanding of the dollar/gold price ratio. ("Hey, let me buy your $100 sofa with gold." "Okay, the dollar/gold is $1000 an ounce. Give me 1/10 ounce of gold.") The legal tender laws, government taxation, and the entire financial regulatory environment maintain the inertia of the dollar price and are unlikely to return to an era of direct use of gold currency, even if fiat currency brings destructive inflation.

The emergence of the Bitcoin economy

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

The key is that once currency (dollars) can be directly exchanged for Bitcoin, providers of goods can view Bitcoin as a potential medium of exchange. This aligns with the regression theorem of currency because it can always be traced back to traditional commodity currency: Bitcoin > dollars > monetized gold and silver (beginning of the 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 currency (assuming Bitcoin has limited value outside exchanges). Fiat currency, which has no direct barter value, will certainly not become currency. 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 price ratios with gold and silver. Then, Bitcoin may become valued for its exchangeable intrinsic properties and may thus become popular in trade. Initially, value creators will continue to calculate price value ratios in real currency (gold ounces/Bitcoin ratio), 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 while, as Bitcoin becomes increasingly marketized, these price ratios between fiat currencies and Bitcoin will produce 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 currency.

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 use.

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 qualifications for currency assume that there are many competitive scarce items, and things with spontaneous intrinsic value will certainly outperform those without intrinsic value. However, if there is nothing 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 refers only to its potential limited 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 (i.e., 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. This is very similar to 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 (prohibiting additional issuance, etc.).

The main value of Bitcoin now 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 computational effort 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 stocks. 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, you can sell it immediately (exchange it now), hoping to buy it back at a lower price when returning it to the lender (possibly with an additional fee).

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

Nakamoto posted, August 27, 2010, 16:39:26 Bitcoin does not have dividends, nor is it likely to have dividends in the future, 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 for 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 post and let everyone express disappointment over online service issues, etc.

List of projects that need to be claimed:

Local classifieds similar to Craigslist.
Websites like Mechanical Turk that publish simple jobs in a crowdsourced manner. Suggested by the No Agenda Market of Stable Exchange? This is a topic on the economic forum.
Brewpubs, malt, yeast, hops, etc.
Plant stores 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 undertaken 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 undertaken by whichspace.
Pizza ordering systems. Undertaken by mizerdearia. Pizza can be ordered through websites, command lines, smartphones, 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 address for receiving dividends.

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

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

A quick return method is to pay a fixed amount immediately for each achievement, taking on the risk of differences in achievement counts before finding a 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 achievements. 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 clone of Bitcoin (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 Meta-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 search for proof of work for both networks simultaneously.

There is no need for any coordination between networks. Miners will join both networks simultaneously. They scan SHA for targets, and if found, they can solve problems on both sides simultaneously. If one network's difficulty is lower, the target may only apply to that network.

I believe external miners can call the getwork of both sides to merge work. Perhaps they call Bitcoin to get work, then hand it over to BitDNS's getwork, merging it into one job.

These networks will not only avoid fragmentation but can enhance each other's total computing power through sharing. This will 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 Meta-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 search for proof of work for both networks simultaneously.

Theoretically, it sounds great...

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

I believe external miners can call the getwork of both sides to merge work. Perhaps they call Bitcoin to get work, then hand it over 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.

It seems miners have to do some "extra work." If mining extra on BitDNS does not yield