[Cryptography] Bitcoin, fork you very much

Ray Dillinger bear at sonic.net
Sun Dec 24 17:01:53 EST 2017



On 12/23/2017 11:36 PM, Dave Horsfall wrote:
> OK, I've grepped the 'net a few times, but I'm still trying to grok
> Bitcoin in small words (the Aussie media is currently frothing at the
> mouth over B$ falling off a cliff, for example, and it may as well be
> written in Urdu).
...clip....
> I grok the "proof of work" concept (why else are IoTs hijacked, for
> example?) but I don't quite understand the ramifications, and why
> there's a finite limit (aside from sheer hardware).

A lot of the rules of Bitcoin come from the simple fact that people
agree that those are the rules of Bitcoin.  There are thousands of nodes
out there checking every would-be new block, and if it violates one of
the rules that people have agreed on, that node dumps the block on the
floor and refuses to have anything to do with it.  When lots of nodes
dump your new block on the floor and refuse to have anything to do with
it, it doesn't get added to the block chain.  Or, if you have made a
special node that adds it to the block chain, all the other nodes drop
that version of the block chain on the floor and refuse to have anything
to do with it.

The finite limit on coins is a feature that results from just such a
rule.  Everybody has agreed that it is okay for someone who successfully
creates a block to include a special transaction that creates coins at
an address which they can later spend.  But the number of coins they are
allowed to create with each block is being halved every so often as time
goes on.  That's not a special cryptography procedure, so much as just a
rule about what blocks people will and won't accept as a legitimate part
of the Bitcoin block chain.

Each period between halvings lasts 210000 blocks.  Each block during
the first period, 50 coins were created.  That was half the number of
coins that would have been created if there were 100 per block, which
I'm pointing out because that would have been 21 million coins, an
important number.

During the period before the first reward halving, half of 21 million
coins were created.  Then there was a period where half as many as that
were created, after which we had 3/4 of 21 million.  Now the reward has
halved again, and we are in a third period.  During this period one
eighth of 21 million coins will be created.  At the end of this period
we will have 7/8 of 21 million.  And so on.  We approach 21 million
coins by Zeno's limit, not because of any special cryptological property
or mysterious thing that you need advanced knowledge to understand, but
just because the rules of the protocol establish a procedure that
approaches it.

				Bear

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