Into the mind of a Bitcoin miner
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Into the mind of a Bitcoin miner

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Talk given at http://www.meetup.com/devhaag/events/162138302/ ...

Talk given at http://www.meetup.com/devhaag/events/162138302/
Actually an improvement of a talk I gave almost 3 yrs ago: http://www.slideshare.net/pascalvanhecke/bitcoin-how-does-it-work-and-why-did-it-become-a-hype

I concentrated on a role playing game where participants acted like nodes in the (early) Bitcoin network, and how the protocol is designed in that way that if you try to cheat, you get excluded from the network. On the other hand, if enough participants form a conspiracy, or there is lack of connectivity, you get harmful effects such as the 51% attack or a blockchain fork.

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  • Whitepaper: assume we are 2008
  • Neem whitepaper erbij
  • Metaphors!- Theyonlywork as long as theywork.
  • No hierarchiePeer to peer: allparticipants are equal.This has someprofoundimplications.
  • For example:everyone shares the same information.In a banking system, a bank has a bookwhereall account holdings are recordedandalltransations,In bitcoin, everyone has all informationThink of Git: allcommits in a code repo are on all harddisks
  • Next metaphor:Assumeaninfinitenumber of colours.No onecancreate the same.
  • Crypto pens!Public private keys.The colour is the public keyThe pen is the private key.PKI is underlyingunder a lot of crypto.
  • Valid transaction:The transaction is written in the color of the sendingaddress, akaitcomesfrom the senderRemember: trustlessnetwork: youonlyseemessages passing, you do notseeeachotherThere is enough money on that colour
  • Do not change hands untilit is in the books!!!
  • Race betweenminers: theypick up tx s from the network, collect them.
  • Important:everything is based on:People do notknoweachotherThe trust the otheroneswill act rationally!!!EG:Makes no sens to cheat on the difficulty, becausemy block willberejectedMakes no sense tosendinvalid transactionsMakes no sense tosendinvalidblocksMakes no sens totrytodoublespendMakes no sense tohold on toyourown block because rest of networkwilloutperformyou
  • Attacks on the networkBecauseeverything is based on the factthatppl do notknowand trust eachother, thingscan break down1 case: blockchain splitWhen 2 parts of the network are not well connected
  • Noteverythingturned out likeSatoshipredicted!!!In vestmentinminingThuscentralization!!Thusthreatsfor the system (easiertofindminersetc…)
  • Mining still profitable?
  • Mining
  • Whyanonymity? –daarom drugs en porno
  • Anonymity

Into the mind of a Bitcoin miner Into the mind of a Bitcoin miner Presentation Transcript

  • Bitcoin introduction at Bizcamp Ghent June 11th 2011 (http://bizcamp.be/). • I have tried to explain bitcoin with the following metaphors: – a cash register copied over the hard drives of all participants – public/private keys as coloured pens: a transaction is only valid if it is written in the color of the pen that is writing the transaction in the register (unlimited number of colours, none is the same) bitcoin blocks as pages in the cash register the node that first solves a sudoku puzzle made up of all the transactions in the page (and with the puzzle on the previous page), gets 50 bitcoins as a prize (as a metaphor for mining, this one turned out the most difficult to grasp) the transaction history can't be falsified because that would require solving sudoku puzzles faster than the combined rest of the world economic value generated by mining is the stability of the system as a whole (transaction history not falsifiable) – – – – • Rest of the screenshots: – – – – – how the client works discussion of (relative) "anonymity” driver behind current speculation: expectation that a sizeable amount of the underground economy will move into bitcoin Bitcoin mining hardware and business risks and challenges for bitcoin
  • Bitcoin a Peer-to-Peer Electronic Cash System
  • Transactions
  • Double-spending
  • Red sends 1.1 to green Blue sends 3 to green Grey sends 1 to red Blue sends 3 to red Red sends 1.1 to grey
  • Red sends 1.1 to green Blue sends 3 to green Grey sends 1 to red Blue sends 3 to red Red sends 1.1 to grey
  • I have a page with transactions for which I have solved a Sudoku puzzle!
  • Red sends 1.1 to green Blue sends 3 to green Grey sends 1 to red Blue sends 3 to red Red sends 1.1 to grey Red gets 50 for the puzzle!
  • Red sends 1.1 to green Blue sends 3 to green Grey sends 1 to red Blue sends 3 to red Red sends 1.1 to grey Red gets 50 for the puzzle!
  • Blue sends 4 to green …
  • Difficulty
  • Bitcoin mining
  • Fees
  • Blockchain and block size
  • Future?