Into the mind of a Bitcoin miner
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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
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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.
Transcript of Into the mind of a Bitcoin miner
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
Blue sends 3 to green
Blue sends 3
to
green
Blue
send
s 3 to
gree
n
Blue sends 3 to green
Blue sends 3 to green
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?
?
