Evolutionist,
We continue our examination of the Bitcoin White Paper, released by Satoshi Nakamoto in October of 2008, focusing on section four, proof-of-work.
What separates Bitcoin from all the other cryptocurrencies is proof-of-work. This system was implemented on the network to keep all participants honest, making it financially irresponsible for records to be altered. This system uses energy, a lot of it, which is a good thing.
The nodes (computers) on the network use their computer processing power to compete in solving the nonce (a string of random numbers), much like guessing winning lottery numbers. Once the nonce is solved (proof-of-work), the hash (encryption key) is unlocked for the block and broadcasted to the network. This is done for every block, so nodes would have to redo all the work to go back and make changes on previous blocks.
The high energy use is crucial to Bitcoin’s security because it makes it almost impossible to reverse records. As most Bitcoin nodes operate for profit, spending on energy to change records would be costly. In thirteen years of existence, there has never been an attack on the network.
If you were to travel the world, would you do it on an airplane or kayak? One uses way more energy than the other, but which one is more efficient? It is not how much energy is consumed but what is the energy consumed for? To secure the global monetary network of the world seems like a good reason to me.
Next time you hear someone say Bitcoin uses too much energy, give them the kayak example.
The Bitcoin White Paper Series:
#4 - Section: Timestamp Server
To the moon!
Bitcoin: A Peer-to-Peer Electronic Cash System
Proof-of-Work
To implement a distributed timestamp server on a peer-to-peer basis, we will need to use a proof-of-work system similar to Adam Back's Hashcash [6], rather than newspaper or Usenet posts. The proof-of-work involves scanning for a value that when hashed, such as with SHA-256, the hash begins with a number of zero bits. The average work required is exponential in the number of zero bits required and can be verified by executing a single hash.
For our timestamp network, we implement the proof-of-work by incrementing a nonce in the block until a value is found that gives the block's hash the required zero bits. Once the CPU effort has been expended to make it satisfy the proof-of-work, the block cannot be changed without redoing the work. As later blocks are chained after it, the work to change the block would include redoing all the blocks after it.
The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains. To modify a past block, an attacker would have to redo the proof-of-work of the block and all blocks after it and then catch up with and surpass the work of the honest nodes. We will show later that the probability of a slower attacker catching up diminishes exponentially as subsequent blocks are added.
To compensate for increasing hardware speed and varying interest in running nodes over time, the proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour. If they're generated too fast, the difficulty increases.
[6] A. Back, "Hashcash - a denial of service counter-measure," http://www.hashcash.org/papers/hashcash.pdf, 2002.
Proof Of Work (PoW): A cryptocurrency protocol enforced by an algorithm that seeks to achieve consensus among distributed users by choosing the creator of the blockchain’s next block based on their ability to complete a complex computation that the network can verify.
🔥🔥SUBSCRIBER PERK 🔥🔥
All evolutionists will receive a free digital copy of my upcoming book: title and release date set for Q3 of 2022.