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Bitcoin Mining The Hard Way: The Algorithms, Protocols, And Bytes

Bitcoin Mining The Hard Way: The Algorithms, Protocols, And Bytes

Xerox Alto restoration, IC reverse engineering, chargers, and whatever Bitcoin mining the hard way: the algorithms, protocols, and bytes This article explains Bitcoin mining in details, right down to the hex data and network traffic.If you've ever wondered what really happens in Bitcoin mining, you've come to the right place.My previous article, Bitcoins the hard way described how I manually created a Bitcoin transaction and sent it into the system. In this article, I show what happens next: how a transaction gets mined into a block. Bitcoin mining is often thought of as the way to create new bitcoins. But that's really just a secondary purpose.The primary importance of mining is to ensure that all participants have a consistent view of the Bitcoin data.Because Bitcoin is a distributed peer-to-peer system, there is no central database that keeps track of who owns bitcoins. Instead, the log of all transactions is distributed across the network. The main problem with a distributed transaction log is how to avoid inconsistencies that could allow someone to spend the same bitcoins twice.The solution in Bitcoin is to mine the outstanding transactions into a block of transactions approximately every 10 minutes, which makes them official. Conflicting or invalid transactions aren't allowed into a block, so the double spend problem is avoided. Although mining transactions into blocks avoid double-spending, it raises new problems: What stops people from randomly mining blocks? How do you decide who gets to mine a block? How does the network agree on which blocks are valid?Solving those problems is the key innovation of Bitcoin:mining is made very, very difficult, a technique called proof-of-work .It takes an insanely huge amount of computational effort to mine a block, but it is Continue reading >>

How To Manually Verify A Hash From A Block? : Bitcoin

How To Manually Verify A Hash From A Block? : Bitcoin

Do not use URL shortening services: always submit the real link. Begging/asking for bitcoins is absolutely not allowed, no matter how badly you need the bitcoins. Only requests for donations to large, recognized charities are allowed, and only if there is good reason to believe that the person accepting bitcoins on behalf of the charity is trustworthy. News articles that do not contain the word "Bitcoin" are usually off-topic. This subreddit is not about general financial news. Submissions that are mostly about some other cryptocurrency belong elsewhere. For example, /r/CryptoCurrency is a good place to discuss all cryptocurrencies. Promotion of client software which attempts to alter the Bitcoin protocol without overwhelming consensus is not permitted. Trades should usually not be advertised here. For example, submissions like "Buying 100 BTC" or "Selling my computer for bitcoins" do not belong here. /r/Bitcoin is primarily for news and discussion. Please avoid repetition /r/bitcoin is a subreddit devoted to new information and discussion about Bitcoin and its ecosystem. New merchants are welcome to announce their services for Bitcoin, but after those have been announced they are no longer news and should not be re-posted. Aside from new merchant announcements, those interested in advertising to our audience should consider Reddit's self-serve advertising system . Do not post your Bitcoin address unless someone explicitly asks you to. Be aware that Twitter, etc. is full of impersonation. Continue reading >>

Bitcoin Hash Functions Explained - Coindesk

Bitcoin Hash Functions Explained - Coindesk

Anyone with an interest in bitcoin will have heard the phrase 'cryptographic hash function' at some time or other. But what exactly does it mean, and how is it connected to cryptocurrency? Hash functions are an essential part of, not only of the bitcoin protocol, but of information security as a whole. In the following article we'll take a look at some simple examples of how they work, with a simple demonstration, too. In the abstract, a hash function is a mathematical processthat takes input data of any size, performs an operation on it, and returns output data of a fixed size. In a more concrete example, this can be used to take a sequence of letters of any length as input what we call a string and return a sequence of letters of a fixed length. Whether the input string is a single letter, a word, a sentence, or an entire novel, the output called the digest will always be the same length. Acommon use of this kind of hash function is to store passwords. When you create a user account with any web service which requires a password, the password isrun through a hash function, and the hash digest of the message is stored. When you type in your password to log in, the same hash function is run on the word you've entered, and the server checks whether the result matches the stored digest. This means that if a hacker is able to access the database containing the stored hashes, they will not be able to immediately compromise all user accounts because there is no easy way to find the password which producedany given hash. You can experiment with hash values using Python, a programming language installed on Mac and Linux operating systems by default. (This tutorial will assume you're using some version of either OS X or Linux, as using Python on Windows is more complicated .) Continue reading >>

Bitcoin - Wikipedia

Bitcoin - Wikipedia

Unspent outputs of transactions denominated in any multiple of satoshis [3] :ch. 5 12.5 bitcoins per block (approximately every ten minutes) until mid 2020, [7] and then afterwards 6.25 bitcoins per block for 4 years until next halving. This halving continues until 2110–40, when 21 million bitcoins will have been issued. ^ The symbol was encoded in Unicode version 10.0 at position U+20BF ₿ BITCOIN SIGN in the Currency Symbols block in June 2017. [2] Bitcoin is a worldwide cryptocurrency and digital payment system [8] :3 called the first decentralized digital currency , as the system works without a central repository or single administrator. [8] :1 [9] It was invented by an unknown person or group of people under the name Satoshi Nakamoto [10] and released as open-source software in 2009. [11] The system is peer-to-peer , and transactions take place between users directly, without an intermediary. [8] :4 These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain . Bitcoins are created as a reward for a process known as mining . They can be exchanged for other currencies, [12] products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. [13] Bitcoin can also be held as an investment. According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin. [14] The word bitcoin first occurred and was defined in the white paper [15] that was published on 31 October 2008. [16] It is a compound of the words bit and coin . [17] The white paper frequently uses the shorter coin. [15] There is no uniform convention for bitcoin capitalization. Some sources use Bitcoin, capitalized, to Continue reading >>

If You Understand Hash Functions, Youll Understand Blockchains

If You Understand Hash Functions, Youll Understand Blockchains

If you understand Hash Functions, youll understand Blockchains Hash functions are a fundamental part of blockchain technologies. If you understand hash functions, it will make understanding other concepts such as tamper proofing, digital fingerprints and provenance easier. The hash concept is actually quite simple. Its the amount of jargon used that confuses people. Simply stated, a hash function takes some input data and creates some output data. To expand on this concept, a hash function takes an input of any length and creates an output of fixed length. Here is an example using a type of hash function called md5: It takes an input string and created a string of random letters and numbers a0680c04c4eb53884be77b4e10677f2b. This is referred to as the message digest. It is also known as the digital fingerprint. This is because there is no way this digest can represent any other string. If I try and modify this to I owe my sister $2 the message digest will be completely different. There are lots of different types of hash functions. You can wrap your head around them here . The main ones involving the blockchain are SHA256 and RIPEMD. The number such as 128 or 256 generally refers to the length of the output. ie SHA256 will produce a 256 bit output. Above is the SHA256 command run on Linux. The output is 256 bits or 64 characters long. Count it if you dont believe me! The easiest way to detect if the input has changed is to compare the message digest of 2 proclaimed versions. If they match, you can be sure that the person holding the mortgage title for example is indeed the true owner of the house. Many people ask how can it be possible to never come across the same message digest? It cant be infinitely unique can it? The answer is that it is NOT infinitely unique but th Continue reading >>

Mining Bitcoin With Pencil And Paper

Mining Bitcoin With Pencil And Paper

I decided to see how practical it would be to mine Bitcoin with pencil and paper. It turns out that the SHA-256 algorithm used for mining is pretty simple and can in fact be done by hand. Not surprisingly, the process is extremely slow compared to hardware mining and is entirely impractical. But performing the algorithm manually is a good way to understand exactly how it works. Bitcoin mining is a key part of the security of the Bitcoin system. The idea is that Bitcoin miners group a bunch of Bitcoin transactions into a block, then repeatedly perform a cryptographic operation called hashing zillions of times until someone finds a special extremely rare hash value. At this point, the block has been mined and becomes part of the Bitcoin block chain. The hashing task itself doesn't accomplish anything useful in itself, but because finding a successful block is so difficult, it ensures that no individual has the resources to take over the Bitcoin system. For more details on mining, see my Bitcoin mining article . A cryptographic hash function takes a block of input data and creates a smaller, unpredictable output. The hash function is designed so there's no "short cut" to get the desired outputyou just have to keep hashing blocks until you find one by brute force that works. For Bitcoin, the hash function is a function called SHA-256 . To provide additional security, Bitcoin applies the SHA-256 function twice, a process known as double-SHA-256. In Bitcoin, a successful hash is one that starts with enough zeros. [1] Just as it is rare to find a phone number or license plate ending in multiple zeros, it is rare to find a hash starting with multiple zeros. But Bitcoin is exponentially harder. Currently, a successful hash must start with approximately 17 zeros, so only one out Continue reading >>

What Is A Bitcoin Hash?

What Is A Bitcoin Hash?

By: Sudhir Khatwani In: Bitcoin Last Updated: If you are involved with Bitcoin , then you must have heard about cryptography or hash algorithms. But what do these things have to do with your BTCs? Cryptography or hash algorithms are what keep Bitcoins blockchain secure. They arethe building blocks of the present-day cryptocurrency industry. In this article, we are going to talk about cryptographichash algorithms in detail. To start with, it is important to have a general idea of what a hash function is and what it does. A hash algorithm takes data of any arbitrary size(numbers, alphabets, media files) and transforms it into a fixed alphanumeric string. The fixed bit size can vary (like 64-bit or 128-bit or 256-bit) depending on what hash function is being used. And this fixed size output is what is called a hash. In other words, a hash is the cryptographic byproduct of a hash algorithm. The hash algorithm has certain unique properties: The mathematics behind the hash algorithm ensures that there is no way to generate the original data from its generated hash. This means the hash only functions in a linear progression. A simple analogy would be that you cant produce a real human thumb from a thumbprint. This is why a hash can be treated as a digital fingerprint of the data processed through the hash function. To logically conclude, the same hash will only be generatedfrom the same input data. But if you modify the data with something miniscule, like a single space or a comma, it will completely change the hash output. And Bitcoins blockchain uses this cryptographic hash functions properties in its consensus mechanism. Bitcoins blockchain uses SHA-256 (Secure Hash Algorithm). In 2001, SHA-256 was developed by the National Security Agency (NSA) in the USA. Bitcoins proof Continue reading >>

8 Answers - What Are Bitcoin Miners Actually Solving? What Kind Of Math Problems Are They Solving And What Do They Achieve By Solving Them?

8 Answers - What Are Bitcoin Miners Actually Solving? What Kind Of Math Problems Are They Solving And What Do They Achieve By Solving Them?

What are Bitcoin miners actually solving? What kind of math problems are they solving and what do they achieve by solving them? Earn a master's in 18 months entirely online. No admission exam. Advance your career with software design and programming courses offered entirely online. Okay. Bear with me. This may get technical. Every miner or mining pool puts together a block which is a basket of verified transactions that they want to publish to the public blockchain. Once they have that block they then have a unique "puzzle" to solve. Unique because it depends on the specific block they are trying to build (and everyone's is more or less unique). Okay. Still with me? The have to run that block data through a hash algorithm. Think of it as a trash compactor. Like the one on the Death Star, detention level. Let's say that each time the compactor is activated, the contents are mashed into a random mess of metal, water sewage, Luke, Han, Leia, 3PO and Wookie parts. The puzzle challenge is what composition of garbage after compacted will result in a Wookie head at the top of the compressed cube of garbage. There is no way to analytically calculate what original arrangement of metal, waste, sewage, serpent monster, Heros and Chewie will result in a Wookie head surfacing to the top of the compressed output so the only way to see is to continually try different initial conditions until you find one that works, IE you keep repeating the experiment dropping the heroes into the trash in different order, rearranging the composition of the existing garbage, amount of sewage etc, until you get one that has Chewie staring at you with those doggie eyes. When they get a Wookie head at the top they have found a solution to the block and they win the block reward and broadcast their solut Continue reading >>

Hash - The Puzzle Of Bitcoin | Vpnmentor

Hash - The Puzzle Of Bitcoin | Vpnmentor

In the previous post we have explained the ideas behind the Bitcoin system, however, one issue remained unexplained: What is this bloody hard puzzle that the Bitcoin miners constantly try to solve? Recall that in the Bitcoin system the miners are in constant competition: Whoever solves the puzzle first will earn the honor of adding a new block to the block-chain and make some money as well. Hence, the miners try feverishly to be the first to solve the puzzle. In the following section we are going to address the following questions: How is it integrated in the Bitcoin system? Dont be scared of the word cryptography, in our context it simply means that the hash puzzle is related to the world of cryptography, i.e. building unbreakable systems. Maybe the best real world analogy to a hash puzzle is a fingerprint. Imagine that you are given a fingerprint sample and you are asked to discover the height, weight and overall look of the person to whom this fingerprint belongs. What would you do? To make it a bit harder, assume that there is no correlation between fingerprints and other human features (like hair color) so the only way to test if this fingerprint came from your best friend is to take his fingerprint and compare it with the other one. Your best choice, then, would be taking fingerprints from every person on Earth and then comparing it to the fingerprint in question, until you find a match and stop. In case you are unlucky, the right person would be the last one that you checked, which means that youll keep looking for him for the next 13,555 years, assuming you check one person per minute (and the Earths population is about 7.125 billion people). If you are lucky, though, you are expected to look for that person for only half of that time, hooray! Bad news ah? Lets Continue reading >>

Mining Pools - What Are Bitcoin Miners Really Solving? - Bitcoin Stack Exchange

Mining Pools - What Are Bitcoin Miners Really Solving? - Bitcoin Stack Exchange

As with mining, what are the bitcoin miners really solving? I read they are solving hashes, but what does that really mean. Can we see what they are solving? Can someone give an example of what a bitcoin mining machine sees to solve? Related: bitcoin.stackexchange.com/q/148/153 Stephen Gornick Feb 28 '13 at 23:52 Ok but WHAT data are we mining! Nobody seems to know. I don't care how it works I want to know where the data is coming from that bit mining is decryption or encrypting. user10225 Dec 5 '13 at 20:18 They try to find a random nonce (a little random data) that goes into a block and makes the block have a (SHA256) hash that (in binary) starts with a certain amount of 0's. The more zeroes the more rare hash is. A good hash' outcome is not predictable, and so you have to try a lot of times to find a good nonce. The amount of zeroes are based on how difficult it is supposed to be to find a block. In Bitcoin it adjusts to have a new block every 10 minutes (on average, given the rate at which previous blocks are found). Interesting: because the hashes are unpredictable it doesn't matter how the nonce changes! Most of the time it's just a number counting upwards from 0! Here is an extremely simplified sketch of the problem, but it should give a pretty good idea of what the problem is. This is the hash of the lastest block (shortened to 30 characters): These are the hashes of a few valid transactions waiting for inclusion (shortened). And this the hash of one special transaction that you just crafted, which gives 25BTC (the current reward) to yourself: Now, let's use a gross approximation of what a new block might look like (the real one uses binary format). It contains the hash of the previous block and the hashes of those 3 transactions: 00000000000001adf44c7d69767585 Continue reading >>

Developer Guide - Bitcoin

Developer Guide - Bitcoin

BETA: This documentation has not been extensively reviewed by Bitcoin experts and so likely contains numerous errors. Please use the Issue and Edit links on the bottom left menu to help us improve. Click here to close this disclaimer. X The Developer Guide aims to provide the information you need to understandBitcoin and start building Bitcoin-based applications, but it is not aspecification . To make the best use ofthis documentation, you may want to install the current version of BitcoinCore, either from source or from a pre-compiled executable . Questions about Bitcoin development are best asked in one of the Bitcoin development communities .Errors or suggestions related todocumentation on Bitcoin.org can be submitted as an issue or posted to the bitcoin-documentation mailing list . In the following documentation, some strings have been shortened or wrapped: []indicates extra data was removed, and lines ending in a single backslash \are continued below. If you hover your mouse over a paragraph, cross-referencelinks will be shown in blue. If you hover over a cross-reference link, a briefdefinition of the term will be displayed in a tooltip. The block chain provides Bitcoins public ledger, an ordered and timestamped recordof transactions. This system is used to protect against double spending and modification of previous transaction records. Each full node in the Bitcoin network independently stores a block chain containing only blocks validated by that node . When several nodes allhave the same blocks in their block chain , they are considered to be in consensus . The validation rules these nodes follow to maintain consensus are called consensusrules . This section describes many ofthe consensus rules used by Bitcoin Core. The illustration above shows a simplified ve Continue reading >>

Decoding The Enigma Of Bitcoin Miningpart I: Mechanism

Decoding The Enigma Of Bitcoin Miningpart I: Mechanism

Bitcoin Miners solve puzzle and winBitcoins Decoding the enigma of Bitcoin Mining Part I: Mechanism Bitcoin miners is somewhat a misleading term. The miners are actually book-keepers and validators of the network. It is called as Mining because the algorithm somewhat approximates the declining supply of gold and the miner wins an award (which are the new bitcoins created) for their effort. Bitcoin miners run a software program (which is the Bitcoin client ) on their host machine. In the very initial days it could be done even from a laptop but nowadays you need expensive and dedicated machines worth thousands of dollars and very high processing power. Book-keeping: The bitcoin client downloads and syncs in real time the entire blockchain of the bitcoin network. Hence the miners are called as book-keepers as the blockchain has list of every transaction processed by the network. Network guardians: Miners also safeguard the network against hacks and validate each transaction. Bitcoin mining gives a probabilistic solution to Byzantines General problem with the underlying assumption that at least 51% of the miners are honest. Settlement and clearing: The bitcoin network works as a settlement and clearing house for all the transactions without depending on any 3rd party service. Creation of new bitcoins: As discussed in the Monetary policy of Bitcoin , 12.5 Bitcoins are created out of thin air every 10 minutes. This is the incentive for contributing processing power and keeping the network safe. It is important to understand that the primary function of mining is not for the reward, but rather keeping the network safe and executing transactions smoothly. Infographic of Bitcoin mining made with oodles of . Image with me. Ask permission to use this infographic. I have already Continue reading >>

What Is Bitcoin Mining? A Step-by-step Guide

What Is Bitcoin Mining? A Step-by-step Guide

What is Bitcoin Mining? A Step-by-Step Guide Bitcoin may be the next big thing in finance, but it can be difficult for most people to understand how it works. There is a whole lot of maths and numbers involved, things which normally make a lot of people run in fear. Well, it's one of the most complex parts of Bitcoin, but it is also the most critical to its success. As you know, Bitcoin is a digital currency . Currencies need checks and balances, validation and verification. Normally central governments and banks are the ones who perform these tasks, making their currencies difficult to forge while also keeping track of them. The big difference with Bitcoin is that it is decentralized. If there is no central government regulating it, then how do we know that the transactions are accurate? How do we know that person A has sent 1 bitcoin to person B? How do we stop person A from also sending that bitcoin to person C? What is Bitcoin Mining? In Some Ways, Bitcoin Is Like Gold One of the most common analogies that people use for Bitcoin is that it's like mining gold. Just like the precious metal, there is only a limited amount (there will only ever be 21 million bitcoin) and the more that you take out, the more difficult and resource intensive it is to find. Apart from that, Bitcoin actually works quite differently and it's actually quite genius once you can get your head around it. One of the major differences is that mining doesn't necessarily create the bitcoin. Bitcoin is given to miners as a reward for validating the previous transactions. So how do they do it? Bitcoin mining requires a computer and a special program. Miners will use this program and a lot of computer resources to compete with other miners in solving complicated mathematical problems. About every ten Continue reading >>

By Reading This Page, You Are Mining Bitcoins Quartz

By Reading This Page, You Are Mining Bitcoins Quartz

If you clicked the button above, then you are currently mining bitcoin, the math-based digital currency that recently topped $1,000 on exchanges. Congratulations. (It wont do anything bad to your computer, we promise.) New bitcoins are created roughly every 10 minutes in batches of 25 coins, with each coin worth around $730 at current rates. Your computerin collaboration with those of everyone else reading this post who clicked the button aboveis racing thousands of others to unlock and claim the next batch. For as long as that counter above keeps climbing, your computer will keep running a bitcoin mining script and trying to get a piece of the action. (But dont worry: Its designed to shut off after 10 minutes if you are on a phone or a tablet, so your battery doesnt drain). Lets start with what its not doing. Your computer is not blasting through the cavernous depths of the internet in search of digital ore that can be fashioned into bitcoin bullion. There is no ore, and bitcoin mining doesnt involve extracting or smelting anything. Its called mining only because the people who do it are the ones who get new bitcoins, and because bitcoin is a finite resource liberated in small amounts over time, like gold, or anything else that is mined. (The size of each batch of coins drops by half roughly every four years, and around 2140, it will be cut to zero, capping the total number of bitcoins in circulation at 21 million.) But the analogy ends there. What bitcoin miners actually do could be better described as competitive bookkeeping. Miners build and maintain a gigantic public ledger containing a record of every bitcoin transaction in history. Every time somebody wants to send bitcoins to somebody else, the transfer has to be validated by miners: They check the ledger to ma Continue reading >>

Block Hashing Algorithm

Block Hashing Algorithm

Bitcoin mining uses the hashcash proof of work function; the hashcash algorithm requires the following parameters: a service string, a nonce, and a counter. In bitcoin the service string is encoded in the block header data structure, and includes a version field, the hash of the previous block, the root hash of the merkle tree of all transactions in the block, the current time, and the difficulty. Bitcoin stores the nonce in the extraNonce field which is part of the coinbase transaction, which is stored as the left most leaf node in the merkle tree (the coinbase is the special first transaction in the block). The counter parameter is small at 32-bits so each time it wraps the extraNonce field must be incremented (or otherwise changed) to avoid repeating work.The basics of the hashcash algorithm are quite easy to understand and it is described in more detail here .When mining bitcoin, the hashcash algorithm repeatedly hashes the block header while incrementing the counter & extraNonce fields. Incrementing the extraNonce field entails recomputing the merkle tree, as the coinbase transaction is the left most leaf node. The block is also occasionally updated as you are working on it. You upgrade the software and it specifies a new version 256-bit hash of the previous block header 256-bit hash based on all of the transactions in the block Current timestamp as seconds since 1970-01-01T00:00 UTC The body of the block contains the transactions. These are hashed only indirectly through the Merkle root. Because transactions aren't hashed directly, hashing a block with 1 transaction takes exactly the same amount of effort as hashing a block with 10,000 transactions. The compact format of target is a special kind of floating-point encoding using 3 bytes mantissa, the leading byte Continue reading >>

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