Articles about bitcoin as described in the whitepaper.
This means Big Block Bitcoin.
Proof of work
Proof of work consensus mechanism versus pawn and pledge TLDR/Summary: Proof of work (POW) in bitcoin doesn’t necessarily decide whats wrong and whats right.
That would be like accepting that the strongest guy in a village is always right, even though he steals other peoples stuff, defrauds them and beats them up.
In the real world you may not be able to ignore an aggressor, but in the digital realm you can.
A CPU and some electricity can’t force you to keep up the connection and you can disconnect whenever you want.
Proof of work simply generates a costly signal (signal-theory, handicap-principle.
A costly signal, which serves as a pawn or investment up front, which will be lost in case of getting caught cheating.
It essentially means, that a miner has to put his money where his mouth is.
And since you make more profit when playing by the protocol rules, the incentives of cheating are close to zero.
This is true as long as bitcoin is being used by a majority of people who have a demand for honesty and truth.
Bitcoin won’t make much sense in a dishonest and fraudulent environment.
Similar to elections being held in a dictatorship.
It would be contradictory and just a charade, not worth the energy to even pretend.
That’s what proof of work is mainly about: to put your money where your mouth is.
It serves as a pawn and security.
It is not for consensus.
And when you get caught cheating, either intentionally or by accident, the money will be gone and you have to bare the consequences.
If you think I am wrong and “proof of work” is the one and only mechanism for consensus, ask yourself why the terms “honesty” and “honest node” are mentioned 16 times in the bitcoin whitepaper.
The term “decentralization” on the other hand is not mentioned once, even though I admit, that the concept can be read between the lines and is somehow implied in the overall design.
If you want more details keep reading.
The decentralization in bitcoin
As an additional option, you can also read this article as a PDF on the blockchain if you want.
https://ordinals.gorillapool.io/content/bc36aef15520dc000446ab2ba22d92978a64ab9b3332f7893c33148e6d12b1a6
The decentralization in Bitcoin The word “decentralization” is inflationary used in the so called bitcoin and crypto space and may be one of the most misunderstood concepts in the whole space.
You may not be aware, but Satoshi himself hasn’t used the word “decentralization” even once in his whitepaper.
Since another mantra in the space is “don’t trust, verify”, I recommend you read The Bitcoin Whitepaper and verify yourself.
Even though I admit that the concept of “decentralization” can be read between the lines.
So maybe this concept of decentralization has a somehow different meaning as it is propagated by the majority of the so called bitcoin and crypto influencers over, the last decade.
In this article I try to explain what I think the concept of “decentralization” in bitcoin means.
The blockchain trilemma fairytale
As an additional option, you can also read this article as a PDF on the blockchain if you want.
https://ordinals.gorillapool.io/content/343db0853846585132fe9059a94a8aa4b6321bcb8b247cf3da5f2cbb7b1770c1
The blockchain trilemma fairytale TLDR/Summary: Trilemma somehow has a negative connotation.
It somehow implies, that there is a problem which has to be fixed.
This assumption is based on a false premise.
You simply have three variables, namely decentralization, security and scalability which can be balanced out against each other, like in mathematics.
This is how you solve mathematical equations.
And the same concept of variables being balanced out against each other due to infinite feedback-loops and co-dependencies can be found all over nature.
It is called balance and is not negative at all.
Additionally on small-block-BTC we are not talking about an equation with three variables but with only two variables.
Namely decentralization and security, since the variable blocksize is a frozen constant at 1 MB (one Megabyte).
Which would make it a blockchain dilemma (duos, duo, di, dos, two).
There are only two variables left, because on small-block-BTC the originally variable blocksize, which was set to 1MB as a temporary SPAM and DDOS protection got converted into a frozen constant of 1MB (4MB blockweight).
They sacrificed scalability for decentralization and security, which leaves small-block-BTC with just two variables, namely decentralization and security.
So we are not talking about a problem (dilemma or trilemma), but just about an equation with several variables.
And on small-block-BTC only two variables are left, because the blocksize was converted into a constant of 1MB.
Therefore the term “blockchain trilemma” is just Orwellian Newspeak to artificially create a problem which never existed in the first place.
On the original Big Block Bitcoin, those three variables are still variable and can be balanced out against each other.
Therefore it scales and can match the demand for transactions with a corresponding supply like free markets always do.
The same way a marathon runner can run a marathon because his heart rate is variable, adapts to the stimuli and supplies the demanded heart rate increase. If you want a more detailed version with some pictures, analogies and explanations, keep on reading.
What is bitcoin?
As an additional option, you can also read this article as a PDF on the blockchain if you want.
https://ordinals.gorillapool.io/content/ea00a6beb0baa211bf8bd858359980d83ee5b4a54f8185302493cd74493da33a
What is Bitcoin? TLDR/Summary: Bitcoin is a peer to peer electronic cash system.
It is a decentralized system design, where users and server operators (miners) can create accounts and identities themselves by creating a pair of asynchronous keys with public-key-cryptography.
Users then can transact and trade freely peer-to-peer without intermediaries, middlemen or gatekeepers over the internet or in real life.
They can also delegate read, write and execution access to their data and content without centralized positions of potential corruption like google, meta, governments, insurances or banks.
Every transaction, interaction or timestamp on the network costs a small fee which is being payed to the server operators (miners).
There are several server operators (miners) which are all operating and managing their own version of the same database.
The server operators (miners) are constantly auditing each other so cheating becomes close to impossible.
The history of the database has the same state for all server operators and can’t be changed retroactively.
If you play by the rules you are being rewarded, if you try to cheat you are being punished.
Bitcoin Whitepaper
Bitcoin Whitepaper TABLE OF CONTENTS
Abstract
Introduction Transactions Timestamp Server Proof-of-Work Network Incentive Reclaiming Disk Space Simplified Payment Verification Combining and Splitting Value Privacy Calculations Conclusion References
Bitcoin: A Peer-to-Peer Electronic Cash System Abstract A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.