https://en.bitcoin.it/w/api.php?action=feedcontributions&feedformat=atom&user=RunCPABitcoin Wiki - User contributions [en]2026-06-03T09:43:51ZUser contributionsMediaWiki 1.43.8https://en.bitcoin.it/w/index.php?title=Mining&diff=65504Mining2018-06-25T15:07:31Z<p>RunCPA: /* The Computationally-Difficult Problem */</p>
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<div><!-- This page is designed to be short and simple! It should provide only a very brief explanation of things that have their own page and should link to other pages whenever possible. This page should serve as an entry point and a place to organize most of our mining articles. Thank You! (-Atheros) --><br />
[[File:Quick-and-dirty-4x5970-cooling.jpg|thumb|right|A home-made "[[Mining rig|mining rig]]"]]<br />
== Introduction ==<br />
'''Mining''' is the process of adding transaction records to Bitcoin's public ledger of past transactions (and a "[[Mining rig|mining rig]]" is a colloquial metaphor for a single computer system that performs the necessary computations for "mining".<br />
This ledger of past transactions is called the [[block chain]] as it is a chain of [[block|blocks]].<br />
The blockchain serves to [[Confirmation|confirm]] transactions to the rest of the network as having taken place.<br />
Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.<br />
<br />
Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual [[blocks]] must contain a [[proof of work|proof of work]] to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the [[hashcash]] proof-of-work function.<br />
<br />
The primary purpose of mining is to set the history of [[transactions]] in a way that is [[Irreversible Transactions|computationally impractical to modify by any one entity]]. By downloading and verifying the blockchain, bitcoin [[full node|nodes]] are able to reach consensus about the ordering of events in bitcoin.<br />
<br />
Mining is also the mechanism used to [[Controlled supply|introduce Bitcoins]] into the system:<br />
Miners are paid any [[transaction fees]] as well as a "subsidy" of newly created coins.<br />
This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.<br />
<br />
Bitcoin mining is so called because it resembles the mining of other commodities:<br />
it requires exertion and it slowly makes new units available to anybody who wishes to take part. An important difference is that the [[Controlled supply|supply]] does not depend on the amount of mining. In general changing total miner hashpower does not change how many bitcoins are created over the long term.<br />
<br />
== Difficulty ==<br />
=== The Computationally-Difficult Problem ===<br />
[http://cryptodetail.com/best-practices-mining-cryptocurrencies Mining] a block is difficult because the SHA-256 hash of a block's header must be lower than or equal to the [[Target|target]] in order for the block to be accepted by the network. This problem can be simplified for explanation purposes: The hash of a block must start with a certain number of zeros. The probability of calculating a hash that starts with many zeros is very low, therefore many attempts must be made. In order to generate a new hash each round, a [[Nonce|nonce]] is incremented. See [[Proof of work]] for more information.<br />
<br />
=== The Difficulty Metric ===<br />
The [[Difficulty|difficulty]] is the measure of how difficult it is to find a new block compared to the easiest it can ever be. The rate is recalculated every 2,016 blocks to a value such that the previous 2,016 blocks would have been generated in exactly one fortnight (two weeks) had everyone been mining at this difficulty. This is expected yield, on average, one block every ten minutes.<br />
<br />
As more miners join, the rate of block creation increases. As the rate of block generation increases, the difficulty rises to compensate, which has a balancing of effect due to reducing the rate of block-creation. Any blocks released by malicious miners that do not meet the required [[Target|difficulty target]] will simply be rejected by the other participants in the network.<br />
<br />
=== Reward ===<br />
When a block is discovered, the discoverer may award themselves a certain number of bitcoins, which is agreed-upon by everyone in the network. Currently this bounty is 12.5 bitcoins; this value will halve every 210,000 blocks. See [[Controlled Currency Supply]].<br />
<br />
Additionally, the miner is awarded the fees paid by users sending transactions. The fee is an incentive for the miner to include the transaction in their block. In the future, as the number of new bitcoins miners are allowed to create in each block dwindles, the fees will make up a much more important percentage of mining income.<br />
<br />
== The mining ecosystem ==<br />
<br />
=== Hardware ===<br />
[[File:Usb-fpga module 1.15x-hs-800.jpg|thumb|right|FPGA Module]]<br />
Users have used various types of hardware over time to mine blocks. Hardware specifications and performance statistics are detailed on the [[Mining Hardware Comparison]] page.<br />
==== CPU Mining ==== <br />
Early Bitcoin client versions allowed users to use their CPUs to mine. The advent of GPU mining made CPU mining financially unwise as the hashrate of the network grew to such a degree that the amount of bitcoins produced by CPU mining became lower than the cost of power to operate a CPU. The option was therefore removed from the core Bitcoin client's user interface.<br />
<br />
==== GPU Mining ====<br />
GPU Mining is drastically faster and more efficient than CPU mining. See the main article: [[Why a GPU mines faster than a CPU]]. A variety of popular [[Mining rig|mining rigs]] have been documented.<br />
==== FPGA Mining ====<br />
FPGA mining is a very efficient and fast way to mine, comparable to GPU mining and drastically outperforming CPU mining. FPGAs typically consume very small amounts of power with relatively high hash ratings, making them more viable and efficient than GPU mining. See [[Mining Hardware Comparison]] for FPGA hardware specifications and statistics.<br />
==== ASIC Mining ====<br />
An application-specific integrated circuit, or ''ASIC'', is a microchip designed and manufactured for a very specific purpose. ASICs designed for Bitcoin mining were first released in 2013. For the amount of power they consume, they are vastly faster than all previous technologies and already have made GPU mining financially.<br />
<br />
==== Mining services (Cloud mining) ====<br />
[[:Category:Mining_contractors|Mining contractors]] provide mining services with performance specified by contract, often referred to as a "Mining Contract." They may, for example, rent out a specific level of mining capacity for a set price at a specific duration.<br />
<br />
=== Pools ===<br />
As more and more miners competed for the limited supply of blocks, individuals found that they were working for months without finding a block and receiving any reward for their mining efforts. This made mining something of a gamble. To address the variance in their income miners started organizing themselves into [[Pooled mining|pools]] so that they could share rewards more evenly. See [[Pooled mining]] and [[Comparison of mining pools]].<br />
<br />
=== History ===<br />
Bitcoin's public ledger (the "block chain") was started on January 3rd, 2009 at 18:15 UTC presumably by [[Satoshi Nakamoto]]. The first block is known as the [[genesis block]]. The first transaction recorded in the first block was a single transaction paying the reward of 50 new bitcoins to its creator.<br />
<br />
==See Also==<br />
<br />
* [https://99bitcoins.com/beginners-guide-to-mining/ Beginner's Guide to Bitcoin Mining]<br />
* [https://www.zpool.ca Bitcoin Multipool]<br />
* [https://www.bitcoinmining.com Bitcoin Mining]<br />
* [http://codinginmysleep.com/bitcoin-mining-in-plain-english Bitcoin Mining in Plain English] by David Perry<br />
* [https://www.weusecoins.com/en/mining-guide/ Getting Started With Bitcoin Mining]<br />
* [[Automatically mine when computer is locked|Tutorial to automatically start mining when you lock your computer]]. (Windows 7)<br />
* [http://bitcoinminer.com Bitcoin Miner]<br />
* [http://www.bitcongress.org/bitcoin/best-bitcoin-mining-hardware/ Bitcoin Mining Hardware Comparison]<br />
* [http://www.reddit.com/r/Bitcoin/comments/18q2jx/eli5_bitcoin_mining_xpost_in_eli5/ Simplified Explanation of Bitcoin Mining] by reddit user [http://www.reddit.com/user/azotic azotic]<br />
* [https://bitcoinchain.com/pools Bitcoin Mining Pools Comparison]<br />
* [http://www.bitcoinmining.com/best-bitcoin-cloud-mining-contract-reviews/ Research, Review and Compare Cloud Mining Contracts]<br />
* [https://www.youtube.com/watch?v=GmOzih6I1zs Video: What is Bitcoin Mining?] <br />
* [http://yogh.io/#mine:last Mining Simulator] ([https://github.com/JornC/bitcoin-transaction-explorer GitHub source])<br />
* [http://bitcoindaily.org/bitcoin-guides/what-is-bitcoin-mining/ Bitcoin Mining Explained]<br />
[[ru:Mining]]<br />
[[Category:Mining]][[Category:Vocabulary]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Help:FAQ&diff=65503Help:FAQ2018-06-25T15:02:38Z<p>RunCPA: /* What if someone creates a new block chain, or a new digital currency that renders Bitcoin obsolete? */</p>
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<div>Here you will find answers to the most commonly asked questions.<br />
<br />
== General ==<br />
=== What is Bitcoin? ===<br />
Bitcoin is a distributed peer-to-peer digital currency that can be transferred instantly and securely between any two people in the world. It's like electronic cash that you can use to pay friends or merchants.<br />
<br />
=== What are bitcoins? ===<br />
Bitcoins are the unit of currency of the Bitcoin system. A commonly used shorthand for this is “BTC” to refer to a price or amount (e.g. “100 BTC”).<br />
There are such things as [[physical bitcoins]], but ultimately, a bitcoin is just a number associated with a [[Address|Bitcoin Address]]. A physical bitcoin is simply an object, such as a coin, with the number carefully embedded inside. See also an [[Introduction|easy intro]] to Bitcoin.<br />
<br />
=== How can I get bitcoins? ===<br />
<br />
There are a variety of ways to acquire bitcoins:<br />
* Accept bitcoins as payment for goods or services.<br />
* You can buy bitcoins from [https://www.bitit.gift/ Bitit] [https://www.coinbase.com/buy-bitcoin Coinbase], [https://paybis.com/ PayBis], [http://cubits.com/ Cubits], [https://www.coincorner.com CoinCorner], [[File:BIPS.gif|20px|link=https://bipsmarket.com]] [https://bipsmarket.com BIPS Market], [https://circle.com Circle], or [http://gocelery.com/ Celery].<br />
* The most common way to buy bitcoins are the [[Buying bitcoins|Bitcoin Exchanges]]<br />
* There are several services where you can [[Buying_Bitcoins_(the_noob_version)|trade them]] for traditional currency.<br />
* You can also buy bitcoins using [http://nationalbitcoinatm.com Bitcoin ATMs] that are locally in your area.<br />
* Find someone to trade cash for bitcoins in-person through a [https://en.bitcoin.it/wiki/Category:Directories local directory].<br />
* Participate in a [[Pooled mining|mining pool]].<br />
* If you have a lot of [https://cryptocomes.com/cryptocurrency-cloud-mining-vs-hardware-mining-which-is-more-profitable mining hardware], you can solo mine and attempt to create a new [[block]] (currently yields 12.5 bitcoins plus transaction fees).<br />
* Visit sites that provide [[Trade#Free_Samples_and_Offers|free samples and offers]].<br />
<br />
===Does Bitcoin guarantee an influx of free money?===<br />
<br />
Since Bitcoin is a new technology, what it is and how it works may be initially unclear. Bitcoin is sometimes presented as being one of three things:<br />
<ol style="list-style-type: upper-alpha;"><br />
<li>Some sort of online 'get-rich-quick' scam.</li><br />
<li>A loophole in the market economy, the installation of which guarantees a steady influx of cash.</li><br />
<li>A sure investment that will almost certainly yield a profit.</li><br />
</ol><br />
In fact, none of the above are true. Let's look at them independently.<br />
<br />
;Is Bitcoin a 'get-rich-quick' scheme?<br />
:If you've spent much time on the Internet, you've probably seen ads for many 'get-rich-quick' schemes. These ads usually promise huge profits for a small amounts of easy work. Such schemes are usually pyramid/matrix-style schemes that make money from their own employees and offer nothing of any real value. Most convince one to buy packages that will make them earn hundreds a day, which in fact have the buyer distribute more such ads, and make minute profits.<br />
<br />
:Bitcoin is in no way similar to these schemes. Bitcoin doesn't promise windfall profits. There is no way for the developers to make money from your involvement or to take money from you. That bitcoins are nearly impossible to acquire without the owner's consent represents one of its greatest strengths. Bitcoin is an experimental, virtual currency that may succeed or may fail. None of its developers expect to get rich off of it. <br />
<br />
:A more detailed answer to this question can be found [http://bitcointalk.org/?topic=7815.0 here].<br />
<br />
;Will I make money by installing the client?<br />
:Most people who use Bitcoin don't earn anything by doing so, and the default client has no built-in way to earn Bitcoins. A small minority of people with dedicated, high-performance hardware do earn some Bitcoins by "''mining''" (generating new bitcoins, see [[#What is mining?|What is mining?]]) with special software, but joining Bitcoin shouldn't be construed as being the road to riches. Most Bitcoin users get involved because they find the project conceptually interesting and don't earn anything by doing so. This is also why you won't find much speculation about the political or economic repercussions of Bitcoin anywhere on this site: Bitcoin developers owe their dedication to the project's intellectual yieldings more than to those of a monetary nature. Bitcoin is still taking its first baby steps; it may go on to do great things but right now it only has something to offer those chasing conceptually interesting projects or bleeding edge technology.<br />
<br />
;As an investment, is Bitcoin a sure thing?<br />
:Bitcoin is a new and interesting electronic currency, the value of which is not backed by any single government or organization. Like other currencies, it is worth something partly because people are willing to trade it for goods and services. Its exchange rate fluctuates continuously, and sometimes wildly. It lacks wide acceptance and is vulnerable to manipulation by parties with modest funding. Security incidents such as website and account compromise may trigger major sell-offs. Other fluctuations can build into positive feedback loops and cause much larger exchange rate fluctuations. Anyone who puts money into Bitcoin should understand the risk they are taking and consider it a high-risk currency. Later, as Bitcoin becomes better known and more widely accepted, it may stabilize, but for the time being it is unpredictable. Any investment in Bitcoin should be done carefully and with a clear plan to manage the risk.<br />
<br />
=== Can I buy bitcoins with Paypal? ===<br />
<br />
It is possible to buy [[physical bitcoins]] with PayPal but it is otherwise difficult and/or expensive to do so for non-physical bitcoins, because of significant risk to the seller. <br />
<br />
While it is possible to find an individual who wishes to sell Bitcoin to you via Paypal, (perhaps via [http://www.bitcoin-otc.com/ #bitcoin-otc] ) most exchanges do not allow funding through PayPal. This is due to repeated cases where someone pays for bitcoins with Paypal, receives their bitcoins, and then fraudulently complains to Paypal that they never received their purchase. PayPal often sides with the fraudulent buyer in this case, which means any seller needs to cover that risk with higher fees or refuse to accept PayPal altogether.<br />
<br />
Buying Bitcoins from individuals this way is still possible, but requires the seller to have some trust that the buyer will not file a claim with PayPal to reverse the payment.<br />
<br />
Also [https://bitbuy.in/ bitbuy.in] and [https://paybis.com/ PayBis], allows you to buy Bitcoins with PayPal.<br />
<br />
=== Where can I find a forum to discuss Bitcoin? ===<br />
<br />
Please visit the [[Bitcoin Wiki:Community_portal#Bitcoin_Community_Forums_on_various_platforms|Community Portal]] for links to Bitcoin-related forums.<br />
<br />
=== How are new bitcoins created? ===<br />
<br />
New bitcoins are generated by the network through the process of "[[#What is mining?|''mining'']]". In a process that is similar to a continuous raffle draw, mining nodes on the network are awarded bitcoins each time they find the solution to a certain mathematical problem (and thereby create a new [[block]]). Creating a block is a [[proof of work]] with a difficulty that varies with the overall strength of the network. The reward for solving a block is [[Controlled Currency Supply|automatically adjusted]] so that, ideally, every four years of operation of the Bitcoin network, half the amount of bitcoins created in the prior 4 years are created. A maximum of {{formatnum:10499889.80231183}} bitcoins were created in the first 4 (approx.) years from January 2009 to November 2012. Every four years thereafter this amount halves, so it should be {{formatnum:5250000}} over years 4-8, {{formatnum:2625000}} over years 8-12, and so on. Thus the total number of bitcoins in existence can never exceed {{formatnum:20999839.77085749}} and counting. See [[Controlled Currency Supply]].<br />
<br />
Blocks are [[Mining|mined]] every 10 minutes, on average and for the first four years ({{formatnum:210000}} blocks) each block included 50 new bitcoins. As the amount of processing power directed at mining changes, the difficulty of creating new bitcoins changes. This difficulty factor is calculated every 2016 blocks and is based upon the time taken to generate the previous 2016 blocks. See [[Mining]].<br />
<br />
=== What's the current total number of bitcoins in existence? ===<br />
<br />
[http://blockexplorer.com/q/totalbc Current count]. Also see [https://blockchain.info/charts/total-bitcoins Total bitcoins in circulation chart]<br />
<br />
The number of blocks times the coin value of a block is the number of coins in existence. The coin value of a block is 50 BTC for each of the first {{formatnum:210000}} blocks, 25 BTC for the next {{formatnum:210000}} blocks, then 12.5 BTC, 6.25 BTC and so on.<br />
<br />
=== How divisible are bitcoins? ===<br />
<br />
A bitcoin can be divided down to 8 decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction. If necessary, the protocol and related software can be modified to handle even smaller amounts.<br />
<br />
=== What do I call the various denominations of bitcoin? ===<br />
<br />
Unlike most currencies, Bitcoin amounts are highly divisible. This has led to a desire to create names for smaller denominations of bitcoin amounts, especially since transactions involving whole bitcoins are no longer quite so common. Bitcoin is decentralized, so there is no organization that can set official names for units. Therefore, there are many different units with varying degrees of popularity. As of 2014, the most common units are bitcoins, bits, and satoshi: 1 bitcoin = 1 000 000.00 bits = 100 000 000 satoshi.<br />
<br />
The '''bitcoin''' (abbreviated '''BTC''' or '''XBT''') is the unit that was used in the original Bitcoin wallet software created by [[Satoshi Nakamoto]]. There is nothing particularly special about this unit, but it is by far the most common unit due to tradition.<br />
<br />
The smallest value that the Bitcoin network supports sending is the '''[[satoshi (unit)|satoshi]]''' (sometimes abbreviated '''sat'''), one hundred-millionth (0.000 000 01) of a bitcoin. In other words, the network does not support sending fractions of a satoshi. Since it is a hard limit, it seems natural to use it as a unit, though it currently has very little value. The unit was named in honor of Bitcoin's creator after he left -- he was not so vain as to name a unit after himself. The plural of satoshi is satoshi: "Send me 100 satoshi".<br />
<br />
Another common unit is the '''[[bit (unit)|bit]]''', one millionth (0.000 001) of a bitcoin. This unit is the same as a microbitcoin (μBTC). Bits are seen by some as especially logical because they have two-decimal precision like most fiat currencies. You can send 1.23 bits, but not 1.234 bits due to the network's limited precision.<br />
<br />
It is also fairly common to use SI prefixes:<br />
<br />
* 0.01 BTC = 1 cBTC = 1 centibitcoin (also referred to as bitcent)<br />
* 0.001 BTC = 1 mBTC = 1 millibitcoin (also referred to as mbit (pronounced em-bit) or millibit or even bitmill)<br />
* 0.000 001 BTC = 1 μBTC = 1 microbitcoin (also referred to as ubit (pronounced yu-bit) or microbit)<br />
<br />
For an overview of all proposed units of Bitcoin (including less common and niche units), see [[Units]].<br />
<br />
Further discussion on this topic can be found on the forums here:<br />
<br />
* [https://bitcointalk.org/index.php?topic=14438.msg195287#msg195287 We need names]<br />
* [https://bitcointalk.org/index.php?topic=8282.0 What to call 0.001 BTC]<br />
<br />
=== How does the halving work when the number gets really small? ===<br />
<br />
Eventually the reward will go from 0.00000001 BTC to zero and no more bitcoins will be created. <br />
<br />
The block reward calculation is done as a right bitwise shift of a 64-bit signed integer, which means it is divided by two and rounded down. The integer is equal to the value in BTC * 100,000,000 since internally in the reference client software, all Bitcoin balances and values are stored as unsigned integers.<br />
<br />
With an initial block reward of 50 BTC, it will take many 4-year periods for the block reward to reach zero.<br />
<br />
=== How long will it take to generate all the coins? ===<br />
<br />
The last block that will generate coins will be block #6,929,999 which should be generated at or near the year 2140. The total number of coins in circulation will then remain static at 20,999,999.9769 BTC.<br />
<br />
Even if the allowed precision is expanded from the current 8 decimals, the total BTC in circulation will always be slightly below 21 million (assuming everything else stays the same). For example, with 16 decimals of precision, the end total would be 20,999,999.999999999496 BTC.<br />
<br />
=== If no more coins are going to be generated, will more blocks be created? ===<br />
<br />
Absolutely! Even before the creation of coins ends, the use of [[transaction fee|transaction fees]] will likely make creating new blocks more valuable from the fees than the new coins being created. When coin generation ends, these fees will sustain the ability to use bitcoins and the Bitcoin network. There is no practical limit on the number of blocks that will be mined in the future.<br />
<br />
=== But if no more coins are generated, what happens when Bitcoins are lost? Won't that be a problem? ===<br />
<br />
Because of the law of supply and demand, when fewer bitcoins are available the ones that are left will be in higher demand, and therefore will have a higher value. So, as Bitcoins are lost, the remaining bitcoins will eventually increase in value to compensate. As the value of a bitcoin increases, the number of bitcoins required to purchase an item '''de'''creases. This is a [[Deflationary spiral|deflationary economic model]]. As the average transaction size reduces, transactions will probably be denominated in sub-units of a bitcoin such as millibitcoins ("Millies") or microbitcoins ("Mikes").<br />
<br />
The Bitcoin protocol uses a base unit of one hundred-millionth of a Bitcoin ("a Satoshi"), but unused bits are available in the protocol fields that could be used to denote even smaller subdivisions.<br />
<br />
=== If every transaction is broadcast via the network, does Bitcoin scale? ===<br />
<br />
The blockchain base layer is not very scalable but layer-2 technologies can be used to greatly increase bitcoin's scale. [[Lightning Network]] is one example which uses [[Contracts|smart contracts]] to build a network where payments are routed along a path instead of flooded to every peer. These payments can be nearly as secure and irreversible as blockchain transactions but have much better scalability (as well support instant payments which are much more private). Other possible layer-2 scalability technologies are sidechains or a bitcoin ecash chaumian bank.<br />
<br />
See also:<br />
* [https://www.reddit.com/r/Bitcoin/comments/438hx0/a_trip_to_the_moon_requires_a_rocket_with/ A trip to the moon requires a rocket with multiple stages]<br />
* [https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-December/011865.html Capacity increases for the Bitcoin system]<br />
* [[Scalability]].<br />
<br />
==Economy==<br />
=== Where does the value of Bitcoin stem from? What backs up Bitcoin? ===<br />
Bitcoins have value because they are useful and because they are [[Controlled Currency Supply|scarce]]. As they are accepted by more merchants, their value will [http://en.wikipedia.org/wiki/Sticky_%28economics%29 stabilize]. See the [[Trade|list of Bitcoin-accepting sites]].<br />
<br />
When we say that a currency is backed up by gold, we mean that there's a promise in place that you can exchange the currency for gold. Bitcoins, like dollars and euros, are not backed up by anything except the variety of merchants that accept them.<br />
<br />
It's a common misconception that Bitcoins gain their value from the cost of electricity required to generate them. Cost doesn't equal value – hiring 1,000 men to shovel a big hole in the ground may be costly, but not valuable. Also, even though scarcity is a critical requirement for a useful currency, it alone doesn't make anything valuable. For example, your fingerprints are scarce, but that doesn't mean they have any exchange value.<br />
<br />
Alternatively it needs to be added that while the law of supply and demand applies it does not guarantee value of Bitcoins in the future. If confidence in Bitcoins is lost then it will not matter that the supply can no longer be increased, the demand will fall off with all holders trying to get rid of their coins. An example of this can be seen in cases of state currencies, in cases when the state in question dissolves and so no new supply of the currency is available (the central authority managing the supply is gone), however the demand for the currency falls sharply because confidence in its purchasing power disappears. Of-course Bitcoins do not have such central authority managing the supply of the coins, but it does not prevent confidence from eroding due to other situations that are not necessarily predictable.<br />
<br />
=== Is Bitcoin a bubble? ===<br />
Yes, in the same way as the euro and dollar are. They only have value in exchange and have no inherent value. If everyone suddenly stopped accepting your dollars, euros or bitcoins, the "bubble" would burst and their value would drop to zero. But that is unlikely to happen: even in Somalia, where the government collapsed 20 years ago, [http://en.wikipedia.org/wiki/Somali_shilling Somali shillings] are still accepted as payment.<br />
<br />
=== Is Bitcoin a Ponzi scheme? ===<br />
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.<br />
<br />
A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.<br />
<br />
The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.<br />
<br />
=== Doesn't Bitcoin unfairly benefit early adopters? ===<br />
Early adopters in Bitcoin are taking a risk and invested resources in an unproven technology. By so doing, they help Bitcoin become what it is now and what it will be in the future (hopefully, a ubiquitous decentralized digital currency). It is only fair they will reap the benefits of their successful investment.<br />
<br />
In any case, any bitcoin generated will probably change hands dozens of time as a medium of exchange, so the profit made from the initial distribution will be insignificant compared to the total commerce enabled by Bitcoin. Many of the earliest users of Bitcoin have traded their coins at valuations below $1 US, or other amounts which are small compared to contemporary prices.<br />
<br />
===Won't loss of wallets and the finite amount of Bitcoins create excessive deflation, destroying Bitcoin? ===<br />
Worries about Bitcoin being destroyed by deflation are not entirely unfounded. Unlike most currencies, which experience inflation as their founding institutions create more and more units, Bitcoin will likely experience gradual deflation with the passage of time. Bitcoin is unique in that only a small amount of units will ever be produced (twenty-one million to be exact), this number has been known since the project's inception, and the units are created at a predictable rate.<br />
<br />
Also, Bitcoin users are faced with a danger that doesn't threaten users of any other currency: if a Bitcoin user loses his wallet, his money is gone forever, unless he finds it again. And not just to him; it's gone completely out of circulation, rendered utterly inaccessible to anyone. As people will lose their wallets, the total number of Bitcoins will slowly decrease.<br />
<br />
Therefore, Bitcoin seems to be faced with a unique problem. Whereas most currencies inflate over time, Bitcoin will mostly likely do just the opposite. Time will see the irretrievable loss of an ever-increasing number of Bitcoins. An already small number will be permanently whittled down further and further. And as there become fewer and fewer Bitcoins, the laws of supply and demand suggest that their value will probably continually rise.<br />
<br />
Thus Bitcoin is bound to once again stray into mysterious territory, because no one exactly knows what happens to a currency that grows continually more valuable. Many economists claim that a low level of [http://cryptodetail.com/how-does-cryptocurrency-market-prices-value-increase inflation] is a good thing for a currency, but nobody is quite sure about what might happens to one that continually deflates. Although deflation could hardly be called a rare phenomenon, steady, constant deflation is unheard of. There may be a lot of speculation, but no one has any hard data to back up their claims.<br />
<br />
That being said, there is a mechanism in place to combat the obvious consequences. Extreme deflation would render most currencies highly impractical: if a single Canadian dollar could suddenly buy the holder a car, how would one go about buying bread or candy? Even pennies would fetch more than a person could carry. Bitcoin, however, offers a simple and stylish solution: infinite divisibility. Bitcoins can be divided up and trade into as small of pieces as one wants, so no matter how valuable Bitcoins become, one can trade them in practical quantities. <br />
<br />
In fact, infinite divisibility should allow Bitcoins to function in cases of extreme wallet loss. Even if, in the far future, so many people have lost their wallets that only a single Bitcoin, or a fraction of one, remains, Bitcoin should continue to function just fine. No one can claim to be sure what is going to happen, but deflation may prove to present a smaller threat than many expect.<br />
<br />
For more information, see the [[Deflationary spiral]] page.<br />
<br />
=== What if someone bought up all the existing Bitcoins? ===<br />
Bitcoin markets are competitive -- meaning the price of a bitcoin will rise or fall depending on supply and demand at certain price levels. Only a fraction of bitcoins issued to date are found on the exchange markets for sale. So even though technically, a buyer with lots of money could buy all the bitcoins offered for sale, unless those holding the rest of the bitcoins offer them for sale as well, even the wealthiest, most determined buyer can't get at them.<br />
<br />
Additionally, new currency continues to be issued daily and will continue to do so for decades; though over time the rate at which they are issued declines to insignificant levels. Those who are mining aren't obligated to sell their bitcoins so not all bitcoins will make it to the markets even.<br />
<br />
This situation doesn't suggest, however, that the markets aren't vulnerable to price manipulation. It doesn't take significant amounts of money to move the market price up or down, and thus Bitcoin remains a volatile asset.<br />
<br />
===What if someone creates a new block chain, or a new digital currency that renders Bitcoin obsolete?===<br />
<br />
That the [https://cryptocomes.com/what-is-blockchain-technology-simple-explanation-for-beginners block chain] cannot be easily forked represents one of the central security mechanisms of Bitcoin. Given the choice between two block chains, a Bitcoin miner always chooses the longer one - that is to say, the one with the more complex hash. Thusly, it ensures that each user can only spend their bitcoins once, and that no user gets ripped off.<br />
<br />
As a consequence of the block chain structure, there may at any time be many different sub-branches, and the possibility always exists of a transaction being over-written by the longest branch, if it has been recorded in a shorter one. The older a transaction is though, the lower its chances of being over-written, and the higher of becoming permanent. Although the block chain prevents one from spending more Bitcoins than one has, it means that transactions can be accidentally nullified. <br />
<br />
A new block chain would leave the network vulnerable to [[double-spending|double-spend]] attacks. However, the creation of a viable new chain presents considerable difficulty, and the possibility does not present much of a risk.<br />
<br />
Bitcoin will always choose the longer Block Chain and determines the relative length of two branches by the complexities of their hashes. Since the hash of each new block is made from that of the block preceding it, to create a block with a more complex hash, one must be prepared to do more computation than has been done by the entire Bitcoin network from the fork point up to the newest of the blocks one is trying to supersede. Needless to say, such an undertaking would require a very large amount of processing power and since Bitcoin is continually growing and expanding, it will likely only require more with the passage of time.<br />
<br />
A much more distinct and real threat to the Bitcoin use is the development of other, superior virtual currencies, which could supplant Bitcoin and render it obsolete and valueless.<br />
<br />
A great deal of careful thought and ingenuity has gone into the development of Bitcoin, but it is the first of its breed, a prototype, and vulnerable to more highly-evolved competitors. At present, any threatening rivals have yet to rear their heads; Bitcoin remains the first and foremost private virtual currency, but we can offer no guarantees that it will retain that position. It would certainly be in keeping with internet history for a similar system built from the same principles to supersede and cast Bitcoin into obsolescence, after time had revealed its major shortcomings. Friendster and Myspace suffered similar fates at the hand of Facebook, Napster was ousted by Limeware, Bearshare and torrent applications, and Skype has all but crushed the last few disciples of the Microsoft Messenger army. <br />
<br />
This may sound rather foreboding, so bear in mind that the introduction of new and possibly better virtual currencies will not necessarily herald Bitcoin's demise. If Bitcoin establishes itself sufficiently firmly before the inception of the next generation of private, online currencies so as to gain widespread acceptance and general stability, future currencies may pose little threat even if they can claim superior design. This is known as the network effect.<br />
<br />
=== Is Bitcoin open to value manipulation? ===<br />
<br />
The current low market cap of Bitcoin means that any investor with deep enough pockets can significantly change/manipulate the rate. Is this a problem?<br />
<br />
This is only a problem if you are investing in Bitcoin for short period of time. A manipulator can't change the fundamentals, and over a period of 5-10 years, the fundamentals will win over any short term manipulations.<br />
<br />
==Sending and Receiving Payments==<br />
<br />
=== Why do I have to wait 10 minutes before I can spend money I received? ===<br />
<br />
10 minutes is the average time taken to find a block. It can be significantly more or less time than that depending on luck; 10 minutes is simply the average case. <br />
<br />
[[Blocks]] (shown as "[[Confirmation|confirmations]]" in the GUI) are how the Bitcoin achieves consensus on who owns what. Once a block is found everyone agrees that you now own those coins, so you can spend them again. Until then it's possible that some network nodes believe otherwise, if somebody is attempting to defraud the system by reversing a transaction. The more confirmations a transaction has, the less risk there is of a reversal. Only 6 blocks or 1 hour is enough to make reversal computationally impractical. This is dramatically better than credit cards which can see chargebacks occur up to three months after the original transaction!<br />
<br />
Ten minutes was specifically chosen by [[Satoshi]] as a tradeoff between first confirmation time and the amount of work wasted due to chain splits. After a block is mined, it takes time for other miners to find out about it, and until then they are actually competing against the new block instead of adding to it. If someone mines another new block based on the old block chain, the network can only accept one of the two, and all the work that went into the other block gets wasted. For example, if it takes miners 1 minute on average to learn about new blocks, and new blocks come every 10 minutes, then the overall network is wasting about 10% of its work. Lengthening the time between blocks reduces this waste.<br />
<br />
As a thought experiment, what if the Bitcoin network grew to include Mars? From the farthest points in their orbits, it takes about 20 minutes for a signal to travel from Earth to Mars. With only 10 minutes between new blocks, miners on Mars would always be 2 blocks behind the miners on Earth. It would be almost impossible for them to contribute to the block chain. If we wanted collaborate with those kinds of delays, we would need at least a few hours between new blocks. <br />
<br />
[[File:TransactionConfirmationTimesExample.PNG]]<br />
<br />
=== Do you have to wait until my transactions are confirmed in order to buy or sell things with Bitcoin? ===<br />
<br />
YES, you do, IF the transaction is non-recourse. The Bitcoin reference software does not display transactions as confirmed until six blocks have passed (confirmations). As transactions are buried in the chain they become increasingly non-reversible but are very reversible before the first confirmation. Two to six confirmations are recommended for non-recourse situations depending on the value of the transactions involved.<br />
<br />
When people ask this question they are usually thinking about applications like supermarkets. This generally is a recourse situation: if somebody tries to double-spend on a face-to-face transaction it might work a few times, but probabalistically speaking eventually one of the double-spends will get noticed, and the penalty for shoplifting charges in most localities is calibrated to be several times worse than the proceeds of a single shoplifting event.<br />
<br />
Double-spends might be a concern for something like a snack machine in a low-traffic area with no nearby security cameras. Such a machine shouldn't honor zero-confirmation payments, and should instead use some other mechanism of clearing Bitcoin or validating transactions against reversal, see the wiki article [[Myths#Point_of_sale_with_bitcoins_isn.27t_possible_because_of_the_10_minute_wait_for_confirmation|here]] for alternatives.<br />
<br />
Applications that require immediate payment processing, like supermarkets or snack machines, need to manage the risks. Here is one way to reverse an unconfirmed payment:<br />
<br />
A [[Double-spending#Finney_attack|Finney attack]] is where an attacker mines a block containing a movement of some coins back to themselves. Once they find a block solution, they quickly go to a merchant and make a purchase, then broadcast the block, thus taking back the coins. This attack is a risk primarily for goods that are dispatched immediately, like song downloads or currency trades. Because the attacker can't choose the time of the attack, it isn't a risk for merchants such as supermarkets where you can't choose exactly when to pay (due to queues, etc). The attack can fail if somebody else finds a block containing the purchasing transaction before you release your own block, therefore, merchants can reduce but not eliminate the risk by making purchasers wait some length of time that's less than a confirm.<br />
<br />
Because pulling off this attack is not trivial, merchants who need to sell things automatically and instantly are most likely to adjust the price to include the cost of reversal fraud, or elect to use special insurance.<br />
<br />
=== I was sent some bitcoins and they haven't arrived yet! Where are they? ===<br />
<br />
Don't panic! There are a number of reasons why your bitcoins might not show up yet, and a number of ways to diagnose them. <br />
<br />
The latest version of the Bitcoin-Qt client tells you how far it has yet to go in downloading the blockchain. Hover over the icon in the bottom right corner of the client to learn your client's status.<br />
<br />
If it has not caught up then it's possible that your transaction hasn't been included in a block yet. <br />
<br />
You can check pending transactions in the network by going [https://www.biteasy.com here] or [http://blockchain.info here] and then searching for your address. If the transaction is listed here then it's a matter of waiting until it gets included in a block before it will show in your client. <br />
<br />
If the transaction is based on a coin that was in a recent transaction then it could be considered a low priority transaction. Transfers can take longer if the transaction fee paid was not high enough. If there is no fee at all the transfer can get a very low priority and take hours or even days to be included in a block.<br />
<br />
<br />
=== I sent too small of a transaction fee, is my bitcoin lost forever? ===<br />
<br />
<br />
If the transaction never gets confirmed into a block - the mempool expiry of all nodes will drop it eventually and you will be able to spend your funds again - [https://hackernoon.com/holy-cow-i-sent-a-bitcoin-transaction-with-too-low-fees-are-my-coins-lost-forever-7a865e2e45ba typically] it takes about 3 days or so for this to happen. If using an [[https://en.bitcoin.it/w/index.php?title=Scalability#Simplified_payment_verification SPV]] wallet such as [[ Electrum]] or [[Multibit]], if after three days the wallet does not see the coin to spend, you need to reindex your wallet's block headers. After reindexing, your wallet will see that the coin was never confirmed and thus the balance will be spendable again. <br />
<br />
'''NOTE''': From Bitcoin 0.14 “transaction reappearance” happens after 2 [https://www.reddit.com/r/Bitcoin/comments/69jywp/a_practical_guide_to_accidental_low_fee/dhjfthf/ weeks].<br />
<br />
=== Why does my Bitcoin address keep changing? ===<br />
{{seealso|Address reuse}}<br />
Unlike postal and email addresses, Bitcoin addresses are designed to be used exactly once only, for a single transaction.<br />
Originally, wallets would display only a single address at a time, and change it when a transaction was received, but an increasing number of wallet implementations now generate an address when you explicitly want to receive a payment.<br />
<br />
While it is technically possible to use an address for an arbitrary number of payments, this works by accident and harms both yourself ''and other unrelated third parties'', so it is considered a bad practice.<br />
The most important concerns with such misuse involve loss of privacy and security:<br />
both can be put into jeopardy when addresses are used for more than a single transaction only.<br />
<br />
===How much will the transaction fee be? / Why is the fee so high?===<br />
<br />
Bitcoin transactions almost always require a [[transaction fee]] for them to get confirmed. The transaction fee is received by the first bitcoin miner who mines a [[block]] containing the transaction; this action is also what gives the transaction its first confirmation. The appropriate fee varies depending on how large (in bytes) your transaction is, how fast you want the transaction to be confirmed, and also on current network conditions. As such, paying a fixed fee, or even a fixed fee per kB, is a very bad idea; all good Bitcoin wallets will use several pieces of data to estimate an appropriate fee for you, though some are better at fee estimation than others.<br />
<br />
The fee most strongly depends on the transaction's data size. Fees do '''not''' depend on the BTC amount of the transaction -- it's entirely possible for a 0.01 BTC transaction to require a higher fee than a 1000 BTC transaction.<br />
<br />
Basic intro to how Bitcoin [[transactions]] work: If you receive BTC in three separate transactions of (say) 1, 5, and 10 BTC, then you can think of your wallet as containing three gold coins with sizes 1, 5, and 10 BTC. If you then want to send 6 BTC, you can melt the 1 & 5 BTC coins together and recast them as a 6 BTC coin, or melt the 10 BTC coin and recast a 6 BTC coin for the recipient and a 4 BTC coin as change for yourself. In Bitcoin's technical vocabulary, these objects are literally called input and output coins. (In the rest of this section, when we say "coin" we mean these objects, not the amount of BTC value.)<br />
<br />
Transaction data sizes, and therefore fees, are proportional to the '''number''' (not value) of input and output coins in a transaction. Input coins are about 5x larger / more expensive than output coins.<br />
<br />
If your wallet estimates a very high fee, it is most likely because your wallet is full of a whole bunch of tiny coins, so your transaction will need to take very many coins as inputs, increasing the cost. On the bright side, fees will go down once you make a few transactions, since you will end up "melting down" these many small coins into a few larger ones. Sometimes you can significantly reduce the fee by sending less BTC: if you have like 1000 tiny faucet payments totaling 0.5 BTC and then 16.5 BTC from other sources, then you'll find that sending ~16.5 BTC will be massively cheaper than sending a slightly higher value since it avoids including all of those faucet coins.<br />
<br />
Fees also fluctuate depending on network conditions. All unconfirmed transactions compete with each other to be picked up by miners. If there are a lot of high-fee transactions being sent right now, then you will need to pay higher fees to out-bid them. On the other hand, if speed is less important to you, you can pay a somewhat smaller fee, and your transaction will float around until there is a period of reduced network usage. Sometimes even transactions with zero fee will be confirmed after a very long period of time, though this requires a perfect set of conditions, beyond what is explained here (ie. it probably won't work if you try it).<br />
<br />
Oftentimes wallets will have an "express" fee configuration, but note that confirmation times are naturally random and unreliable. At any given point in time, the probability that ''no'' transactions will be confirmed in the next hour is about 0.25% (ie. it happens more than once per week on average). Bitcoin users should avoid getting into situations where their transactions ''absolutely must'' get 1 confirmation in the next couple of hours, even if high-fee transactions usually take less than 10 minutes to get 1 confirmation.<br />
<br />
=== What happens when someone sends me a bitcoin but my computer is powered off? ===<br />
<br />
Bitcoins are not actually "sent" to your wallet; the software only uses that term so that we can use the currency without having to learn new concepts. Your wallet is only needed when you wish to spend coins that you've received.<br />
<br />
If you are sent coins when your wallet client program is not running, and you later launch the wallet client program, the coins will eventually appear as if they were just received in the wallet. That is to say, when the client program is started it must download blocks and catch up with any transactions it did not already know about.<br />
<br />
=== How long does "synchronizing" take when the Bitcoin client is first installed? What's it doing? ===<br />
<br />
The popular Bitcoin client software from bitcoin.org implements a "full" Bitcoin node: It can carry out all the duties of the Bitcoin P2P system, it isn't simply a "client". One of the principles behind the operation of full Bitcoin nodes is that they don't assume that the other participants have followed the rules of the Bitcoin system. During synchronization, the software is processing historical Bitcoin transactions and making sure for itself that all of the rules of the system have been correctly followed.<br />
<br />
In normal operation, after synchronizing, the software should use a hardly noticeable amount of your computer's resources.<br />
<br />
When the wallet client program is first installed, its initial validation requires a lot of work from your computer's hard disk, so the amount of time to synchronize depends on your disk speed and, to a lesser extent, your CPU speed. It can take anywhere from a few hours to a day or so. On a slow computer it could take more than 40 hours of continuous synchronization, so check your computer's power-saving settings to ensure that it does not turn its hard disk off when unattended for a few hours. You can use the Bitcoin software during synchronization, but you may not see recent payments to you until the client program has caught up to the point where those transactions happened.<br />
<br />
If you feel that this process takes too long, you can download a pre-synchronized blockchain from [http://eu2.bitcoincharts.com/blockchain/ http://eu2.bitcoincharts.com/blockchain/]. Alternatively, you can try an alternative "lite" client such as Multibit or a super-light client like electrum, though these clients have somewhat weaker security, are less mature, and don't contribute to the health of the P2P network.<br />
<br />
==Networking==<br />
=== Do I need to configure my firewall to run Bitcoin? ===<br />
<br />
Bitcoin will connect to other nodes, usually on TCP port 8333. You will need to allow outgoing TCP connections to port 8333 if you want to allow your Bitcoin client to connect to many nodes. [[Testnet]] uses TCP port 18333 instead of 8333.<br />
<br />
If you want to restrict your firewall rules to a few IPs, you can find stable nodes in the [[Fallback Nodes|fallback nodes list]].<br />
<br />
=== How does the peer finding mechanism work? ===<br />
<br />
Bitcoin finds peers primarily by forwarding peer announcements within its own network and each node saves a database of peers that it's aware of, for future use. In order to bootstrap this process Bitcoin needs a list of initial peers, these can be provided manually but normally it obtains them by querying a set of DNS domain names which have automatically updated lists, if that doesn't work it falls back to a built-in list which is updated from time to time in new versions of the software. In the reference software initial peers can also be specified manually by adding an addr.txt to the data directory or via the addnode parameter.<br />
<br />
==Mining==<br />
===What is mining?===<br />
[[Mining]] is the process of spending computation power to secure Bitcoin transactions against reversal and introducing new Bitcoins to the system<ref>[https://www.bitcoinmining.com Bitcoin Mining]</ref>.<br />
<br />
Technically speaking, mining is the calculation of a [[hash]] of the a block header, which includes among other things a reference to the previous block, a hash of a set of transactions and a [[nonce]]. If the hash value is found to be less than the current [[target]] (which is inversely proportional to the [[difficulty]]), a new block is formed and the miner gets the newly generated Bitcoins (25 per block at current levels). If the hash is not less than the current target, a new nonce is tried, and a new hash is calculated. This is done millions of times per second by each miner.<br />
<br />
===Is mining used for some useful computation?===<br />
The computations done when mining are internal to Bitcoin and not related to any other distributed computing projects. They serve the purpose of securing the Bitcoin network, which is useful.<br />
<br />
===Is it not a waste of energy?===<br />
Spending energy on creating and securing a free monetary system is hardly a waste. Also, services necessary for the operation of currently widespread monetary systems, such as banks and credit card companies, also spend energy, arguably more than Bitcoin would.<br />
<br />
===Why don't we use calculations that are also useful for some other purpose?===<br />
To provide security for the Bitcoin network, the calculations involved need to have some [http://bitcoin.stackexchange.com/questions/5617/why-are-bitcoin-calculation-useless/5618#5618 very specific features]. These features are incompatible with leveraging the computation for other purposes.<br />
<br />
===How can we stop miners from creating zero transaction blocks?===<br />
The incentive for miners to include transactions is in the fees that come along with them. If we were to implement some minimum number of transactions per block it would be trivial for a miner to create and include transactions merely to surpass that threshold. As the network matures, the block reward drops, and miners become more dependent on transactions fees to pay their costs, the problem of zero transaction blocks should diminish over time.<br />
<br />
===How does the proof-of-work system help secure Bitcoin?===<br />
Bitcoin uses the [[Hashcash]] [[proof of work]] with a minor adaption. To give a general idea of the mining process, imagine this setup:<br />
<br />
payload = <some data related to things happening on the Bitcoin network><br />
nonce = 1<br />
hash = [http://en.wikipedia.org/wiki/SHA2 SHA2]( [http://en.wikipedia.org/wiki/SHA2 SHA2]( payload + nonce ) )<br />
<br />
The work performed by a miner consists of repeatedly increasing "nonce" until<br />
the hash function yields a value, that has the rare property of being below a certain<br />
target threshold. (In other words: The hash "starts with a certain number of zeroes",<br />
if you display it in the fixed-length representation, that is typically used.)<br />
<br />
As can be seen, the mining process doesn't compute anything special. It merely<br />
tries to find a number (also referred to as nonce) which - in combination with the payload -<br />
results in a hash with special properties.<br />
<br />
The advantage of using such a mechanism consists of the fact, that it is very easy to check a result: Given the payload and a specific nonce, only a single call of the hashing function is needed to verify that the hash has the required properties. Since there is no known way to find these hashes other than brute force, this can be used as a "[[proof of work]]" that someone invested a lot of computing power to find the correct nonce for this payload.<br />
<br />
This feature is then used in the Bitcoin network to allow the network to come to a consensus on the history of transactions. An attacker that wants to rewrite history will need to do the required proof of work before it will be accepted. And as long as honest miners have more computing power, they can always outpace an attacker.<br />
<br />
Also see [http://en.wikipedia.org/wiki/Hashcash Hashcash] and [http://en.wikipedia.org/wiki/Proof-of-work_system Proof-of-work system] and [http://en.wikipedia.org/wiki/SHA2 SHA2] and on Wikipedia.<br />
<br />
===Why was the "Generate coin" option of the client software removed?===<br />
<br />
The option wasn't removed, but it is now only accessible via the command-line or the configuration file. The reason for this is that many users were complaining after they turned on and expecting to receive coins. Without specialized mining hardware a user is exceptionally unlikely generate a block on their own at the network's current [[difficulty|security level]].<br />
<br />
==Security==<br />
<br />
===Could miners collude to give themselves money or to fundamentally change the nature of Bitcoin?===<br />
<br />
There are two questions in here. Let's look at them separately.<br />
<br />
;Could miners gang up and give themselves money?<br />
<br />
Mining itself is the process of creating new blocks in the block chain. Each block contains a list of all the transactions that have taken place across the entire Bitcoin network since the last block was created, as well as a hash of the previous block. New blocks are 'mined', or rather, generated, by Bitcoin clients correctly guessing sequences of characters in codes called 'hashes,' which are created using information from previous blocks. Bitcoin users may download specialized 'mining' software, which allows them to dedicate some amount of their processing power – however large or small – to guessing at strings within the hash of the previous block. Whoever makes the right guess first, thus creating a new block, receives a reward in Bitcoins.<br />
<br />
The block chain is one of the two structures that makes Bitcoin secure, the other being the public-key encryption system on which Bitcoin trade is based. The block chain assures that not only is every single transaction that ever takes place recorded, but that every single transaction is recorded on the computer of anyone who chooses to store the relevant information. Many, many users have complete records of every transaction in Bitcoins history readily available to them at any point, and anyone who wants in the information can obtain it with ease. These things make Bitcoin very hard to fool.<br />
<br />
The Bitcoin network takes considerable processing power to run, and since those with the most processing power can make the most guesses, those who put the most power toward to sustaining the network earn the most currency. Each correct guess yields, at present, twenty-five Bitcoins, and as Bitcoins are presently worth something (although the value still fluctuates) every miner who earns any number of Bitcoins makes money. Some miners pull in Bitcoins on their own; and some also join or form pools wherein all who contribute earn a share of the profits. <br />
<br />
Therefore, first answer is a vehement “yes” – not only can miners collude to get more money, Bitcoin is designed to encourage them to do so. Bitcoin pools are communal affairs, and there is nothing dishonest or underhanded about them.<br />
<br />
Of course, the real question is:<br />
<br />
;Can they do so in ways not sanctioned by Bitcoin network? Is there any way to rip off the network and make loads of money dishonestly?<br />
<br />
Bitcoin isn't infallible. It can be cheated, but doing so is extremely difficult. Bitcoin was designed to evade some of the central problems with modern currencies – namely, that their trustworthiness hinges upon that of people who might not have users' best interests in mind. Every currency in the world (other than Bitcoin) is controlled by large institutions who keep track of what's done with it, and who can manipulate its value. And every other currency has value because people trust the institutions that control them.<br />
<br />
Bitcoin doesn't ask that its users trust any institution. Its security is based on the cryptography that is an integral part of its structure, and that is readily available for any and all to see. Instead of one entity keeping track of transactions, the entire network does, so Bitcoins are astoundingly difficult to steal, or double-spend. Bitcoins are created in a regular and predictable fashion, and by many different users, so no one can decide to make a whole lot more and lessen their value. In short, Bitcoin is designed to be inflation-proof, double-spend-proof and completely distributed.<br />
<br />
Nonetheless, there are a few ways that one can acquire Bitcoins dishonestly. Firstly, one can steal private keys. Key theft isn't something that Bitcoin security has been designed to prevent: it's up to users to keep their keys safe. But the cryptography is designed so that it is completely impossible to deduce someone's private key from their public one. As long as you keep your private key to yourself, you don't have much to worry about. Furthermore, one could theoretically create a new block chain, but due to the way in which the block chain is constructed, this would be extremely difficult and require massive amounts of processing power. A full explanation of the difficulties involved can be found in the [[block chain]] article.<br />
<br />
Bitcoin can be ripped off – but doing so would be extremely hard and require considerable expertise and a staggering amount of processing power. And it's only going to get harder with time. Bitcoin isn't impenetrable, but it's close enough to put any real worries in the peripherals.<br />
<br />
;Could miners fundamentally change the nature of Bitcoin?<br />
<br />
Once again, almost certainly not.<br />
<br />
Bitcoin is a distributed network, so any changes implemented to the system must be accepted by all users. Someone trying to change the way Bitcoins are generated would have to convince every user to download and use their software – so the only changes that would go through are those that would be equally benefit all users. <br />
<br />
And thus, it is more or less impossible for anyone to change the function of Bitcoin to their advantage. If users don't like the changes, they won't adopt them, whereas if users do like them, then these will help everyone equally. Of course, one can conceive of a situation where someone manages to get a change pushed through that provides them with an advantage that no one notices, but given that Bitcoin is structurally relatively simple, it is unlikely that any major changes will go through without someone noticing first.<br />
<br />
The fact that such changes are so difficult to make testifies to the fully distributed nature of Bitcoin. Any centrally controlled currency can be modified by its central agency without the consent of its adherents. Bitcoin has no central authority, so it changes only at the behest of the whole community. Bitcoins development represents a kind of collective evolution; the first of its kind among currencies.<br />
<br />
==Help==<br />
===I'd like to learn more. Where can I get help?===<br />
<br />
* Read the [[Introduction|introduction to bitcoin]] <br />
* See the videos, podcasts, and blog posts from the [[Press]]<br />
* Read and post on the [[:Bitcoin Wiki:Community_portal#Bitcoin_Community_Forums|forums]]<br />
* Chat on one of the [[:Bitcoin Wiki:Community_portal#IRC_Chat|Bitcoin IRC]] channels<br />
* Listen to [http://omegataupodcast.net/2011/03/59-bitcoin-a-digital-decentralized-currency/ this podcast], which goes into the details of how bitcoin works<br />
* Ask questions on the [http://bitcoin.stackexchange.com Bitcoin Stack Exchange]<br />
* Use [http://bitcoinx.io BitcoinX.io] to help beginners learn about reputable Bitcoin exchanges and Bitcoin wallets<br />
<br />
==See Also==<br />
<br />
* [[Man page]]<br />
* [[Introduction]]<br />
* [[Prohibited changes]]<br />
<br />
==References==<br />
<references><br />
<references/><br />
{{Reflist|2}}<br />
<br />
[[de:FAQ]]<br />
[[zh-cn:FAQ]]<br />
[[fr:FAQ]]<br />
[[ru:FAQ]]<br />
<br />
[[Category:Technical]]<br />
[[Category:Vocabulary]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Help:FAQ&diff=65502Help:FAQ2018-06-25T14:59:46Z<p>RunCPA: </p>
<hr />
<div>Here you will find answers to the most commonly asked questions.<br />
<br />
== General ==<br />
=== What is Bitcoin? ===<br />
Bitcoin is a distributed peer-to-peer digital currency that can be transferred instantly and securely between any two people in the world. It's like electronic cash that you can use to pay friends or merchants.<br />
<br />
=== What are bitcoins? ===<br />
Bitcoins are the unit of currency of the Bitcoin system. A commonly used shorthand for this is “BTC” to refer to a price or amount (e.g. “100 BTC”).<br />
There are such things as [[physical bitcoins]], but ultimately, a bitcoin is just a number associated with a [[Address|Bitcoin Address]]. A physical bitcoin is simply an object, such as a coin, with the number carefully embedded inside. See also an [[Introduction|easy intro]] to Bitcoin.<br />
<br />
=== How can I get bitcoins? ===<br />
<br />
There are a variety of ways to acquire bitcoins:<br />
* Accept bitcoins as payment for goods or services.<br />
* You can buy bitcoins from [https://www.bitit.gift/ Bitit] [https://www.coinbase.com/buy-bitcoin Coinbase], [https://paybis.com/ PayBis], [http://cubits.com/ Cubits], [https://www.coincorner.com CoinCorner], [[File:BIPS.gif|20px|link=https://bipsmarket.com]] [https://bipsmarket.com BIPS Market], [https://circle.com Circle], or [http://gocelery.com/ Celery].<br />
* The most common way to buy bitcoins are the [[Buying bitcoins|Bitcoin Exchanges]]<br />
* There are several services where you can [[Buying_Bitcoins_(the_noob_version)|trade them]] for traditional currency.<br />
* You can also buy bitcoins using [http://nationalbitcoinatm.com Bitcoin ATMs] that are locally in your area.<br />
* Find someone to trade cash for bitcoins in-person through a [https://en.bitcoin.it/wiki/Category:Directories local directory].<br />
* Participate in a [[Pooled mining|mining pool]].<br />
* If you have a lot of [https://cryptocomes.com/cryptocurrency-cloud-mining-vs-hardware-mining-which-is-more-profitable mining hardware], you can solo mine and attempt to create a new [[block]] (currently yields 12.5 bitcoins plus transaction fees).<br />
* Visit sites that provide [[Trade#Free_Samples_and_Offers|free samples and offers]].<br />
<br />
===Does Bitcoin guarantee an influx of free money?===<br />
<br />
Since Bitcoin is a new technology, what it is and how it works may be initially unclear. Bitcoin is sometimes presented as being one of three things:<br />
<ol style="list-style-type: upper-alpha;"><br />
<li>Some sort of online 'get-rich-quick' scam.</li><br />
<li>A loophole in the market economy, the installation of which guarantees a steady influx of cash.</li><br />
<li>A sure investment that will almost certainly yield a profit.</li><br />
</ol><br />
In fact, none of the above are true. Let's look at them independently.<br />
<br />
;Is Bitcoin a 'get-rich-quick' scheme?<br />
:If you've spent much time on the Internet, you've probably seen ads for many 'get-rich-quick' schemes. These ads usually promise huge profits for a small amounts of easy work. Such schemes are usually pyramid/matrix-style schemes that make money from their own employees and offer nothing of any real value. Most convince one to buy packages that will make them earn hundreds a day, which in fact have the buyer distribute more such ads, and make minute profits.<br />
<br />
:Bitcoin is in no way similar to these schemes. Bitcoin doesn't promise windfall profits. There is no way for the developers to make money from your involvement or to take money from you. That bitcoins are nearly impossible to acquire without the owner's consent represents one of its greatest strengths. Bitcoin is an experimental, virtual currency that may succeed or may fail. None of its developers expect to get rich off of it. <br />
<br />
:A more detailed answer to this question can be found [http://bitcointalk.org/?topic=7815.0 here].<br />
<br />
;Will I make money by installing the client?<br />
:Most people who use Bitcoin don't earn anything by doing so, and the default client has no built-in way to earn Bitcoins. A small minority of people with dedicated, high-performance hardware do earn some Bitcoins by "''mining''" (generating new bitcoins, see [[#What is mining?|What is mining?]]) with special software, but joining Bitcoin shouldn't be construed as being the road to riches. Most Bitcoin users get involved because they find the project conceptually interesting and don't earn anything by doing so. This is also why you won't find much speculation about the political or economic repercussions of Bitcoin anywhere on this site: Bitcoin developers owe their dedication to the project's intellectual yieldings more than to those of a monetary nature. Bitcoin is still taking its first baby steps; it may go on to do great things but right now it only has something to offer those chasing conceptually interesting projects or bleeding edge technology.<br />
<br />
;As an investment, is Bitcoin a sure thing?<br />
:Bitcoin is a new and interesting electronic currency, the value of which is not backed by any single government or organization. Like other currencies, it is worth something partly because people are willing to trade it for goods and services. Its exchange rate fluctuates continuously, and sometimes wildly. It lacks wide acceptance and is vulnerable to manipulation by parties with modest funding. Security incidents such as website and account compromise may trigger major sell-offs. Other fluctuations can build into positive feedback loops and cause much larger exchange rate fluctuations. Anyone who puts money into Bitcoin should understand the risk they are taking and consider it a high-risk currency. Later, as Bitcoin becomes better known and more widely accepted, it may stabilize, but for the time being it is unpredictable. Any investment in Bitcoin should be done carefully and with a clear plan to manage the risk.<br />
<br />
=== Can I buy bitcoins with Paypal? ===<br />
<br />
It is possible to buy [[physical bitcoins]] with PayPal but it is otherwise difficult and/or expensive to do so for non-physical bitcoins, because of significant risk to the seller. <br />
<br />
While it is possible to find an individual who wishes to sell Bitcoin to you via Paypal, (perhaps via [http://www.bitcoin-otc.com/ #bitcoin-otc] ) most exchanges do not allow funding through PayPal. This is due to repeated cases where someone pays for bitcoins with Paypal, receives their bitcoins, and then fraudulently complains to Paypal that they never received their purchase. PayPal often sides with the fraudulent buyer in this case, which means any seller needs to cover that risk with higher fees or refuse to accept PayPal altogether.<br />
<br />
Buying Bitcoins from individuals this way is still possible, but requires the seller to have some trust that the buyer will not file a claim with PayPal to reverse the payment.<br />
<br />
Also [https://bitbuy.in/ bitbuy.in] and [https://paybis.com/ PayBis], allows you to buy Bitcoins with PayPal.<br />
<br />
=== Where can I find a forum to discuss Bitcoin? ===<br />
<br />
Please visit the [[Bitcoin Wiki:Community_portal#Bitcoin_Community_Forums_on_various_platforms|Community Portal]] for links to Bitcoin-related forums.<br />
<br />
=== How are new bitcoins created? ===<br />
<br />
New bitcoins are generated by the network through the process of "[[#What is mining?|''mining'']]". In a process that is similar to a continuous raffle draw, mining nodes on the network are awarded bitcoins each time they find the solution to a certain mathematical problem (and thereby create a new [[block]]). Creating a block is a [[proof of work]] with a difficulty that varies with the overall strength of the network. The reward for solving a block is [[Controlled Currency Supply|automatically adjusted]] so that, ideally, every four years of operation of the Bitcoin network, half the amount of bitcoins created in the prior 4 years are created. A maximum of {{formatnum:10499889.80231183}} bitcoins were created in the first 4 (approx.) years from January 2009 to November 2012. Every four years thereafter this amount halves, so it should be {{formatnum:5250000}} over years 4-8, {{formatnum:2625000}} over years 8-12, and so on. Thus the total number of bitcoins in existence can never exceed {{formatnum:20999839.77085749}} and counting. See [[Controlled Currency Supply]].<br />
<br />
Blocks are [[Mining|mined]] every 10 minutes, on average and for the first four years ({{formatnum:210000}} blocks) each block included 50 new bitcoins. As the amount of processing power directed at mining changes, the difficulty of creating new bitcoins changes. This difficulty factor is calculated every 2016 blocks and is based upon the time taken to generate the previous 2016 blocks. See [[Mining]].<br />
<br />
=== What's the current total number of bitcoins in existence? ===<br />
<br />
[http://blockexplorer.com/q/totalbc Current count]. Also see [https://blockchain.info/charts/total-bitcoins Total bitcoins in circulation chart]<br />
<br />
The number of blocks times the coin value of a block is the number of coins in existence. The coin value of a block is 50 BTC for each of the first {{formatnum:210000}} blocks, 25 BTC for the next {{formatnum:210000}} blocks, then 12.5 BTC, 6.25 BTC and so on.<br />
<br />
=== How divisible are bitcoins? ===<br />
<br />
A bitcoin can be divided down to 8 decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction. If necessary, the protocol and related software can be modified to handle even smaller amounts.<br />
<br />
=== What do I call the various denominations of bitcoin? ===<br />
<br />
Unlike most currencies, Bitcoin amounts are highly divisible. This has led to a desire to create names for smaller denominations of bitcoin amounts, especially since transactions involving whole bitcoins are no longer quite so common. Bitcoin is decentralized, so there is no organization that can set official names for units. Therefore, there are many different units with varying degrees of popularity. As of 2014, the most common units are bitcoins, bits, and satoshi: 1 bitcoin = 1 000 000.00 bits = 100 000 000 satoshi.<br />
<br />
The '''bitcoin''' (abbreviated '''BTC''' or '''XBT''') is the unit that was used in the original Bitcoin wallet software created by [[Satoshi Nakamoto]]. There is nothing particularly special about this unit, but it is by far the most common unit due to tradition.<br />
<br />
The smallest value that the Bitcoin network supports sending is the '''[[satoshi (unit)|satoshi]]''' (sometimes abbreviated '''sat'''), one hundred-millionth (0.000 000 01) of a bitcoin. In other words, the network does not support sending fractions of a satoshi. Since it is a hard limit, it seems natural to use it as a unit, though it currently has very little value. The unit was named in honor of Bitcoin's creator after he left -- he was not so vain as to name a unit after himself. The plural of satoshi is satoshi: "Send me 100 satoshi".<br />
<br />
Another common unit is the '''[[bit (unit)|bit]]''', one millionth (0.000 001) of a bitcoin. This unit is the same as a microbitcoin (μBTC). Bits are seen by some as especially logical because they have two-decimal precision like most fiat currencies. You can send 1.23 bits, but not 1.234 bits due to the network's limited precision.<br />
<br />
It is also fairly common to use SI prefixes:<br />
<br />
* 0.01 BTC = 1 cBTC = 1 centibitcoin (also referred to as bitcent)<br />
* 0.001 BTC = 1 mBTC = 1 millibitcoin (also referred to as mbit (pronounced em-bit) or millibit or even bitmill)<br />
* 0.000 001 BTC = 1 μBTC = 1 microbitcoin (also referred to as ubit (pronounced yu-bit) or microbit)<br />
<br />
For an overview of all proposed units of Bitcoin (including less common and niche units), see [[Units]].<br />
<br />
Further discussion on this topic can be found on the forums here:<br />
<br />
* [https://bitcointalk.org/index.php?topic=14438.msg195287#msg195287 We need names]<br />
* [https://bitcointalk.org/index.php?topic=8282.0 What to call 0.001 BTC]<br />
<br />
=== How does the halving work when the number gets really small? ===<br />
<br />
Eventually the reward will go from 0.00000001 BTC to zero and no more bitcoins will be created. <br />
<br />
The block reward calculation is done as a right bitwise shift of a 64-bit signed integer, which means it is divided by two and rounded down. The integer is equal to the value in BTC * 100,000,000 since internally in the reference client software, all Bitcoin balances and values are stored as unsigned integers.<br />
<br />
With an initial block reward of 50 BTC, it will take many 4-year periods for the block reward to reach zero.<br />
<br />
=== How long will it take to generate all the coins? ===<br />
<br />
The last block that will generate coins will be block #6,929,999 which should be generated at or near the year 2140. The total number of coins in circulation will then remain static at 20,999,999.9769 BTC.<br />
<br />
Even if the allowed precision is expanded from the current 8 decimals, the total BTC in circulation will always be slightly below 21 million (assuming everything else stays the same). For example, with 16 decimals of precision, the end total would be 20,999,999.999999999496 BTC.<br />
<br />
=== If no more coins are going to be generated, will more blocks be created? ===<br />
<br />
Absolutely! Even before the creation of coins ends, the use of [[transaction fee|transaction fees]] will likely make creating new blocks more valuable from the fees than the new coins being created. When coin generation ends, these fees will sustain the ability to use bitcoins and the Bitcoin network. There is no practical limit on the number of blocks that will be mined in the future.<br />
<br />
=== But if no more coins are generated, what happens when Bitcoins are lost? Won't that be a problem? ===<br />
<br />
Because of the law of supply and demand, when fewer bitcoins are available the ones that are left will be in higher demand, and therefore will have a higher value. So, as Bitcoins are lost, the remaining bitcoins will eventually increase in value to compensate. As the value of a bitcoin increases, the number of bitcoins required to purchase an item '''de'''creases. This is a [[Deflationary spiral|deflationary economic model]]. As the average transaction size reduces, transactions will probably be denominated in sub-units of a bitcoin such as millibitcoins ("Millies") or microbitcoins ("Mikes").<br />
<br />
The Bitcoin protocol uses a base unit of one hundred-millionth of a Bitcoin ("a Satoshi"), but unused bits are available in the protocol fields that could be used to denote even smaller subdivisions.<br />
<br />
=== If every transaction is broadcast via the network, does Bitcoin scale? ===<br />
<br />
The blockchain base layer is not very scalable but layer-2 technologies can be used to greatly increase bitcoin's scale. [[Lightning Network]] is one example which uses [[Contracts|smart contracts]] to build a network where payments are routed along a path instead of flooded to every peer. These payments can be nearly as secure and irreversible as blockchain transactions but have much better scalability (as well support instant payments which are much more private). Other possible layer-2 scalability technologies are sidechains or a bitcoin ecash chaumian bank.<br />
<br />
See also:<br />
* [https://www.reddit.com/r/Bitcoin/comments/438hx0/a_trip_to_the_moon_requires_a_rocket_with/ A trip to the moon requires a rocket with multiple stages]<br />
* [https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-December/011865.html Capacity increases for the Bitcoin system]<br />
* [[Scalability]].<br />
<br />
==Economy==<br />
=== Where does the value of Bitcoin stem from? What backs up Bitcoin? ===<br />
Bitcoins have value because they are useful and because they are [[Controlled Currency Supply|scarce]]. As they are accepted by more merchants, their value will [http://en.wikipedia.org/wiki/Sticky_%28economics%29 stabilize]. See the [[Trade|list of Bitcoin-accepting sites]].<br />
<br />
When we say that a currency is backed up by gold, we mean that there's a promise in place that you can exchange the currency for gold. Bitcoins, like dollars and euros, are not backed up by anything except the variety of merchants that accept them.<br />
<br />
It's a common misconception that Bitcoins gain their value from the cost of electricity required to generate them. Cost doesn't equal value – hiring 1,000 men to shovel a big hole in the ground may be costly, but not valuable. Also, even though scarcity is a critical requirement for a useful currency, it alone doesn't make anything valuable. For example, your fingerprints are scarce, but that doesn't mean they have any exchange value.<br />
<br />
Alternatively it needs to be added that while the law of supply and demand applies it does not guarantee value of Bitcoins in the future. If confidence in Bitcoins is lost then it will not matter that the supply can no longer be increased, the demand will fall off with all holders trying to get rid of their coins. An example of this can be seen in cases of state currencies, in cases when the state in question dissolves and so no new supply of the currency is available (the central authority managing the supply is gone), however the demand for the currency falls sharply because confidence in its purchasing power disappears. Of-course Bitcoins do not have such central authority managing the supply of the coins, but it does not prevent confidence from eroding due to other situations that are not necessarily predictable.<br />
<br />
=== Is Bitcoin a bubble? ===<br />
Yes, in the same way as the euro and dollar are. They only have value in exchange and have no inherent value. If everyone suddenly stopped accepting your dollars, euros or bitcoins, the "bubble" would burst and their value would drop to zero. But that is unlikely to happen: even in Somalia, where the government collapsed 20 years ago, [http://en.wikipedia.org/wiki/Somali_shilling Somali shillings] are still accepted as payment.<br />
<br />
=== Is Bitcoin a Ponzi scheme? ===<br />
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.<br />
<br />
A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.<br />
<br />
The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.<br />
<br />
=== Doesn't Bitcoin unfairly benefit early adopters? ===<br />
Early adopters in Bitcoin are taking a risk and invested resources in an unproven technology. By so doing, they help Bitcoin become what it is now and what it will be in the future (hopefully, a ubiquitous decentralized digital currency). It is only fair they will reap the benefits of their successful investment.<br />
<br />
In any case, any bitcoin generated will probably change hands dozens of time as a medium of exchange, so the profit made from the initial distribution will be insignificant compared to the total commerce enabled by Bitcoin. Many of the earliest users of Bitcoin have traded their coins at valuations below $1 US, or other amounts which are small compared to contemporary prices.<br />
<br />
===Won't loss of wallets and the finite amount of Bitcoins create excessive deflation, destroying Bitcoin? ===<br />
Worries about Bitcoin being destroyed by deflation are not entirely unfounded. Unlike most currencies, which experience inflation as their founding institutions create more and more units, Bitcoin will likely experience gradual deflation with the passage of time. Bitcoin is unique in that only a small amount of units will ever be produced (twenty-one million to be exact), this number has been known since the project's inception, and the units are created at a predictable rate.<br />
<br />
Also, Bitcoin users are faced with a danger that doesn't threaten users of any other currency: if a Bitcoin user loses his wallet, his money is gone forever, unless he finds it again. And not just to him; it's gone completely out of circulation, rendered utterly inaccessible to anyone. As people will lose their wallets, the total number of Bitcoins will slowly decrease.<br />
<br />
Therefore, Bitcoin seems to be faced with a unique problem. Whereas most currencies inflate over time, Bitcoin will mostly likely do just the opposite. Time will see the irretrievable loss of an ever-increasing number of Bitcoins. An already small number will be permanently whittled down further and further. And as there become fewer and fewer Bitcoins, the laws of supply and demand suggest that their value will probably continually rise.<br />
<br />
Thus Bitcoin is bound to once again stray into mysterious territory, because no one exactly knows what happens to a currency that grows continually more valuable. Many economists claim that a low level of [http://cryptodetail.com/how-does-cryptocurrency-market-prices-value-increase inflation] is a good thing for a currency, but nobody is quite sure about what might happens to one that continually deflates. Although deflation could hardly be called a rare phenomenon, steady, constant deflation is unheard of. There may be a lot of speculation, but no one has any hard data to back up their claims.<br />
<br />
That being said, there is a mechanism in place to combat the obvious consequences. Extreme deflation would render most currencies highly impractical: if a single Canadian dollar could suddenly buy the holder a car, how would one go about buying bread or candy? Even pennies would fetch more than a person could carry. Bitcoin, however, offers a simple and stylish solution: infinite divisibility. Bitcoins can be divided up and trade into as small of pieces as one wants, so no matter how valuable Bitcoins become, one can trade them in practical quantities. <br />
<br />
In fact, infinite divisibility should allow Bitcoins to function in cases of extreme wallet loss. Even if, in the far future, so many people have lost their wallets that only a single Bitcoin, or a fraction of one, remains, Bitcoin should continue to function just fine. No one can claim to be sure what is going to happen, but deflation may prove to present a smaller threat than many expect.<br />
<br />
For more information, see the [[Deflationary spiral]] page.<br />
<br />
=== What if someone bought up all the existing Bitcoins? ===<br />
Bitcoin markets are competitive -- meaning the price of a bitcoin will rise or fall depending on supply and demand at certain price levels. Only a fraction of bitcoins issued to date are found on the exchange markets for sale. So even though technically, a buyer with lots of money could buy all the bitcoins offered for sale, unless those holding the rest of the bitcoins offer them for sale as well, even the wealthiest, most determined buyer can't get at them.<br />
<br />
Additionally, new currency continues to be issued daily and will continue to do so for decades; though over time the rate at which they are issued declines to insignificant levels. Those who are mining aren't obligated to sell their bitcoins so not all bitcoins will make it to the markets even.<br />
<br />
This situation doesn't suggest, however, that the markets aren't vulnerable to price manipulation. It doesn't take significant amounts of money to move the market price up or down, and thus Bitcoin remains a volatile asset.<br />
<br />
===What if someone creates a new block chain, or a new digital currency that renders Bitcoin obsolete?===<br />
<br />
That the block chain cannot be easily forked represents one of the central security mechanisms of Bitcoin. Given the choice between two block chains, a Bitcoin miner always chooses the longer one - that is to say, the one with the more complex hash. Thusly, it ensures that each user can only spend their bitcoins once, and that no user gets ripped off.<br />
<br />
As a consequence of the block chain structure, there may at any time be many different sub-branches, and the possibility always exists of a transaction being over-written by the longest branch, if it has been recorded in a shorter one. The older a transaction is though, the lower its chances of being over-written, and the higher of becoming permanent. Although the block chain prevents one from spending more Bitcoins than one has, it means that transactions can be accidentally nullified. <br />
<br />
A new block chain would leave the network vulnerable to [[double-spending|double-spend]] attacks. However, the creation of a viable new chain presents considerable difficulty, and the possibility does not present much of a risk.<br />
<br />
Bitcoin will always choose the longer Block Chain and determines the relative length of two branches by the complexities of their hashes. Since the hash of each new block is made from that of the block preceding it, to create a block with a more complex hash, one must be prepared to do more computation than has been done by the entire Bitcoin network from the fork point up to the newest of the blocks one is trying to supersede. Needless to say, such an undertaking would require a very large amount of processing power and since Bitcoin is continually growing and expanding, it will likely only require more with the passage of time.<br />
<br />
A much more distinct and real threat to the Bitcoin use is the development of other, superior virtual currencies, which could supplant Bitcoin and render it obsolete and valueless.<br />
<br />
A great deal of careful thought and ingenuity has gone into the development of Bitcoin, but it is the first of its breed, a prototype, and vulnerable to more highly-evolved competitors. At present, any threatening rivals have yet to rear their heads; Bitcoin remains the first and foremost private virtual currency, but we can offer no guarantees that it will retain that position. It would certainly be in keeping with internet history for a similar system built from the same principles to supersede and cast Bitcoin into obsolescence, after time had revealed its major shortcomings. Friendster and Myspace suffered similar fates at the hand of Facebook, Napster was ousted by Limeware, Bearshare and torrent applications, and Skype has all but crushed the last few disciples of the Microsoft Messenger army. <br />
<br />
This may sound rather foreboding, so bear in mind that the introduction of new and possibly better virtual currencies will not necessarily herald Bitcoin's demise. If Bitcoin establishes itself sufficiently firmly before the inception of the next generation of private, online currencies so as to gain widespread acceptance and general stability, future currencies may pose little threat even if they can claim superior design. This is known as the network effect.<br />
<br />
=== Is Bitcoin open to value manipulation? ===<br />
<br />
The current low market cap of Bitcoin means that any investor with deep enough pockets can significantly change/manipulate the rate. Is this a problem?<br />
<br />
This is only a problem if you are investing in Bitcoin for short period of time. A manipulator can't change the fundamentals, and over a period of 5-10 years, the fundamentals will win over any short term manipulations.<br />
<br />
==Sending and Receiving Payments==<br />
<br />
=== Why do I have to wait 10 minutes before I can spend money I received? ===<br />
<br />
10 minutes is the average time taken to find a block. It can be significantly more or less time than that depending on luck; 10 minutes is simply the average case. <br />
<br />
[[Blocks]] (shown as "[[Confirmation|confirmations]]" in the GUI) are how the Bitcoin achieves consensus on who owns what. Once a block is found everyone agrees that you now own those coins, so you can spend them again. Until then it's possible that some network nodes believe otherwise, if somebody is attempting to defraud the system by reversing a transaction. The more confirmations a transaction has, the less risk there is of a reversal. Only 6 blocks or 1 hour is enough to make reversal computationally impractical. This is dramatically better than credit cards which can see chargebacks occur up to three months after the original transaction!<br />
<br />
Ten minutes was specifically chosen by [[Satoshi]] as a tradeoff between first confirmation time and the amount of work wasted due to chain splits. After a block is mined, it takes time for other miners to find out about it, and until then they are actually competing against the new block instead of adding to it. If someone mines another new block based on the old block chain, the network can only accept one of the two, and all the work that went into the other block gets wasted. For example, if it takes miners 1 minute on average to learn about new blocks, and new blocks come every 10 minutes, then the overall network is wasting about 10% of its work. Lengthening the time between blocks reduces this waste.<br />
<br />
As a thought experiment, what if the Bitcoin network grew to include Mars? From the farthest points in their orbits, it takes about 20 minutes for a signal to travel from Earth to Mars. With only 10 minutes between new blocks, miners on Mars would always be 2 blocks behind the miners on Earth. It would be almost impossible for them to contribute to the block chain. If we wanted collaborate with those kinds of delays, we would need at least a few hours between new blocks. <br />
<br />
[[File:TransactionConfirmationTimesExample.PNG]]<br />
<br />
=== Do you have to wait until my transactions are confirmed in order to buy or sell things with Bitcoin? ===<br />
<br />
YES, you do, IF the transaction is non-recourse. The Bitcoin reference software does not display transactions as confirmed until six blocks have passed (confirmations). As transactions are buried in the chain they become increasingly non-reversible but are very reversible before the first confirmation. Two to six confirmations are recommended for non-recourse situations depending on the value of the transactions involved.<br />
<br />
When people ask this question they are usually thinking about applications like supermarkets. This generally is a recourse situation: if somebody tries to double-spend on a face-to-face transaction it might work a few times, but probabalistically speaking eventually one of the double-spends will get noticed, and the penalty for shoplifting charges in most localities is calibrated to be several times worse than the proceeds of a single shoplifting event.<br />
<br />
Double-spends might be a concern for something like a snack machine in a low-traffic area with no nearby security cameras. Such a machine shouldn't honor zero-confirmation payments, and should instead use some other mechanism of clearing Bitcoin or validating transactions against reversal, see the wiki article [[Myths#Point_of_sale_with_bitcoins_isn.27t_possible_because_of_the_10_minute_wait_for_confirmation|here]] for alternatives.<br />
<br />
Applications that require immediate payment processing, like supermarkets or snack machines, need to manage the risks. Here is one way to reverse an unconfirmed payment:<br />
<br />
A [[Double-spending#Finney_attack|Finney attack]] is where an attacker mines a block containing a movement of some coins back to themselves. Once they find a block solution, they quickly go to a merchant and make a purchase, then broadcast the block, thus taking back the coins. This attack is a risk primarily for goods that are dispatched immediately, like song downloads or currency trades. Because the attacker can't choose the time of the attack, it isn't a risk for merchants such as supermarkets where you can't choose exactly when to pay (due to queues, etc). The attack can fail if somebody else finds a block containing the purchasing transaction before you release your own block, therefore, merchants can reduce but not eliminate the risk by making purchasers wait some length of time that's less than a confirm.<br />
<br />
Because pulling off this attack is not trivial, merchants who need to sell things automatically and instantly are most likely to adjust the price to include the cost of reversal fraud, or elect to use special insurance.<br />
<br />
=== I was sent some bitcoins and they haven't arrived yet! Where are they? ===<br />
<br />
Don't panic! There are a number of reasons why your bitcoins might not show up yet, and a number of ways to diagnose them. <br />
<br />
The latest version of the Bitcoin-Qt client tells you how far it has yet to go in downloading the blockchain. Hover over the icon in the bottom right corner of the client to learn your client's status.<br />
<br />
If it has not caught up then it's possible that your transaction hasn't been included in a block yet. <br />
<br />
You can check pending transactions in the network by going [https://www.biteasy.com here] or [http://blockchain.info here] and then searching for your address. If the transaction is listed here then it's a matter of waiting until it gets included in a block before it will show in your client. <br />
<br />
If the transaction is based on a coin that was in a recent transaction then it could be considered a low priority transaction. Transfers can take longer if the transaction fee paid was not high enough. If there is no fee at all the transfer can get a very low priority and take hours or even days to be included in a block.<br />
<br />
<br />
=== I sent too small of a transaction fee, is my bitcoin lost forever? ===<br />
<br />
<br />
If the transaction never gets confirmed into a block - the mempool expiry of all nodes will drop it eventually and you will be able to spend your funds again - [https://hackernoon.com/holy-cow-i-sent-a-bitcoin-transaction-with-too-low-fees-are-my-coins-lost-forever-7a865e2e45ba typically] it takes about 3 days or so for this to happen. If using an [[https://en.bitcoin.it/w/index.php?title=Scalability#Simplified_payment_verification SPV]] wallet such as [[ Electrum]] or [[Multibit]], if after three days the wallet does not see the coin to spend, you need to reindex your wallet's block headers. After reindexing, your wallet will see that the coin was never confirmed and thus the balance will be spendable again. <br />
<br />
'''NOTE''': From Bitcoin 0.14 “transaction reappearance” happens after 2 [https://www.reddit.com/r/Bitcoin/comments/69jywp/a_practical_guide_to_accidental_low_fee/dhjfthf/ weeks].<br />
<br />
=== Why does my Bitcoin address keep changing? ===<br />
{{seealso|Address reuse}}<br />
Unlike postal and email addresses, Bitcoin addresses are designed to be used exactly once only, for a single transaction.<br />
Originally, wallets would display only a single address at a time, and change it when a transaction was received, but an increasing number of wallet implementations now generate an address when you explicitly want to receive a payment.<br />
<br />
While it is technically possible to use an address for an arbitrary number of payments, this works by accident and harms both yourself ''and other unrelated third parties'', so it is considered a bad practice.<br />
The most important concerns with such misuse involve loss of privacy and security:<br />
both can be put into jeopardy when addresses are used for more than a single transaction only.<br />
<br />
===How much will the transaction fee be? / Why is the fee so high?===<br />
<br />
Bitcoin transactions almost always require a [[transaction fee]] for them to get confirmed. The transaction fee is received by the first bitcoin miner who mines a [[block]] containing the transaction; this action is also what gives the transaction its first confirmation. The appropriate fee varies depending on how large (in bytes) your transaction is, how fast you want the transaction to be confirmed, and also on current network conditions. As such, paying a fixed fee, or even a fixed fee per kB, is a very bad idea; all good Bitcoin wallets will use several pieces of data to estimate an appropriate fee for you, though some are better at fee estimation than others.<br />
<br />
The fee most strongly depends on the transaction's data size. Fees do '''not''' depend on the BTC amount of the transaction -- it's entirely possible for a 0.01 BTC transaction to require a higher fee than a 1000 BTC transaction.<br />
<br />
Basic intro to how Bitcoin [[transactions]] work: If you receive BTC in three separate transactions of (say) 1, 5, and 10 BTC, then you can think of your wallet as containing three gold coins with sizes 1, 5, and 10 BTC. If you then want to send 6 BTC, you can melt the 1 & 5 BTC coins together and recast them as a 6 BTC coin, or melt the 10 BTC coin and recast a 6 BTC coin for the recipient and a 4 BTC coin as change for yourself. In Bitcoin's technical vocabulary, these objects are literally called input and output coins. (In the rest of this section, when we say "coin" we mean these objects, not the amount of BTC value.)<br />
<br />
Transaction data sizes, and therefore fees, are proportional to the '''number''' (not value) of input and output coins in a transaction. Input coins are about 5x larger / more expensive than output coins.<br />
<br />
If your wallet estimates a very high fee, it is most likely because your wallet is full of a whole bunch of tiny coins, so your transaction will need to take very many coins as inputs, increasing the cost. On the bright side, fees will go down once you make a few transactions, since you will end up "melting down" these many small coins into a few larger ones. Sometimes you can significantly reduce the fee by sending less BTC: if you have like 1000 tiny faucet payments totaling 0.5 BTC and then 16.5 BTC from other sources, then you'll find that sending ~16.5 BTC will be massively cheaper than sending a slightly higher value since it avoids including all of those faucet coins.<br />
<br />
Fees also fluctuate depending on network conditions. All unconfirmed transactions compete with each other to be picked up by miners. If there are a lot of high-fee transactions being sent right now, then you will need to pay higher fees to out-bid them. On the other hand, if speed is less important to you, you can pay a somewhat smaller fee, and your transaction will float around until there is a period of reduced network usage. Sometimes even transactions with zero fee will be confirmed after a very long period of time, though this requires a perfect set of conditions, beyond what is explained here (ie. it probably won't work if you try it).<br />
<br />
Oftentimes wallets will have an "express" fee configuration, but note that confirmation times are naturally random and unreliable. At any given point in time, the probability that ''no'' transactions will be confirmed in the next hour is about 0.25% (ie. it happens more than once per week on average). Bitcoin users should avoid getting into situations where their transactions ''absolutely must'' get 1 confirmation in the next couple of hours, even if high-fee transactions usually take less than 10 minutes to get 1 confirmation.<br />
<br />
=== What happens when someone sends me a bitcoin but my computer is powered off? ===<br />
<br />
Bitcoins are not actually "sent" to your wallet; the software only uses that term so that we can use the currency without having to learn new concepts. Your wallet is only needed when you wish to spend coins that you've received.<br />
<br />
If you are sent coins when your wallet client program is not running, and you later launch the wallet client program, the coins will eventually appear as if they were just received in the wallet. That is to say, when the client program is started it must download blocks and catch up with any transactions it did not already know about.<br />
<br />
=== How long does "synchronizing" take when the Bitcoin client is first installed? What's it doing? ===<br />
<br />
The popular Bitcoin client software from bitcoin.org implements a "full" Bitcoin node: It can carry out all the duties of the Bitcoin P2P system, it isn't simply a "client". One of the principles behind the operation of full Bitcoin nodes is that they don't assume that the other participants have followed the rules of the Bitcoin system. During synchronization, the software is processing historical Bitcoin transactions and making sure for itself that all of the rules of the system have been correctly followed.<br />
<br />
In normal operation, after synchronizing, the software should use a hardly noticeable amount of your computer's resources.<br />
<br />
When the wallet client program is first installed, its initial validation requires a lot of work from your computer's hard disk, so the amount of time to synchronize depends on your disk speed and, to a lesser extent, your CPU speed. It can take anywhere from a few hours to a day or so. On a slow computer it could take more than 40 hours of continuous synchronization, so check your computer's power-saving settings to ensure that it does not turn its hard disk off when unattended for a few hours. You can use the Bitcoin software during synchronization, but you may not see recent payments to you until the client program has caught up to the point where those transactions happened.<br />
<br />
If you feel that this process takes too long, you can download a pre-synchronized blockchain from [http://eu2.bitcoincharts.com/blockchain/ http://eu2.bitcoincharts.com/blockchain/]. Alternatively, you can try an alternative "lite" client such as Multibit or a super-light client like electrum, though these clients have somewhat weaker security, are less mature, and don't contribute to the health of the P2P network.<br />
<br />
==Networking==<br />
=== Do I need to configure my firewall to run Bitcoin? ===<br />
<br />
Bitcoin will connect to other nodes, usually on TCP port 8333. You will need to allow outgoing TCP connections to port 8333 if you want to allow your Bitcoin client to connect to many nodes. [[Testnet]] uses TCP port 18333 instead of 8333.<br />
<br />
If you want to restrict your firewall rules to a few IPs, you can find stable nodes in the [[Fallback Nodes|fallback nodes list]].<br />
<br />
=== How does the peer finding mechanism work? ===<br />
<br />
Bitcoin finds peers primarily by forwarding peer announcements within its own network and each node saves a database of peers that it's aware of, for future use. In order to bootstrap this process Bitcoin needs a list of initial peers, these can be provided manually but normally it obtains them by querying a set of DNS domain names which have automatically updated lists, if that doesn't work it falls back to a built-in list which is updated from time to time in new versions of the software. In the reference software initial peers can also be specified manually by adding an addr.txt to the data directory or via the addnode parameter.<br />
<br />
==Mining==<br />
===What is mining?===<br />
[[Mining]] is the process of spending computation power to secure Bitcoin transactions against reversal and introducing new Bitcoins to the system<ref>[https://www.bitcoinmining.com Bitcoin Mining]</ref>.<br />
<br />
Technically speaking, mining is the calculation of a [[hash]] of the a block header, which includes among other things a reference to the previous block, a hash of a set of transactions and a [[nonce]]. If the hash value is found to be less than the current [[target]] (which is inversely proportional to the [[difficulty]]), a new block is formed and the miner gets the newly generated Bitcoins (25 per block at current levels). If the hash is not less than the current target, a new nonce is tried, and a new hash is calculated. This is done millions of times per second by each miner.<br />
<br />
===Is mining used for some useful computation?===<br />
The computations done when mining are internal to Bitcoin and not related to any other distributed computing projects. They serve the purpose of securing the Bitcoin network, which is useful.<br />
<br />
===Is it not a waste of energy?===<br />
Spending energy on creating and securing a free monetary system is hardly a waste. Also, services necessary for the operation of currently widespread monetary systems, such as banks and credit card companies, also spend energy, arguably more than Bitcoin would.<br />
<br />
===Why don't we use calculations that are also useful for some other purpose?===<br />
To provide security for the Bitcoin network, the calculations involved need to have some [http://bitcoin.stackexchange.com/questions/5617/why-are-bitcoin-calculation-useless/5618#5618 very specific features]. These features are incompatible with leveraging the computation for other purposes.<br />
<br />
===How can we stop miners from creating zero transaction blocks?===<br />
The incentive for miners to include transactions is in the fees that come along with them. If we were to implement some minimum number of transactions per block it would be trivial for a miner to create and include transactions merely to surpass that threshold. As the network matures, the block reward drops, and miners become more dependent on transactions fees to pay their costs, the problem of zero transaction blocks should diminish over time.<br />
<br />
===How does the proof-of-work system help secure Bitcoin?===<br />
Bitcoin uses the [[Hashcash]] [[proof of work]] with a minor adaption. To give a general idea of the mining process, imagine this setup:<br />
<br />
payload = <some data related to things happening on the Bitcoin network><br />
nonce = 1<br />
hash = [http://en.wikipedia.org/wiki/SHA2 SHA2]( [http://en.wikipedia.org/wiki/SHA2 SHA2]( payload + nonce ) )<br />
<br />
The work performed by a miner consists of repeatedly increasing "nonce" until<br />
the hash function yields a value, that has the rare property of being below a certain<br />
target threshold. (In other words: The hash "starts with a certain number of zeroes",<br />
if you display it in the fixed-length representation, that is typically used.)<br />
<br />
As can be seen, the mining process doesn't compute anything special. It merely<br />
tries to find a number (also referred to as nonce) which - in combination with the payload -<br />
results in a hash with special properties.<br />
<br />
The advantage of using such a mechanism consists of the fact, that it is very easy to check a result: Given the payload and a specific nonce, only a single call of the hashing function is needed to verify that the hash has the required properties. Since there is no known way to find these hashes other than brute force, this can be used as a "[[proof of work]]" that someone invested a lot of computing power to find the correct nonce for this payload.<br />
<br />
This feature is then used in the Bitcoin network to allow the network to come to a consensus on the history of transactions. An attacker that wants to rewrite history will need to do the required proof of work before it will be accepted. And as long as honest miners have more computing power, they can always outpace an attacker.<br />
<br />
Also see [http://en.wikipedia.org/wiki/Hashcash Hashcash] and [http://en.wikipedia.org/wiki/Proof-of-work_system Proof-of-work system] and [http://en.wikipedia.org/wiki/SHA2 SHA2] and on Wikipedia.<br />
<br />
===Why was the "Generate coin" option of the client software removed?===<br />
<br />
The option wasn't removed, but it is now only accessible via the command-line or the configuration file. The reason for this is that many users were complaining after they turned on and expecting to receive coins. Without specialized mining hardware a user is exceptionally unlikely generate a block on their own at the network's current [[difficulty|security level]].<br />
<br />
==Security==<br />
<br />
===Could miners collude to give themselves money or to fundamentally change the nature of Bitcoin?===<br />
<br />
There are two questions in here. Let's look at them separately.<br />
<br />
;Could miners gang up and give themselves money?<br />
<br />
Mining itself is the process of creating new blocks in the block chain. Each block contains a list of all the transactions that have taken place across the entire Bitcoin network since the last block was created, as well as a hash of the previous block. New blocks are 'mined', or rather, generated, by Bitcoin clients correctly guessing sequences of characters in codes called 'hashes,' which are created using information from previous blocks. Bitcoin users may download specialized 'mining' software, which allows them to dedicate some amount of their processing power – however large or small – to guessing at strings within the hash of the previous block. Whoever makes the right guess first, thus creating a new block, receives a reward in Bitcoins.<br />
<br />
The block chain is one of the two structures that makes Bitcoin secure, the other being the public-key encryption system on which Bitcoin trade is based. The block chain assures that not only is every single transaction that ever takes place recorded, but that every single transaction is recorded on the computer of anyone who chooses to store the relevant information. Many, many users have complete records of every transaction in Bitcoins history readily available to them at any point, and anyone who wants in the information can obtain it with ease. These things make Bitcoin very hard to fool.<br />
<br />
The Bitcoin network takes considerable processing power to run, and since those with the most processing power can make the most guesses, those who put the most power toward to sustaining the network earn the most currency. Each correct guess yields, at present, twenty-five Bitcoins, and as Bitcoins are presently worth something (although the value still fluctuates) every miner who earns any number of Bitcoins makes money. Some miners pull in Bitcoins on their own; and some also join or form pools wherein all who contribute earn a share of the profits. <br />
<br />
Therefore, first answer is a vehement “yes” – not only can miners collude to get more money, Bitcoin is designed to encourage them to do so. Bitcoin pools are communal affairs, and there is nothing dishonest or underhanded about them.<br />
<br />
Of course, the real question is:<br />
<br />
;Can they do so in ways not sanctioned by Bitcoin network? Is there any way to rip off the network and make loads of money dishonestly?<br />
<br />
Bitcoin isn't infallible. It can be cheated, but doing so is extremely difficult. Bitcoin was designed to evade some of the central problems with modern currencies – namely, that their trustworthiness hinges upon that of people who might not have users' best interests in mind. Every currency in the world (other than Bitcoin) is controlled by large institutions who keep track of what's done with it, and who can manipulate its value. And every other currency has value because people trust the institutions that control them.<br />
<br />
Bitcoin doesn't ask that its users trust any institution. Its security is based on the cryptography that is an integral part of its structure, and that is readily available for any and all to see. Instead of one entity keeping track of transactions, the entire network does, so Bitcoins are astoundingly difficult to steal, or double-spend. Bitcoins are created in a regular and predictable fashion, and by many different users, so no one can decide to make a whole lot more and lessen their value. In short, Bitcoin is designed to be inflation-proof, double-spend-proof and completely distributed.<br />
<br />
Nonetheless, there are a few ways that one can acquire Bitcoins dishonestly. Firstly, one can steal private keys. Key theft isn't something that Bitcoin security has been designed to prevent: it's up to users to keep their keys safe. But the cryptography is designed so that it is completely impossible to deduce someone's private key from their public one. As long as you keep your private key to yourself, you don't have much to worry about. Furthermore, one could theoretically create a new block chain, but due to the way in which the block chain is constructed, this would be extremely difficult and require massive amounts of processing power. A full explanation of the difficulties involved can be found in the [[block chain]] article.<br />
<br />
Bitcoin can be ripped off – but doing so would be extremely hard and require considerable expertise and a staggering amount of processing power. And it's only going to get harder with time. Bitcoin isn't impenetrable, but it's close enough to put any real worries in the peripherals.<br />
<br />
;Could miners fundamentally change the nature of Bitcoin?<br />
<br />
Once again, almost certainly not.<br />
<br />
Bitcoin is a distributed network, so any changes implemented to the system must be accepted by all users. Someone trying to change the way Bitcoins are generated would have to convince every user to download and use their software – so the only changes that would go through are those that would be equally benefit all users. <br />
<br />
And thus, it is more or less impossible for anyone to change the function of Bitcoin to their advantage. If users don't like the changes, they won't adopt them, whereas if users do like them, then these will help everyone equally. Of course, one can conceive of a situation where someone manages to get a change pushed through that provides them with an advantage that no one notices, but given that Bitcoin is structurally relatively simple, it is unlikely that any major changes will go through without someone noticing first.<br />
<br />
The fact that such changes are so difficult to make testifies to the fully distributed nature of Bitcoin. Any centrally controlled currency can be modified by its central agency without the consent of its adherents. Bitcoin has no central authority, so it changes only at the behest of the whole community. Bitcoins development represents a kind of collective evolution; the first of its kind among currencies.<br />
<br />
==Help==<br />
===I'd like to learn more. Where can I get help?===<br />
<br />
* Read the [[Introduction|introduction to bitcoin]] <br />
* See the videos, podcasts, and blog posts from the [[Press]]<br />
* Read and post on the [[:Bitcoin Wiki:Community_portal#Bitcoin_Community_Forums|forums]]<br />
* Chat on one of the [[:Bitcoin Wiki:Community_portal#IRC_Chat|Bitcoin IRC]] channels<br />
* Listen to [http://omegataupodcast.net/2011/03/59-bitcoin-a-digital-decentralized-currency/ this podcast], which goes into the details of how bitcoin works<br />
* Ask questions on the [http://bitcoin.stackexchange.com Bitcoin Stack Exchange]<br />
* Use [http://bitcoinx.io BitcoinX.io] to help beginners learn about reputable Bitcoin exchanges and Bitcoin wallets<br />
<br />
==See Also==<br />
<br />
* [[Man page]]<br />
* [[Introduction]]<br />
* [[Prohibited changes]]<br />
<br />
==References==<br />
<references><br />
<references/><br />
{{Reflist|2}}<br />
<br />
[[de:FAQ]]<br />
[[zh-cn:FAQ]]<br />
[[fr:FAQ]]<br />
[[ru:FAQ]]<br />
<br />
[[Category:Technical]]<br />
[[Category:Vocabulary]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Lightning_Network&diff=65501Lightning Network2018-06-25T14:56:56Z<p>RunCPA: </p>
<hr />
<div>'''Lightning Network''' is a proposed implementation of [[Hashed Timelock Contracts]] (HTLCs) with bi-directional [[payment channels]] which allows payments to be securely routed across multiple peer-to-peer payment channels.<ref name="ln_pdf">[https://lightning.network/lightning-network-paper.pdf Lightning Network paper, v0.5.9.1]<br>Joseph Poon & Thaddeus Dryja<br>''Retrieved 2016-04-10''</ref> This allows the formation of a network where any peer on the network can pay any other peer even if they don't directly have a channel open between each other.<br />
<br />
== Key features == <br />
Key features of the [http://cryptodetail.com/lightning-network-reduces-blockchain-fees Lightning Network] proposal include,<br />
<br />
* '''Rapid payments:''' payments within an established channel can be made almost as fast as data can travel over the Internet between the two peers.<br />
* '''No third-party trust:''' the two peers in a channel pay each other directly using regular Bitcoin transactions (of which only one is broadcast) so at no point does any third party control their funds.<br />
* '''Reduced blockchain load:''' only channel open transactions, channel close transactions, and (hopefully infrequent) anti-fraud respends need to be committed to the blockchain, allowing all other payments within Lightning Network channels to remain uncommitted. This allows Lightning Network users to make frequent payments secured by Bitcoin without placing excessive load on full nodes which must process every transaction on the blockchain.<br />
* '''Channels can stay open indefinitely:''' as long as the two parties in the channel continue to cooperate with each other, the channel can stay open indefinitely -- there is no mandatory timeout period. This can further reduce the load on the blockchain as well as allow the fees for opening and closing the channel to be amortized over a longer period of time.<br />
* '''Rapid cooperative closes:''' if both parties cooperate, a channel can be closed immediately (with the parties likely wanting to wait for one or more confirmations to ensure the channel closed in the correct state). Non-cooperative closes (such as when one party disappears) are also possible but they take longer.<br />
* '''Outsourcable enforcement:''' if one party closes a channel in an old state in an attempt to steal money, the other party has to act within a defined period of time to block the attempted theft. This function can be outsourced to a third-party without giving them control over any funds, allowing wallets to safely go offline for periods longer than the defined period.<br />
* '''Onion-style routing:''' payment routing information can be encrypted in a nested fashion so that intermediary nodes only know who they received a routable payment from and who to send it to next, preventing those intermediary nodes from knowing who the originator or destination is (provided the intermediaries didn't compare records).<br />
* '''Multisignature capable:''' each party can require that their payments into the channel be signed by multiple keys<ref name="poon_multisig">[https://lists.linuxfoundation.org/pipermail/lightning-dev/2016-January/000403.html 2-of-3 Instant Escrow, or How to Do "2-of-3 Multisig Contract" Equivilant on Lightning]<br>Joseph Poon<br>''Retrieved 2016-04-11''</ref>, giving them access to additional security techniques.<br />
* '''Securely cross blockchains:''' payments can be routed across more than one blockchain (including altcoins and sidechains) as long as all the chains support the same hash function to use for the hash lock, as well as the ability the ability to create time locks.<br />
* '''Sub-satoshi payments:''' payments can be made conditional upon the outcome of a random event, allowing probabilistic payments.<ref name="dryja_directed_graph"/> For example, Alice can pay Bob 0.1 satoshi by creating a 1-satoshi payment with 10-to-1 odds so that 90% of the time she does this she pays him 0 satoshis and 10% of the time she pays him 1 satoshi for an average payment of 0.1 satoshis.<br />
* '''Single-funded channels:''' when Alice needs to send a payment to Bob and doesn't currently have a way to pay him through the Lightning Network (whether because she can't reach him or because she doesn't have enough money in an existing channel), she can make a regular on-chain payment that establishes a channel without Bob needing to add any of his funds to the channel. Alice only uses 12 bytes more than she would for a non-Lightning direct payment and Bob would only need about 25 more [[segwit]] virtual bytes to close the channel than he would had he received a non-Lightning direct payment.<ref name="dryja_directed_graph"/><br />
<br />
== Glossary ==<br />
<br />
<br />
This section attempts to document the most frequently used terms found in Lightning Network literature that may not be familiar to a general technical audience, including both the new terms created by Lightning Network designers as well as pre-existing terms that may not be well known from Bitcoin, cryptography, network routing, and other fields.<br />
<br />
The list below should be in alphabetical order. Any commonly-used synonyms or analogs for a term are placed in parenthesis after the term.<br />
<br />
* '''Bi-directional payment channel:'''<ref name="ln_pdf"/> a payment channel where payments can flow both directions, from Alice to Bob and back to Alice. This is contrasted with Spillman-style and CLTV-style payment channels where payments can only go one direction and once Alice has paid Bob all of the bitcoins she deposited in the channel funding transaction, the channel is no longer useful and so will be closed.<br />
* '''Breach Remedy Transaction:'''<ref name="ln_pdf"/> the transaction Alice creates when Mallory attempts to steal her money by having an old version of the channel state committed to the blockchain. Alice's breach remedy transaction spends all the money that Mallory received but which Mallory can't spend yet because his unilateral spend is still locked by a relative locktime using <code>OP_CSV</code>. This is the third of the maximum of three on-chain transactions needed to maintain a Lightning channel; it only needs to be used in the case of attempted fraud (contract breach).<br />
* '''Channel''' (Lightning channel<ref name="ln_pdf"/>, payment channel<ref name="spillman_channel">[https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2013-April/002433.html Anti DoS for tx replacement]<br>Jeremy Spillman<br>Retrieved 2016-04-17</ref>) a communication channel that allows two parties to make many secure payments between each other in exchange for making only a few transactions on the blockchain.<br />
* '''Commitment Transaction:'''<ref name="ln_pdf"/> a transaction created collaboratively by Alice and Bob each time they update the state of the channel; it records their current balances within the channel. The '''Initial Commitment Transaction'''<ref name="ln_pdf"/> is the first of these transactions; it records the inital balances within the channel. This is the second of the maximum of three on-chain transactions needed to maintain a Lightning channel; it can be combined with a ''funding transaction'' for a new channel under the cooperative conditions necessary to create an ''exercise settlement transaction''.<br />
* '''Contract:'''<ref name="szabo_smart_contracts">[http://szabo.best.vwh.net/smart_contracts_idea.html The Idea of Smart Contracts]<br>Nick Szabo<br>Retrieved 2016-04-17</ref> an agreement between two or more entities to use Bitcoin transactions in a certain way, usually a way that allows Bitcoin's automated consensus to enforce some or all terms in the contract. Often called a ''smart contract''.<br />
* '''CSV:''' (<code>OP_CheckSequenceVerify</code>, <code>OP_CSV</code>)<ref name="bip68"/> a opcode that allows an output to conditionally specify how long it must be part of the blockchain before an input spending it may be added to the blockchain. See ''relative locktime.''<br />
* '''Delivery Transaction:'''<ref name="ln_pdf"/> not really a transaction but rather the name for the outputs in the ''commitment transaction'' which Alice and Bob receive if one of them closes the channel unilaterally in the correct (current) state. If the channel is closed in an old state (indicating possible fraud), a ''breach remedy transaction'' will be generated from the output that would have paid the party closing the channel. If the channel is closed cooperatively, they'll create an ''exercise settlement transaction'' instead.<br />
* '''Dispute period:''' (dispute resolution period<ref name="poon_time_bitcoin_ln">[https://lightning.network/lightning-network-presentation-time-2015-07-06.pdf Time, Bitcoin, and the Lightning Network]<br>Joseph Poon<br>Retrieved 2016-04-17</ref>) the period of time that Alice has to get her ''breach remedy transaction'' added to the blockchain after Mallory has an old ''commitment transaction'' added to the blockchain. If the dispute period ends without a breach remedy transaction being added to the blockchain, Mallory can spend the funds he received from the old commitment transaction.<br />
* '''Dual-funded channel:'''<ref name="dryja_directed_graph">[https://docs.google.com/presentation/d/1G4xchDGcO37DJ2lPC_XYyZIUkJc2khnLrCaZXgvDN0U/edit?pref=2&pli=1#slide=id.g85f425098_0_2 LN as a Directed Graph: Single-Funded Channel Topology]<br>Thaddeus Dryja<br>Retrieved 2016-04-17</ref> a channel opened by a ''funding transaction'' containing inputs from both Alice and Bob. Compare to a ''single-funded channel'' where only Alice's inputs contribute to the balance of the channel.<br />
* '''Encumbrance:'''<ref>[http://chimera.labs.oreilly.com/books/1234000001802/ch02.html Mastering Bitcoin, Chapter 2: How Bitcoin Works]<br>Andreas Antonopoulos<br>Retrieved 2016-04-17</ref> a generic name for any conditions that must be satisfied before a bitcoin output may be spent. Early Bitcoin transactions placed all their conditions in the scriptPubKey; later the introduction of P2SH allowed conditions to be added in a redeemScript which the scriptPubKey committed to; the introduction of soft fork [[segwit]] will add a similar mechanism for detached conditions that the scriptPubKey commits to; in addition, there are even more novel ways to add conditions to outputs that are discussed but rarely used. The term &quot;encumbrance&quot; allows specifying what the conditions do without fussing over exactly where the conditions appear in a serialized transaction.<br />
* '''Exercise Settlement Transaction:'''<ref name="ln_pdf"/> a form of the ''commitment transaction'' created cooperatively by Alice and Bob when they want to close their channel together. Unlike a regular commitment transaction, none of the outputs on an exercise settlement transaction are time locked, allowing them to be immediately respent.<br />
* '''Exhausted:'''<ref name="dryja_directed_graph"/> (exhausted channel) a payment channel where no additional payments can be made in one direction (such as from Alice to Bob). The person controlling the exhausted side of a Lightning channel loses nothing from fraudulently trying to commit an old channel state, so allowing a channel to become exhausted (or too near to being exhausted) is unpreferable. (Exception: channels can be securely started in an exhausted state, such as a ''single-funded channel.''<br />
* '''Full push:'''<ref name="dryja_directed_graph"/> when Alice pays the full amount of the channel to Bob in the ''initial commitment transaction'', which ''exhausts'' the channel without incentivizing fraud because Alice doesn't have a previous ''commitment transaction'' that she can broadcast. This term is used in the context of a ''single-funded transaction'' and stands in contrast to an ''overpayment'' where Alice deposits more than she pays Bob in that initial payment so that she can continue to use the channel without needing to ''rebalance''.<br />
* '''Funding Transaction:'''<ref name="ln_pdf"/> (deposit transaction) a transaction created collaboratively by Alice and Bob to open a Lightning channel. In a single-funded channel, Alice provides all the funding;<ref name="dryja_directed_graph"/> in a dual-funded channel, Alice and Bob both provide some funding. This is the first of the maximum of three on-chain transactions needed to maintain a Lightning channel; it can be combined with a commitment transaction from a previous channel being closed under cooperative conditions.<br />
* '''Half-signed:'''<ref name="ln_pdf"/> a transaction input which requires two signatures to be added to the blockchain but which only has one signature attached. (More generally, this could be any input that has fewer signatures attached than it needs to be added to the blockchain.)<br />
* '''Hash lock:'''<ref>[https://www.mail-archive.com/bitcoin-development@lists.sourceforge.net/msg05135.html BIP - Hash Locked Transaction]<br>Tier Nolan<br>Retrieved 2016-04-17</ref> an encumbrance to a transaction output that requires the pre-image used to generate a particular hash be provided in order to spend the output. In Lightning, this is used to allow payments to be routable without needing to trust the intermediaries.<br />
* '''HTLC:''' (Hashed Timelocked Contract<ref name="russell_deployable_lightning">[https://github.com/ElementsProject/lightning/raw/master/doc/deployable-lightning.pdf Reaching the Ground with Lightning]<br>Rusty Russell<br>Retrieved 2016-04-17</ref>) a contract such as that used in a Lightning Channel where both a ''hash lock'' and a ''time lock'' are used, the hash lock being used to allow Alice to route payments to Bob even through a Mallory that neither of them trust, and the time lock being used to prevent Mallory from stealing back any payments he made to Alice within the channel (provided Alice enforces the contract).<br />
* '''Intermediary:'''<ref name="ln_pdf"/> When Bob has one channel open with Alice and another channel open with Charlie, Bob can serve as an intermediary for transferring payments between Alice and Charlie. With Lightning payments being secured with a ''hash lock,'' Bob can't steal the payment from Alice to Charlie when it travels through Bob's node. Lightning payments can securely travel through a theoretically unlimited number of intermediaries.<br />
* '''Limbo channel:'''<ref name="dryja_directed_graph"/> an optional special state for a Lightning channel where it cannot be immediately closed by one or both of the parties unilaterally (it can still be immediately closed cooperatively). This is used in particular for ''PLIPPs.''<br />
* '''Multisig:'''<ref name="bitcoin_0_1_code"/> (multisignature, m-of-n multisig) a transaction output that requires signatures from at least one of a set of two or more different private keys. Used in Lightning to give both Alice and Bob control over their individual funds within a channel by requiring both of them sign ''commitment transactions''.<br />
* '''Node:''' (Lightning node<ref name="ln_pdf"/>) a wallet with one or more open Lightning channels. This should not be confused with a Bitcoin [[full node]] that validates Bitcoin blocks, although a full node's wallet may also be simultaneously used as a Lightning node to the advantage of the Lightning network user.<br />
* '''Overfunding:'''<ref name="dryja_directed_graph"/> in a ''single-funded channel,'' Alice deposits more bitcoins into the channel than she pays Bob in the initial payment, allowing her to make additional payments through the Lightning network. This stands in contrast to a ''full push'' where Alice only deposits enough to pay Bob in the initial payment.<br />
* '''PILPP:''' (Pre-Image Length Probabilistic Payments<ref name="dryja_directed_graph"/>) a specific type of ''probabilistic payment'' within a payment channel where Alice creates string with a random length and Bob guesses the length; if he guesses correctly, Alice has to pay him; if he guesses incorrectly, Alice gets to keep her money.<br />
* '''Pre-image:'''<ref>[https://en.wikipedia.org/wiki/Image_%28mathematics%29#Inverse_image Image (mathematics)]<br>English Wikipedia contributors<br>Retrieved 2016-04-17</ref> (R<ref name="ln_pdf"/>) data input into a hash function, which produces a hash of the pre-image. Inputting the same pre-image into the same hash function will always produce the same hash; Lightning uses this feature to create ''hash locks''.<br />
* '''Probabilistic Payment:'''<ref>[[Nanopayments]]<br>Bitcoin Wiki contributors<br>Retrieved 2016-04-17</ref> a payment where Alice only pays Bob if some event outside of Alice's and Bob's control occurs in Bob's favor. Probabilistic payments are usually proposed for scenarios where payments can't conveniently be made small enough for technical reasons (such as not being able to pay less than 1 satoshi) or economic reasons (such as having to pay a transaction fee for every on-chain payment, making small payments uneconomical). See ''PLIPP'' for a specific type of probabilistic payment possible within a Lightning channel.<br />
* '''R:''' the variable commonly used<ref name="ln_pdf"/> in formulas to represent a ''pre-image''.<br />
* '''Rebalance:'''<ref>[https://blockstream.com/2015/09/01/lightning-network/ The Lightning Network: What Is It and What's Happening?]<br>Rusty Russell<br>Retrieved 2016-04-17</ref> a cooperative process between Alice and Bob when they adjust their balances within the channel. This happens with every payment in a Lightning channel and is only noteworthy because single-directional channels (such as Spillman-style and CLTV-style channels) are unable to rebalance and so must close as soon as Alices has paid Bob all the bitcoins she deposited into the channel. See ''bi-directional payment channels.''<br />
* '''Relative locktime:'''<ref name="bip68"/> the ability to specify when a transaction output may be spent relative to the block that included that transaction output. Enabled by BIP68 and made scriptable by BIP112. Lightning uses relative locktime to ensure ''breach remedy transactions'' may be broadcast within a time period starting from when an old ''commitment transaction'' is added to the blockchain; by making this a relative locktime (instead of an absolute date or block height), Lightning channels don't have a hard deadline for when they need to close and so can stay open indefinitely as long as the participants continue to cooperate.<br />
* '''Revocable Sequence Maturity Contract (RSMC):'''<ref name="ln_pdf"/> a ''contract'' used in Lightning to revoke the previous ''commitment transaction''. This is allowed through mutual consent in Lightning by both parties signing a new commitment transaction and releasing the data necessary to create ''breach remedy transactions'' for the previous commitment transaction. This property allows Lightning to support ''bi-directional payment channels'', recover from failed ''HTLC'' routing attempts without needing to commit to the blockchain, as well as provide advanced features such as ''PILPPs.''<br />
* '''Single-funded channel:'''<ref name="dryja_directed_graph"/> a channel opened by a ''funding transaction'' containing only inputs from Alice. Compare to a ''dual-funded channel'' where Alice and Bob both contribute inputs to the initial balance of the channel.<br />
* '''Timelock:'''<ref>[http://rusty.ozlabs.org/?p=450 Lightning Networks Part I: Revocable Transactions]<br>Rusty Russell<br>2016-04-17</ref> either an encumbrance to a transaction that prevents that transaction from being added to the blockchain before a particular time or block height (as is the case with [[nLockTime]], or an encumbrance that prevents a spend from a transaction output from being added to the blockchain before a particular time or block height (as is the case of OP_CLTV, consensus enforced sequence number relative locktime, and OP_CSV). In Lightning, this is used to prevent malicious intermediaries from holding other users' funds hostages as well as to allow victims of attempted theft to submit breach remedy transactions before the thief can respend the funds he stole.<br />
* '''TTL:''' (Time To Live<ref>[http://lists.linuxfoundation.org/pipermail/lightning-dev/2015-July/000019.html Re: Routing on the Lightning Network?]<br>Rusty Russell<br>Retrieved 2016-04-17</ref>) when Alice pays Bob with a ''hash locked'' in-channel payment that's ultimately intended for Charlie, she specifies how long Bob has to deliver the payment (its time to live) before the payment becomes invalid. When Bob pays Charlie with his own in-channel payment that has the same hash lock, Bob specifies a slightly shorter amount of time that Charlie has to reveal the pre-image that unlocks the hash lock before Bob's payment becomes invalid. This ensures that either Bob receives the data necessary to remove the hash lock from the payment he received from Alice or the payment he made to Charlie is invalidated; Alice gets the same guarantee that either the payment she made to Bob ultimate goes through to Charlie or her payment to Bob is invalidated.<br />
* '''Unilateral:'''<ref name="ln_pdf"/> any action performed by only one of the participants in a channel without requesting or needing permission from the other participant. Lightning allows channels to be closed unilaterally (so Alice can close the channel by herself if Bob becomes unresponsive) and attempted fraud can be penalized unilaterally (so Alice can take any bitcoins Mallory tried to steal when he broadcast an old ''commitment transaction'').<br />
* '''UTXO:'''<ref>[https://bitcoin.org/en/glossary/unspent-transaction-output Unspent Transaction Output (UTXO)]<br>Bitcoin.org Developer Glossary<br>Retrieved 2016-04-17</ref> (Unspent Transaction Output) spendable bitcoins. A transaction output lists a bitcoin amount and the conditions (called an ''encumbrance'') that need to be fulfilled in order to spend those bitcoins. Once those bitcoins have been spent on the blockchain, no other transaction in the same blockchain can spend the same bitcoins, so an Uspent Transaction Output (UTXO) is bitcoins that can be spent.<br />
<br />
== See Also ==<br />
<br />
* [[Payment channels]]<br />
* [[Hashed Timelock Contracts]]<br />
* [[Off-Chain Transactions]]<br />
* [http://dev.lightning.community/resources/index.html Lightning Lab's list of resources]<br />
<br />
== References ==<br />
<references><br />
<ref name="bitcoin_0_1_code">[http://satoshi.nakamotoinstitute.org/code/ Bitcoin 0.1 code]<br>Satoshi Nakamoto<br>Retrieved 2016-04-11</ref><br />
<ref name="bip68">[https://github.com/bitcoin/bips/blob/master/bip-0068.mediawiki BIP68: Relative lock-time using consensus-enforced sequence numbers]<br>Mark Friedenbach, BtcDrak, Nicolas Dorier, and kinoshitajona<br>Retrieved 2016-04-12</ref><br />
<references/><br />
<br />
[[Category:Technical]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Satoshi_Nakamoto&diff=65500Satoshi Nakamoto2018-06-25T14:54:08Z<p>RunCPA: </p>
<hr />
<div>:''For the unit, see [[satoshi (unit)]].''<br />
'''Satoshi Nakamoto''' is the founder of [[Bitcoin]] and initial creator of the [[Original Bitcoin client]]. He has said in a P2P foundation profile<ref name="p2p_f_profile">[http://p2pfoundation.ning.com/profile/SatoshiNakamoto Satoshi Nakamoto profile on P2P Foundation]</ref> that he is from Japan. Beyond that, not much else is known about him and his identity. He has been working on the Bitcoin project since 2007.<ref>[https://bitcointalk.org/index.php?topic=13.msg46#msg46 Re: Questions about Bitcoin]</ref><br />
<br />
His involvement in the Bitcoin project had tapered and by late 2010 it has ended. The most recent messages reportedly indicate that Satoshi is "gone for good"<ref>[http://bitcoinstats.com/irc/bitcoin-dev/logs/2011/04/26#l1303826036.0 Transcript of #bitcoin-dev for 2011/04/26]</ref>.<br />
<br />
==Possible Motives==<br />
He left some clues about why he is doing this project with the inclusion of the following text in the [[Genesis block]], "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks".<br />
<br />
Some interesting quotes:<br />
<blockquote><p>Yes, [we will not find a solution to political problems in cryptography,] but we can win a major battle in the arms race and gain a new territory of <br />
freedom for several years.</p><br />
<br />
<p>Governments are good at cutting off the heads of a centrally controlled <br />
networks like Napster, but pure P2P networks like Gnutella and Tor seem to be <br />
holding their own.<ref>[http://www.mail-archive.com/cryptography@metzdowd.com/msg09971.html Re: Bitcoin P2P e-cash paper Fri, 07 Nov 2008 09:30:36 -0800]</ref></p></blockquote><br />
<br />
<blockquote>It's very attractive to the libertarian viewpoint if we can explain it <br />
properly. I'm better with code than with words though. <ref>[http://www.mail-archive.com/cryptography@metzdowd.com/msg10001.html Re: Bitcoin P2P e-cash paper Fri, 14 Nov 2008 14:29:22]</ref></blockquote><br />
<br />
==Possible identity==<br />
His identity and nationality are unknown.<br />
<br />
[http://cryptodetail.com/satoshi-nakamoto-and-suspected-people He] is entirely unknown outside of Bitcoin as far as anyone can tell, and his (never used) PGP key was created just months prior to the date of the genesis block. He seems to be very familiar with the cryptography mailing list, but there are no non-Bitcoin posts from him on it. He has used an email address from an anonymous mail hosting service (vistomail) as well as one from a free webmail account (gmx.com) and sends mail when connected via Tor. Some have speculated that his entire identity was created in advance in order to protect himself or the network. Perhaps he chose the name Satoshi because it can mean "wisdom" or "reason" and Nakamoto can mean "Central source".<br />
<br />
Ultimately the design of Bitcoin and its use of cryptographic proof and fully open implementation is one that makes its creator, in a sense, irrelevant and only of interest for historical reasons.<br />
<br />
==External links==<br />
* [http://bitcointalk.org/Satoshi_Nakamoto.asc Satoshi's PGP public key]<br />
* [http://www.bitcoin.org/bitcoin.pdf Bitcoin: A Peer-to-Peer Electronic Cash System] Paper<br />
* [http://sourceforge.net/users/s_nakamoto SourceForge page]<br />
* [http://nakamotoinstitute.org Satoshi Nakamoto Institute]<br />
<br />
==References==<br />
<references/><br />
<br />
[[de:Satoshi Nakamoto]]<br />
[[es:Satoshi Nakamoto]]<br />
<br />
[[Category:Individuals]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Pooled_mining&diff=65499Pooled mining2018-06-25T14:50:25Z<p>RunCPA: </p>
<hr />
<div>'''Pooled mining''' is a [[Mining|mining]] approach where multiple generating clients contribute to the generation of a block, and then split the block reward according the contributed processing power. Pooled mining effectively reduces the granularity of the block generation reward, spreading it out more smoothly over time.<br />
<br />
==Introduction==<br />
<br />
With increasing generation difficulty, mining with lower-performance devices can take a very long time before block generation, on average. For example, with a mining speed of 1000 Khps, at a difficulty of 14484 (which was in effect at the end of December, 2010), the average time to generate a block is almost 2 years. <br />
<br />
To provide a more smooth incentive to lower-performance miners, several pooled miners, using different approaches, have been created. With a mining pool, a lot of different people contribute to generating a block, and the reward is then split among them according to their processing contribution. This way, instead of waiting for years to generate 50btc{{Citation needed}} in a block, a smaller miner may get a fraction of a Bitcoin on a more regular basis.<br />
<br />
A '''share''' is awarded by the mining pool to the clients who present a valid [[proof of work]] of the same type as the [http://cryptodetail.com/what-proof-work-pow proof of work] that is used for creating [[block|blocks]], but of lesser difficulty, so that it requires less time on average to generate.<br />
<br />
==Pooled mining approaches==<br />
<br />
The problem with pooled mining is that steps must be taken to prevent cheating by the clients and the server. Currently there are several different approaches used.<br />
<br />
===The slush approach===<br />
<br />
[[Bitcoin Pooled Mining]] (BPM), sometimes referred to as "slush's pool", follows a score-based method. Older shares (from beginning of the round) have lower weight than more recent shares, which reduces the motivation to cheat by switching between pools within a round.<br />
<br />
===The Pay-per-Share approach===<br />
<br />
The Pay-per-Share (PPS) approach, first described by [[BitPenny]], is to offer an instant flat payout for each share that is solved. The payout is offered from the pool's existing balance and can therefore be withdrawn immediately, without waiting for a block to be solved or confirmed. The possibility of cheating the miners by the pool operator and by timing attacks is thus completely eliminated. <br />
<br />
This method results in the least possible variance for miners while transferring all risk to the pool operator. The resulting possibility of loss for the server is offset by setting a payout lower than the full expected value.<br />
<br />
===The Full Pay-per-Share approach===<br />
<br />
The Full Pay-per-Share (FPPS) approach, created by [[BTC.com]] team, aims to benefit miners from the high transaction fee. It will calculate a standard transaction fee within a certain period，add it into the block rewards (12.5 BTC every block for now) and then distribute the whole to miners according to PPS mode. <br />
<br />
This method keeps advantages of PPS and pay more to miners by sharing some of the transaction fees.<br />
<br />
===Luke-Jr's approach ("[[Eligius]]")===<br />
[[User:Luke-Jr|Luke]] came up with a third approach borrowing strengths from the earlier two.<br />
Like slush's approach, miners submit proofs-of-work to earn shares.<br />
Like puddinpop's approach, the pool pays out immediately via block generation.<br />
When distributing block rewards, it is divided equally among all shares since the last valid block.<br />
Unlike any preexisting pool approach, this means that the shares contributed toward stale blocks are recycled into the next block's shares.<br />
In order to spare participating miners from transaction fees, rewards are only paid out if a miner has earned at least 0.67108864 BTC (400 [[Tonal Bitcoin|TBC]]). If the amount owed is less, it will be added to the earnings of a later block (which may then total over the threshold amount).<br />
If a miner does not submit a share for over a week, the pool sends any balance remaining, regardless of its size.<br />
<br />
===P2Pool approach===<br />
<br />
[[P2Pool]] mining nodes work on a chain of shares similar to Bitcoin’s blockchain. When a block is found, the reward is divided among the most recent shares in this share-blockchain. Like the puddinpop and Luke-Jr approaches, p2pool pays via generation.<br />
<br />
===Comparison===<br />
<br />
The cooperative mining approach (slush and Luke-Jr) uses a lot less resources on the pool server, since rather than continuously checking metahashes, all that has to be checked is the validity of submitted shares. The number of shares sent can be adjusted by adjusting the artificial difficulty level.<br />
<br />
Further, the cooperative mining approach allows the clients to use existing miners without any modification, while the puddinpop approach requires the custom pool miner, which are as of now not as efficient on GPU mining as the existing GPU miners.<br />
[[File:Smallgeneration.png|thumb|Puddinpop miners receive coins directly.]]<br />
<br />
Additionally, the puddinpop and Luke-Jr approaches of distributing the earnings by way of including precise sub-cent amounts in the generation transaction for the participants, results in the presence of sub-cent bitcoin amounts in your wallet, which are liable to disappear (as unnecessary fees) later due to a bug in old (before 0.3.21) bitcoin nodes. (E.g., if you have a transaction with 0.052 in your wallet, and you later send .05 to someone, your .002 will disappear.).<br />
<br />
Puddinpop and Luke-Jr miners receive coins directly, which eliminates the delay in receiving earnings that is required on slush-based mining servers. However, using some [[eWallet]] services for generated coin will cause those coins to be lost.<br />
<br />
==See Also==<br />
<br />
* [[:Category:Miners|Miners]]<br />
* [[Poolservers]]<br />
* [[Comparison of mining pools]]<br />
* [[:Category:Pool Operators|Pool Operators]]<br />
* [[Why a GPU mines faster than a CPU]]<br />
* [[Why pooled mining]]<br />
* [[Mining pool reward FAQ]]<br />
<br />
==External links==<br />
<br />
* [https://bitcointalk.org/index.php?topic=1458.0 puddinpop's mining pool thread]<br />
* [http://blockexplorer.com/block/00000000000233334b157d901714baf59e5b9236227b2878844e52244da4195e example puddinpop block]<br />
* [https://www.bitpal.co.uk/bitcoin-mining-pool/ What is a Bitcoin Mining Pool?]<br />
<br />
==References==<br />
<references /><br />
<br />
* [https://www.zpool.ca/ Bitcoin Multipool]<br />
* [https://www.bitcoinmining.com/ Bitcoin Mining]<br />
* [https://www.youtube.com/watch?v=GmOzih6I1zs Video: What is Bitcoin Mining]<br />
* [http://bitcoinminer.com Bitcoin Miner]<br />
<br />
[[ru:майнинг в пулах]]<br />
[[Category:Mining]]<br />
{{Pools}}</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Help:FAQ&diff=65498Help:FAQ2018-06-25T14:47:38Z<p>RunCPA: </p>
<hr />
<div>Here you will find answers to the most commonly asked questions.<br />
<br />
== General ==<br />
=== What is Bitcoin? ===<br />
Bitcoin is a distributed peer-to-peer digital currency that can be transferred instantly and securely between any two people in the world. It's like electronic cash that you can use to pay friends or merchants.<br />
<br />
=== What are bitcoins? ===<br />
Bitcoins are the unit of currency of the Bitcoin system. A commonly used shorthand for this is “BTC” to refer to a price or amount (e.g. “100 BTC”).<br />
There are such things as [[physical bitcoins]], but ultimately, a bitcoin is just a number associated with a [[Address|Bitcoin Address]]. A physical bitcoin is simply an object, such as a coin, with the number carefully embedded inside. See also an [[Introduction|easy intro]] to Bitcoin.<br />
<br />
=== How can I get bitcoins? ===<br />
<br />
There are a variety of ways to acquire bitcoins:<br />
* Accept bitcoins as payment for goods or services.<br />
* You can buy bitcoins from [https://www.bitit.gift/ Bitit] [https://www.coinbase.com/buy-bitcoin Coinbase], [https://paybis.com/ PayBis], [http://cubits.com/ Cubits], [https://www.coincorner.com CoinCorner], [[File:BIPS.gif|20px|link=https://bipsmarket.com]] [https://bipsmarket.com BIPS Market], [https://circle.com Circle], or [http://gocelery.com/ Celery].<br />
* The most common way to buy bitcoins are the [[Buying bitcoins|Bitcoin Exchanges]]<br />
* There are several services where you can [[Buying_Bitcoins_(the_noob_version)|trade them]] for traditional currency.<br />
* You can also buy bitcoins using [http://nationalbitcoinatm.com Bitcoin ATMs] that are locally in your area.<br />
* Find someone to trade cash for bitcoins in-person through a [https://en.bitcoin.it/wiki/Category:Directories local directory].<br />
* Participate in a [[Pooled mining|mining pool]].<br />
* If you have a lot of [https://cryptocomes.com/cryptocurrency-cloud-mining-vs-hardware-mining-which-is-more-profitable mining hardware], you can solo mine and attempt to create a new [[block]] (currently yields 12.5 bitcoins plus transaction fees).<br />
* Visit sites that provide [[Trade#Free_Samples_and_Offers|free samples and offers]].<br />
<br />
===Does Bitcoin guarantee an influx of free money?===<br />
<br />
Since Bitcoin is a new technology, what it is and how it works may be initially unclear. Bitcoin is sometimes presented as being one of three things:<br />
<ol style="list-style-type: upper-alpha;"><br />
<li>Some sort of online 'get-rich-quick' scam.</li><br />
<li>A loophole in the market economy, the installation of which guarantees a steady influx of cash.</li><br />
<li>A sure investment that will almost certainly yield a profit.</li><br />
</ol><br />
In fact, none of the above are true. Let's look at them independently.<br />
<br />
;Is Bitcoin a 'get-rich-quick' scheme?<br />
:If you've spent much time on the Internet, you've probably seen ads for many 'get-rich-quick' schemes. These ads usually promise huge profits for a small amounts of easy work. Such schemes are usually pyramid/matrix-style schemes that make money from their own employees and offer nothing of any real value. Most convince one to buy packages that will make them earn hundreds a day, which in fact have the buyer distribute more such ads, and make minute profits.<br />
<br />
:Bitcoin is in no way similar to these schemes. Bitcoin doesn't promise windfall profits. There is no way for the developers to make money from your involvement or to take money from you. That bitcoins are nearly impossible to acquire without the owner's consent represents one of its greatest strengths. Bitcoin is an experimental, virtual currency that may succeed or may fail. None of its developers expect to get rich off of it. <br />
<br />
:A more detailed answer to this question can be found [http://bitcointalk.org/?topic=7815.0 here].<br />
<br />
;Will I make money by installing the client?<br />
:Most people who use Bitcoin don't earn anything by doing so, and the default client has no built-in way to earn Bitcoins. A small minority of people with dedicated, high-performance hardware do earn some Bitcoins by "''mining''" (generating new bitcoins, see [[#What is mining?|What is mining?]]) with special software, but joining Bitcoin shouldn't be construed as being the road to riches. Most Bitcoin users get involved because they find the project conceptually interesting and don't earn anything by doing so. This is also why you won't find much speculation about the political or economic repercussions of Bitcoin anywhere on this site: Bitcoin developers owe their dedication to the project's intellectual yieldings more than to those of a monetary nature. Bitcoin is still taking its first baby steps; it may go on to do great things but right now it only has something to offer those chasing conceptually interesting projects or bleeding edge technology.<br />
<br />
;As an investment, is Bitcoin a sure thing?<br />
:Bitcoin is a new and interesting electronic currency, the value of which is not backed by any single government or organization. Like other currencies, it is worth something partly because people are willing to trade it for goods and services. Its exchange rate fluctuates continuously, and sometimes wildly. It lacks wide acceptance and is vulnerable to manipulation by parties with modest funding. Security incidents such as website and account compromise may trigger major sell-offs. Other fluctuations can build into positive feedback loops and cause much larger exchange rate fluctuations. Anyone who puts money into Bitcoin should understand the risk they are taking and consider it a high-risk currency. Later, as Bitcoin becomes better known and more widely accepted, it may stabilize, but for the time being it is unpredictable. Any investment in Bitcoin should be done carefully and with a clear plan to manage the risk.<br />
<br />
=== Can I buy bitcoins with Paypal? ===<br />
<br />
It is possible to buy [[physical bitcoins]] with PayPal but it is otherwise difficult and/or expensive to do so for non-physical bitcoins, because of significant risk to the seller. <br />
<br />
While it is possible to find an individual who wishes to sell Bitcoin to you via Paypal, (perhaps via [http://www.bitcoin-otc.com/ #bitcoin-otc] ) most exchanges do not allow funding through PayPal. This is due to repeated cases where someone pays for bitcoins with Paypal, receives their bitcoins, and then fraudulently complains to Paypal that they never received their purchase. PayPal often sides with the fraudulent buyer in this case, which means any seller needs to cover that risk with higher fees or refuse to accept PayPal altogether.<br />
<br />
Buying Bitcoins from individuals this way is still possible, but requires the seller to have some trust that the buyer will not file a claim with PayPal to reverse the payment.<br />
<br />
Also [https://bitbuy.in/ bitbuy.in] and [https://paybis.com/ PayBis], allows you to buy Bitcoins with PayPal.<br />
<br />
=== Where can I find a forum to discuss Bitcoin? ===<br />
<br />
Please visit the [[Bitcoin Wiki:Community_portal#Bitcoin_Community_Forums_on_various_platforms|Community Portal]] for links to Bitcoin-related forums.<br />
<br />
=== How are new bitcoins created? ===<br />
<br />
New bitcoins are generated by the network through the process of "[[#What is mining?|''mining'']]". In a process that is similar to a continuous raffle draw, mining nodes on the network are awarded bitcoins each time they find the solution to a certain mathematical problem (and thereby create a new [[block]]). Creating a block is a [[proof of work]] with a difficulty that varies with the overall strength of the network. The reward for solving a block is [[Controlled Currency Supply|automatically adjusted]] so that, ideally, every four years of operation of the Bitcoin network, half the amount of bitcoins created in the prior 4 years are created. A maximum of {{formatnum:10499889.80231183}} bitcoins were created in the first 4 (approx.) years from January 2009 to November 2012. Every four years thereafter this amount halves, so it should be {{formatnum:5250000}} over years 4-8, {{formatnum:2625000}} over years 8-12, and so on. Thus the total number of bitcoins in existence can never exceed {{formatnum:20999839.77085749}} and counting. See [[Controlled Currency Supply]].<br />
<br />
Blocks are [[Mining|mined]] every 10 minutes, on average and for the first four years ({{formatnum:210000}} blocks) each block included 50 new bitcoins. As the amount of processing power directed at mining changes, the difficulty of creating new bitcoins changes. This difficulty factor is calculated every 2016 blocks and is based upon the time taken to generate the previous 2016 blocks. See [[Mining]].<br />
<br />
=== What's the current total number of bitcoins in existence? ===<br />
<br />
[http://blockexplorer.com/q/totalbc Current count]. Also see [https://blockchain.info/charts/total-bitcoins Total bitcoins in circulation chart]<br />
<br />
The number of blocks times the coin value of a block is the number of coins in existence. The coin value of a block is 50 BTC for each of the first {{formatnum:210000}} blocks, 25 BTC for the next {{formatnum:210000}} blocks, then 12.5 BTC, 6.25 BTC and so on.<br />
<br />
=== How divisible are bitcoins? ===<br />
<br />
A bitcoin can be divided down to 8 decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction. If necessary, the protocol and related software can be modified to handle even smaller amounts.<br />
<br />
=== What do I call the various denominations of bitcoin? ===<br />
<br />
Unlike most currencies, Bitcoin amounts are highly divisible. This has led to a desire to create names for smaller denominations of bitcoin amounts, especially since transactions involving whole bitcoins are no longer quite so common. Bitcoin is decentralized, so there is no organization that can set official names for units. Therefore, there are many different units with varying degrees of popularity. As of 2014, the most common units are bitcoins, bits, and satoshi: 1 bitcoin = 1 000 000.00 bits = 100 000 000 satoshi.<br />
<br />
The '''bitcoin''' (abbreviated '''BTC''' or '''XBT''') is the unit that was used in the original Bitcoin wallet software created by [[Satoshi Nakamoto]]. There is nothing particularly special about this unit, but it is by far the most common unit due to tradition.<br />
<br />
The smallest value that the Bitcoin network supports sending is the '''[[satoshi (unit)|satoshi]]''' (sometimes abbreviated '''sat'''), one hundred-millionth (0.000 000 01) of a bitcoin. In other words, the network does not support sending fractions of a satoshi. Since it is a hard limit, it seems natural to use it as a unit, though it currently has very little value. The unit was named in honor of Bitcoin's creator after he left -- he was not so vain as to name a unit after himself. The plural of satoshi is satoshi: "Send me 100 satoshi".<br />
<br />
Another common unit is the '''[[bit (unit)|bit]]''', one millionth (0.000 001) of a bitcoin. This unit is the same as a microbitcoin (μBTC). Bits are seen by some as especially logical because they have two-decimal precision like most fiat currencies. You can send 1.23 bits, but not 1.234 bits due to the network's limited precision.<br />
<br />
It is also fairly common to use SI prefixes:<br />
<br />
* 0.01 BTC = 1 cBTC = 1 centibitcoin (also referred to as bitcent)<br />
* 0.001 BTC = 1 mBTC = 1 millibitcoin (also referred to as mbit (pronounced em-bit) or millibit or even bitmill)<br />
* 0.000 001 BTC = 1 μBTC = 1 microbitcoin (also referred to as ubit (pronounced yu-bit) or microbit)<br />
<br />
For an overview of all proposed units of Bitcoin (including less common and niche units), see [[Units]].<br />
<br />
Further discussion on this topic can be found on the forums here:<br />
<br />
* [https://bitcointalk.org/index.php?topic=14438.msg195287#msg195287 We need names]<br />
* [https://bitcointalk.org/index.php?topic=8282.0 What to call 0.001 BTC]<br />
<br />
=== How does the halving work when the number gets really small? ===<br />
<br />
Eventually the reward will go from 0.00000001 BTC to zero and no more bitcoins will be created. <br />
<br />
The block reward calculation is done as a right bitwise shift of a 64-bit signed integer, which means it is divided by two and rounded down. The integer is equal to the value in BTC * 100,000,000 since internally in the reference client software, all Bitcoin balances and values are stored as unsigned integers.<br />
<br />
With an initial block reward of 50 BTC, it will take many 4-year periods for the block reward to reach zero.<br />
<br />
=== How long will it take to generate all the coins? ===<br />
<br />
The last block that will generate coins will be block #6,929,999 which should be generated at or near the year 2140. The total number of coins in circulation will then remain static at 20,999,999.9769 BTC.<br />
<br />
Even if the allowed precision is expanded from the current 8 decimals, the total BTC in circulation will always be slightly below 21 million (assuming everything else stays the same). For example, with 16 decimals of precision, the end total would be 20,999,999.999999999496 BTC.<br />
<br />
=== If no more coins are going to be generated, will more blocks be created? ===<br />
<br />
Absolutely! Even before the creation of coins ends, the use of [[transaction fee|transaction fees]] will likely make creating new blocks more valuable from the fees than the new coins being created. When coin generation ends, these fees will sustain the ability to use bitcoins and the Bitcoin network. There is no practical limit on the number of blocks that will be mined in the future.<br />
<br />
=== But if no more coins are generated, what happens when Bitcoins are lost? Won't that be a problem? ===<br />
<br />
Because of the law of supply and demand, when fewer bitcoins are available the ones that are left will be in higher demand, and therefore will have a higher value. So, as Bitcoins are lost, the remaining bitcoins will eventually increase in value to compensate. As the value of a bitcoin increases, the number of bitcoins required to purchase an item '''de'''creases. This is a [[Deflationary spiral|deflationary economic model]]. As the average transaction size reduces, transactions will probably be denominated in sub-units of a bitcoin such as millibitcoins ("Millies") or microbitcoins ("Mikes").<br />
<br />
The Bitcoin protocol uses a base unit of one hundred-millionth of a Bitcoin ("a Satoshi"), but unused bits are available in the protocol fields that could be used to denote even smaller subdivisions.<br />
<br />
=== If every transaction is broadcast via the network, does Bitcoin scale? ===<br />
<br />
The blockchain base layer is not very scalable but layer-2 technologies can be used to greatly increase bitcoin's scale. [[Lightning Network]] is one example which uses [[Contracts|smart contracts]] to build a network where payments are routed along a path instead of flooded to every peer. These payments can be nearly as secure and irreversible as blockchain transactions but have much better scalability (as well support instant payments which are much more private). Other possible layer-2 scalability technologies are sidechains or a bitcoin ecash chaumian bank.<br />
<br />
See also:<br />
* [https://www.reddit.com/r/Bitcoin/comments/438hx0/a_trip_to_the_moon_requires_a_rocket_with/ A trip to the moon requires a rocket with multiple stages]<br />
* [https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-December/011865.html Capacity increases for the Bitcoin system]<br />
* [[Scalability]].<br />
<br />
==Economy==<br />
=== Where does the value of Bitcoin stem from? What backs up Bitcoin? ===<br />
Bitcoins have value because they are useful and because they are [[Controlled Currency Supply|scarce]]. As they are accepted by more merchants, their value will [http://en.wikipedia.org/wiki/Sticky_%28economics%29 stabilize]. See the [[Trade|list of Bitcoin-accepting sites]].<br />
<br />
When we say that a currency is backed up by gold, we mean that there's a promise in place that you can exchange the currency for gold. Bitcoins, like dollars and euros, are not backed up by anything except the variety of merchants that accept them.<br />
<br />
It's a common misconception that Bitcoins gain their value from the cost of electricity required to generate them. Cost doesn't equal value – hiring 1,000 men to shovel a big hole in the ground may be costly, but not valuable. Also, even though scarcity is a critical requirement for a useful currency, it alone doesn't make anything valuable. For example, your fingerprints are scarce, but that doesn't mean they have any exchange value.<br />
<br />
Alternatively it needs to be added that while the law of supply and demand applies it does not guarantee value of Bitcoins in the future. If confidence in Bitcoins is lost then it will not matter that the supply can no longer be increased, the demand will fall off with all holders trying to get rid of their coins. An example of this can be seen in cases of state currencies, in cases when the state in question dissolves and so no new supply of the currency is available (the central authority managing the supply is gone), however the demand for the currency falls sharply because confidence in its purchasing power disappears. Of-course Bitcoins do not have such central authority managing the supply of the coins, but it does not prevent confidence from eroding due to other situations that are not necessarily predictable.<br />
<br />
=== Is Bitcoin a bubble? ===<br />
Yes, in the same way as the euro and dollar are. They only have value in exchange and have no inherent value. If everyone suddenly stopped accepting your dollars, euros or bitcoins, the "bubble" would burst and their value would drop to zero. But that is unlikely to happen: even in Somalia, where the government collapsed 20 years ago, [http://en.wikipedia.org/wiki/Somali_shilling Somali shillings] are still accepted as payment.<br />
<br />
=== Is Bitcoin a Ponzi scheme? ===<br />
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.<br />
<br />
A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.<br />
<br />
The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.<br />
<br />
=== Doesn't Bitcoin unfairly benefit early adopters? ===<br />
Early adopters in Bitcoin are taking a risk and invested resources in an unproven technology. By so doing, they help Bitcoin become what it is now and what it will be in the future (hopefully, a ubiquitous decentralized digital currency). It is only fair they will reap the benefits of their successful investment.<br />
<br />
In any case, any bitcoin generated will probably change hands dozens of time as a medium of exchange, so the profit made from the initial distribution will be insignificant compared to the total commerce enabled by Bitcoin. Many of the earliest users of Bitcoin have traded their coins at valuations below $1 US, or other amounts which are small compared to contemporary prices.<br />
<br />
===Won't loss of wallets and the finite amount of Bitcoins create excessive deflation, destroying Bitcoin? ===<br />
Worries about Bitcoin being destroyed by deflation are not entirely unfounded. Unlike most currencies, which experience inflation as their founding institutions create more and more units, Bitcoin will likely experience gradual deflation with the passage of time. Bitcoin is unique in that only a small amount of units will ever be produced (twenty-one million to be exact), this number has been known since the project's inception, and the units are created at a predictable rate.<br />
<br />
Also, Bitcoin users are faced with a danger that doesn't threaten users of any other currency: if a Bitcoin user loses his wallet, his money is gone forever, unless he finds it again. And not just to him; it's gone completely out of circulation, rendered utterly inaccessible to anyone. As people will lose their wallets, the total number of Bitcoins will slowly decrease.<br />
<br />
Therefore, Bitcoin seems to be faced with a unique problem. Whereas most currencies inflate over time, Bitcoin will mostly likely do just the opposite. Time will see the irretrievable loss of an ever-increasing number of Bitcoins. An already small number will be permanently whittled down further and further. And as there become fewer and fewer Bitcoins, the laws of supply and demand suggest that their value will probably continually rise.<br />
<br />
Thus Bitcoin is bound to once again stray into mysterious territory, because no one exactly knows what happens to a currency that grows continually more valuable. Many economists claim that a low level of inflation is a good thing for a currency, but nobody is quite sure about what might happens to one that continually deflates. Although deflation could hardly be called a rare phenomenon, steady, constant deflation is unheard of. There may be a lot of speculation, but no one has any hard data to back up their claims.<br />
<br />
That being said, there is a mechanism in place to combat the obvious consequences. Extreme deflation would render most currencies highly impractical: if a single Canadian dollar could suddenly buy the holder a car, how would one go about buying bread or candy? Even pennies would fetch more than a person could carry. Bitcoin, however, offers a simple and stylish solution: infinite divisibility. Bitcoins can be divided up and trade into as small of pieces as one wants, so no matter how valuable Bitcoins become, one can trade them in practical quantities. <br />
<br />
In fact, infinite divisibility should allow Bitcoins to function in cases of extreme wallet loss. Even if, in the far future, so many people have lost their wallets that only a single Bitcoin, or a fraction of one, remains, Bitcoin should continue to function just fine. No one can claim to be sure what is going to happen, but deflation may prove to present a smaller threat than many expect.<br />
<br />
For more information, see the [[Deflationary spiral]] page.<br />
<br />
=== What if someone bought up all the existing Bitcoins? ===<br />
Bitcoin markets are competitive -- meaning the price of a bitcoin will rise or fall depending on supply and demand at certain price levels. Only a fraction of bitcoins issued to date are found on the exchange markets for sale. So even though technically, a buyer with lots of money could buy all the bitcoins offered for sale, unless those holding the rest of the bitcoins offer them for sale as well, even the wealthiest, most determined buyer can't get at them.<br />
<br />
Additionally, new currency continues to be issued daily and will continue to do so for decades; though over time the rate at which they are issued declines to insignificant levels. Those who are mining aren't obligated to sell their bitcoins so not all bitcoins will make it to the markets even.<br />
<br />
This situation doesn't suggest, however, that the markets aren't vulnerable to price manipulation. It doesn't take significant amounts of money to move the market price up or down, and thus Bitcoin remains a volatile asset.<br />
<br />
===What if someone creates a new block chain, or a new digital currency that renders Bitcoin obsolete?===<br />
<br />
That the block chain cannot be easily forked represents one of the central security mechanisms of Bitcoin. Given the choice between two block chains, a Bitcoin miner always chooses the longer one - that is to say, the one with the more complex hash. Thusly, it ensures that each user can only spend their bitcoins once, and that no user gets ripped off.<br />
<br />
As a consequence of the block chain structure, there may at any time be many different sub-branches, and the possibility always exists of a transaction being over-written by the longest branch, if it has been recorded in a shorter one. The older a transaction is though, the lower its chances of being over-written, and the higher of becoming permanent. Although the block chain prevents one from spending more Bitcoins than one has, it means that transactions can be accidentally nullified. <br />
<br />
A new block chain would leave the network vulnerable to [[double-spending|double-spend]] attacks. However, the creation of a viable new chain presents considerable difficulty, and the possibility does not present much of a risk.<br />
<br />
Bitcoin will always choose the longer Block Chain and determines the relative length of two branches by the complexities of their hashes. Since the hash of each new block is made from that of the block preceding it, to create a block with a more complex hash, one must be prepared to do more computation than has been done by the entire Bitcoin network from the fork point up to the newest of the blocks one is trying to supersede. Needless to say, such an undertaking would require a very large amount of processing power and since Bitcoin is continually growing and expanding, it will likely only require more with the passage of time.<br />
<br />
A much more distinct and real threat to the Bitcoin use is the development of other, superior virtual currencies, which could supplant Bitcoin and render it obsolete and valueless.<br />
<br />
A great deal of careful thought and ingenuity has gone into the development of Bitcoin, but it is the first of its breed, a prototype, and vulnerable to more highly-evolved competitors. At present, any threatening rivals have yet to rear their heads; Bitcoin remains the first and foremost private virtual currency, but we can offer no guarantees that it will retain that position. It would certainly be in keeping with internet history for a similar system built from the same principles to supersede and cast Bitcoin into obsolescence, after time had revealed its major shortcomings. Friendster and Myspace suffered similar fates at the hand of Facebook, Napster was ousted by Limeware, Bearshare and torrent applications, and Skype has all but crushed the last few disciples of the Microsoft Messenger army. <br />
<br />
This may sound rather foreboding, so bear in mind that the introduction of new and possibly better virtual currencies will not necessarily herald Bitcoin's demise. If Bitcoin establishes itself sufficiently firmly before the inception of the next generation of private, online currencies so as to gain widespread acceptance and general stability, future currencies may pose little threat even if they can claim superior design. This is known as the network effect.<br />
<br />
=== Is Bitcoin open to value manipulation? ===<br />
<br />
The current low market cap of Bitcoin means that any investor with deep enough pockets can significantly change/manipulate the rate. Is this a problem?<br />
<br />
This is only a problem if you are investing in Bitcoin for short period of time. A manipulator can't change the fundamentals, and over a period of 5-10 years, the fundamentals will win over any short term manipulations.<br />
<br />
==Sending and Receiving Payments==<br />
<br />
=== Why do I have to wait 10 minutes before I can spend money I received? ===<br />
<br />
10 minutes is the average time taken to find a block. It can be significantly more or less time than that depending on luck; 10 minutes is simply the average case. <br />
<br />
[[Blocks]] (shown as "[[Confirmation|confirmations]]" in the GUI) are how the Bitcoin achieves consensus on who owns what. Once a block is found everyone agrees that you now own those coins, so you can spend them again. Until then it's possible that some network nodes believe otherwise, if somebody is attempting to defraud the system by reversing a transaction. The more confirmations a transaction has, the less risk there is of a reversal. Only 6 blocks or 1 hour is enough to make reversal computationally impractical. This is dramatically better than credit cards which can see chargebacks occur up to three months after the original transaction!<br />
<br />
Ten minutes was specifically chosen by [[Satoshi]] as a tradeoff between first confirmation time and the amount of work wasted due to chain splits. After a block is mined, it takes time for other miners to find out about it, and until then they are actually competing against the new block instead of adding to it. If someone mines another new block based on the old block chain, the network can only accept one of the two, and all the work that went into the other block gets wasted. For example, if it takes miners 1 minute on average to learn about new blocks, and new blocks come every 10 minutes, then the overall network is wasting about 10% of its work. Lengthening the time between blocks reduces this waste.<br />
<br />
As a thought experiment, what if the Bitcoin network grew to include Mars? From the farthest points in their orbits, it takes about 20 minutes for a signal to travel from Earth to Mars. With only 10 minutes between new blocks, miners on Mars would always be 2 blocks behind the miners on Earth. It would be almost impossible for them to contribute to the block chain. If we wanted collaborate with those kinds of delays, we would need at least a few hours between new blocks. <br />
<br />
[[File:TransactionConfirmationTimesExample.PNG]]<br />
<br />
=== Do you have to wait until my transactions are confirmed in order to buy or sell things with Bitcoin? ===<br />
<br />
YES, you do, IF the transaction is non-recourse. The Bitcoin reference software does not display transactions as confirmed until six blocks have passed (confirmations). As transactions are buried in the chain they become increasingly non-reversible but are very reversible before the first confirmation. Two to six confirmations are recommended for non-recourse situations depending on the value of the transactions involved.<br />
<br />
When people ask this question they are usually thinking about applications like supermarkets. This generally is a recourse situation: if somebody tries to double-spend on a face-to-face transaction it might work a few times, but probabalistically speaking eventually one of the double-spends will get noticed, and the penalty for shoplifting charges in most localities is calibrated to be several times worse than the proceeds of a single shoplifting event.<br />
<br />
Double-spends might be a concern for something like a snack machine in a low-traffic area with no nearby security cameras. Such a machine shouldn't honor zero-confirmation payments, and should instead use some other mechanism of clearing Bitcoin or validating transactions against reversal, see the wiki article [[Myths#Point_of_sale_with_bitcoins_isn.27t_possible_because_of_the_10_minute_wait_for_confirmation|here]] for alternatives.<br />
<br />
Applications that require immediate payment processing, like supermarkets or snack machines, need to manage the risks. Here is one way to reverse an unconfirmed payment:<br />
<br />
A [[Double-spending#Finney_attack|Finney attack]] is where an attacker mines a block containing a movement of some coins back to themselves. Once they find a block solution, they quickly go to a merchant and make a purchase, then broadcast the block, thus taking back the coins. This attack is a risk primarily for goods that are dispatched immediately, like song downloads or currency trades. Because the attacker can't choose the time of the attack, it isn't a risk for merchants such as supermarkets where you can't choose exactly when to pay (due to queues, etc). The attack can fail if somebody else finds a block containing the purchasing transaction before you release your own block, therefore, merchants can reduce but not eliminate the risk by making purchasers wait some length of time that's less than a confirm.<br />
<br />
Because pulling off this attack is not trivial, merchants who need to sell things automatically and instantly are most likely to adjust the price to include the cost of reversal fraud, or elect to use special insurance.<br />
<br />
=== I was sent some bitcoins and they haven't arrived yet! Where are they? ===<br />
<br />
Don't panic! There are a number of reasons why your bitcoins might not show up yet, and a number of ways to diagnose them. <br />
<br />
The latest version of the Bitcoin-Qt client tells you how far it has yet to go in downloading the blockchain. Hover over the icon in the bottom right corner of the client to learn your client's status.<br />
<br />
If it has not caught up then it's possible that your transaction hasn't been included in a block yet. <br />
<br />
You can check pending transactions in the network by going [https://www.biteasy.com here] or [http://blockchain.info here] and then searching for your address. If the transaction is listed here then it's a matter of waiting until it gets included in a block before it will show in your client. <br />
<br />
If the transaction is based on a coin that was in a recent transaction then it could be considered a low priority transaction. Transfers can take longer if the transaction fee paid was not high enough. If there is no fee at all the transfer can get a very low priority and take hours or even days to be included in a block.<br />
<br />
<br />
=== I sent too small of a transaction fee, is my bitcoin lost forever? ===<br />
<br />
<br />
If the transaction never gets confirmed into a block - the mempool expiry of all nodes will drop it eventually and you will be able to spend your funds again - [https://hackernoon.com/holy-cow-i-sent-a-bitcoin-transaction-with-too-low-fees-are-my-coins-lost-forever-7a865e2e45ba typically] it takes about 3 days or so for this to happen. If using an [[https://en.bitcoin.it/w/index.php?title=Scalability#Simplified_payment_verification SPV]] wallet such as [[ Electrum]] or [[Multibit]], if after three days the wallet does not see the coin to spend, you need to reindex your wallet's block headers. After reindexing, your wallet will see that the coin was never confirmed and thus the balance will be spendable again. <br />
<br />
'''NOTE''': From Bitcoin 0.14 “transaction reappearance” happens after 2 [https://www.reddit.com/r/Bitcoin/comments/69jywp/a_practical_guide_to_accidental_low_fee/dhjfthf/ weeks].<br />
<br />
=== Why does my Bitcoin address keep changing? ===<br />
{{seealso|Address reuse}}<br />
Unlike postal and email addresses, Bitcoin addresses are designed to be used exactly once only, for a single transaction.<br />
Originally, wallets would display only a single address at a time, and change it when a transaction was received, but an increasing number of wallet implementations now generate an address when you explicitly want to receive a payment.<br />
<br />
While it is technically possible to use an address for an arbitrary number of payments, this works by accident and harms both yourself ''and other unrelated third parties'', so it is considered a bad practice.<br />
The most important concerns with such misuse involve loss of privacy and security:<br />
both can be put into jeopardy when addresses are used for more than a single transaction only.<br />
<br />
===How much will the transaction fee be? / Why is the fee so high?===<br />
<br />
Bitcoin transactions almost always require a [[transaction fee]] for them to get confirmed. The transaction fee is received by the first bitcoin miner who mines a [[block]] containing the transaction; this action is also what gives the transaction its first confirmation. The appropriate fee varies depending on how large (in bytes) your transaction is, how fast you want the transaction to be confirmed, and also on current network conditions. As such, paying a fixed fee, or even a fixed fee per kB, is a very bad idea; all good Bitcoin wallets will use several pieces of data to estimate an appropriate fee for you, though some are better at fee estimation than others.<br />
<br />
The fee most strongly depends on the transaction's data size. Fees do '''not''' depend on the BTC amount of the transaction -- it's entirely possible for a 0.01 BTC transaction to require a higher fee than a 1000 BTC transaction.<br />
<br />
Basic intro to how Bitcoin [[transactions]] work: If you receive BTC in three separate transactions of (say) 1, 5, and 10 BTC, then you can think of your wallet as containing three gold coins with sizes 1, 5, and 10 BTC. If you then want to send 6 BTC, you can melt the 1 & 5 BTC coins together and recast them as a 6 BTC coin, or melt the 10 BTC coin and recast a 6 BTC coin for the recipient and a 4 BTC coin as change for yourself. In Bitcoin's technical vocabulary, these objects are literally called input and output coins. (In the rest of this section, when we say "coin" we mean these objects, not the amount of BTC value.)<br />
<br />
Transaction data sizes, and therefore fees, are proportional to the '''number''' (not value) of input and output coins in a transaction. Input coins are about 5x larger / more expensive than output coins.<br />
<br />
If your wallet estimates a very high fee, it is most likely because your wallet is full of a whole bunch of tiny coins, so your transaction will need to take very many coins as inputs, increasing the cost. On the bright side, fees will go down once you make a few transactions, since you will end up "melting down" these many small coins into a few larger ones. Sometimes you can significantly reduce the fee by sending less BTC: if you have like 1000 tiny faucet payments totaling 0.5 BTC and then 16.5 BTC from other sources, then you'll find that sending ~16.5 BTC will be massively cheaper than sending a slightly higher value since it avoids including all of those faucet coins.<br />
<br />
Fees also fluctuate depending on network conditions. All unconfirmed transactions compete with each other to be picked up by miners. If there are a lot of high-fee transactions being sent right now, then you will need to pay higher fees to out-bid them. On the other hand, if speed is less important to you, you can pay a somewhat smaller fee, and your transaction will float around until there is a period of reduced network usage. Sometimes even transactions with zero fee will be confirmed after a very long period of time, though this requires a perfect set of conditions, beyond what is explained here (ie. it probably won't work if you try it).<br />
<br />
Oftentimes wallets will have an "express" fee configuration, but note that confirmation times are naturally random and unreliable. At any given point in time, the probability that ''no'' transactions will be confirmed in the next hour is about 0.25% (ie. it happens more than once per week on average). Bitcoin users should avoid getting into situations where their transactions ''absolutely must'' get 1 confirmation in the next couple of hours, even if high-fee transactions usually take less than 10 minutes to get 1 confirmation.<br />
<br />
=== What happens when someone sends me a bitcoin but my computer is powered off? ===<br />
<br />
Bitcoins are not actually "sent" to your wallet; the software only uses that term so that we can use the currency without having to learn new concepts. Your wallet is only needed when you wish to spend coins that you've received.<br />
<br />
If you are sent coins when your wallet client program is not running, and you later launch the wallet client program, the coins will eventually appear as if they were just received in the wallet. That is to say, when the client program is started it must download blocks and catch up with any transactions it did not already know about.<br />
<br />
=== How long does "synchronizing" take when the Bitcoin client is first installed? What's it doing? ===<br />
<br />
The popular Bitcoin client software from bitcoin.org implements a "full" Bitcoin node: It can carry out all the duties of the Bitcoin P2P system, it isn't simply a "client". One of the principles behind the operation of full Bitcoin nodes is that they don't assume that the other participants have followed the rules of the Bitcoin system. During synchronization, the software is processing historical Bitcoin transactions and making sure for itself that all of the rules of the system have been correctly followed.<br />
<br />
In normal operation, after synchronizing, the software should use a hardly noticeable amount of your computer's resources.<br />
<br />
When the wallet client program is first installed, its initial validation requires a lot of work from your computer's hard disk, so the amount of time to synchronize depends on your disk speed and, to a lesser extent, your CPU speed. It can take anywhere from a few hours to a day or so. On a slow computer it could take more than 40 hours of continuous synchronization, so check your computer's power-saving settings to ensure that it does not turn its hard disk off when unattended for a few hours. You can use the Bitcoin software during synchronization, but you may not see recent payments to you until the client program has caught up to the point where those transactions happened.<br />
<br />
If you feel that this process takes too long, you can download a pre-synchronized blockchain from [http://eu2.bitcoincharts.com/blockchain/ http://eu2.bitcoincharts.com/blockchain/]. Alternatively, you can try an alternative "lite" client such as Multibit or a super-light client like electrum, though these clients have somewhat weaker security, are less mature, and don't contribute to the health of the P2P network.<br />
<br />
==Networking==<br />
=== Do I need to configure my firewall to run Bitcoin? ===<br />
<br />
Bitcoin will connect to other nodes, usually on TCP port 8333. You will need to allow outgoing TCP connections to port 8333 if you want to allow your Bitcoin client to connect to many nodes. [[Testnet]] uses TCP port 18333 instead of 8333.<br />
<br />
If you want to restrict your firewall rules to a few IPs, you can find stable nodes in the [[Fallback Nodes|fallback nodes list]].<br />
<br />
=== How does the peer finding mechanism work? ===<br />
<br />
Bitcoin finds peers primarily by forwarding peer announcements within its own network and each node saves a database of peers that it's aware of, for future use. In order to bootstrap this process Bitcoin needs a list of initial peers, these can be provided manually but normally it obtains them by querying a set of DNS domain names which have automatically updated lists, if that doesn't work it falls back to a built-in list which is updated from time to time in new versions of the software. In the reference software initial peers can also be specified manually by adding an addr.txt to the data directory or via the addnode parameter.<br />
<br />
==Mining==<br />
===What is mining?===<br />
[[Mining]] is the process of spending computation power to secure Bitcoin transactions against reversal and introducing new Bitcoins to the system<ref>[https://www.bitcoinmining.com Bitcoin Mining]</ref>.<br />
<br />
Technically speaking, mining is the calculation of a [[hash]] of the a block header, which includes among other things a reference to the previous block, a hash of a set of transactions and a [[nonce]]. If the hash value is found to be less than the current [[target]] (which is inversely proportional to the [[difficulty]]), a new block is formed and the miner gets the newly generated Bitcoins (25 per block at current levels). If the hash is not less than the current target, a new nonce is tried, and a new hash is calculated. This is done millions of times per second by each miner.<br />
<br />
===Is mining used for some useful computation?===<br />
The computations done when mining are internal to Bitcoin and not related to any other distributed computing projects. They serve the purpose of securing the Bitcoin network, which is useful.<br />
<br />
===Is it not a waste of energy?===<br />
Spending energy on creating and securing a free monetary system is hardly a waste. Also, services necessary for the operation of currently widespread monetary systems, such as banks and credit card companies, also spend energy, arguably more than Bitcoin would.<br />
<br />
===Why don't we use calculations that are also useful for some other purpose?===<br />
To provide security for the Bitcoin network, the calculations involved need to have some [http://bitcoin.stackexchange.com/questions/5617/why-are-bitcoin-calculation-useless/5618#5618 very specific features]. These features are incompatible with leveraging the computation for other purposes.<br />
<br />
===How can we stop miners from creating zero transaction blocks?===<br />
The incentive for miners to include transactions is in the fees that come along with them. If we were to implement some minimum number of transactions per block it would be trivial for a miner to create and include transactions merely to surpass that threshold. As the network matures, the block reward drops, and miners become more dependent on transactions fees to pay their costs, the problem of zero transaction blocks should diminish over time.<br />
<br />
===How does the proof-of-work system help secure Bitcoin?===<br />
Bitcoin uses the [[Hashcash]] [[proof of work]] with a minor adaption. To give a general idea of the mining process, imagine this setup:<br />
<br />
payload = <some data related to things happening on the Bitcoin network><br />
nonce = 1<br />
hash = [http://en.wikipedia.org/wiki/SHA2 SHA2]( [http://en.wikipedia.org/wiki/SHA2 SHA2]( payload + nonce ) )<br />
<br />
The work performed by a miner consists of repeatedly increasing "nonce" until<br />
the hash function yields a value, that has the rare property of being below a certain<br />
target threshold. (In other words: The hash "starts with a certain number of zeroes",<br />
if you display it in the fixed-length representation, that is typically used.)<br />
<br />
As can be seen, the mining process doesn't compute anything special. It merely<br />
tries to find a number (also referred to as nonce) which - in combination with the payload -<br />
results in a hash with special properties.<br />
<br />
The advantage of using such a mechanism consists of the fact, that it is very easy to check a result: Given the payload and a specific nonce, only a single call of the hashing function is needed to verify that the hash has the required properties. Since there is no known way to find these hashes other than brute force, this can be used as a "[[proof of work]]" that someone invested a lot of computing power to find the correct nonce for this payload.<br />
<br />
This feature is then used in the Bitcoin network to allow the network to come to a consensus on the history of transactions. An attacker that wants to rewrite history will need to do the required proof of work before it will be accepted. And as long as honest miners have more computing power, they can always outpace an attacker.<br />
<br />
Also see [http://en.wikipedia.org/wiki/Hashcash Hashcash] and [http://en.wikipedia.org/wiki/Proof-of-work_system Proof-of-work system] and [http://en.wikipedia.org/wiki/SHA2 SHA2] and on Wikipedia.<br />
<br />
===Why was the "Generate coin" option of the client software removed?===<br />
<br />
The option wasn't removed, but it is now only accessible via the command-line or the configuration file. The reason for this is that many users were complaining after they turned on and expecting to receive coins. Without specialized mining hardware a user is exceptionally unlikely generate a block on their own at the network's current [[difficulty|security level]].<br />
<br />
==Security==<br />
<br />
===Could miners collude to give themselves money or to fundamentally change the nature of Bitcoin?===<br />
<br />
There are two questions in here. Let's look at them separately.<br />
<br />
;Could miners gang up and give themselves money?<br />
<br />
Mining itself is the process of creating new blocks in the block chain. Each block contains a list of all the transactions that have taken place across the entire Bitcoin network since the last block was created, as well as a hash of the previous block. New blocks are 'mined', or rather, generated, by Bitcoin clients correctly guessing sequences of characters in codes called 'hashes,' which are created using information from previous blocks. Bitcoin users may download specialized 'mining' software, which allows them to dedicate some amount of their processing power – however large or small – to guessing at strings within the hash of the previous block. Whoever makes the right guess first, thus creating a new block, receives a reward in Bitcoins.<br />
<br />
The block chain is one of the two structures that makes Bitcoin secure, the other being the public-key encryption system on which Bitcoin trade is based. The block chain assures that not only is every single transaction that ever takes place recorded, but that every single transaction is recorded on the computer of anyone who chooses to store the relevant information. Many, many users have complete records of every transaction in Bitcoins history readily available to them at any point, and anyone who wants in the information can obtain it with ease. These things make Bitcoin very hard to fool.<br />
<br />
The Bitcoin network takes considerable processing power to run, and since those with the most processing power can make the most guesses, those who put the most power toward to sustaining the network earn the most currency. Each correct guess yields, at present, twenty-five Bitcoins, and as Bitcoins are presently worth something (although the value still fluctuates) every miner who earns any number of Bitcoins makes money. Some miners pull in Bitcoins on their own; and some also join or form pools wherein all who contribute earn a share of the profits. <br />
<br />
Therefore, first answer is a vehement “yes” – not only can miners collude to get more money, Bitcoin is designed to encourage them to do so. Bitcoin pools are communal affairs, and there is nothing dishonest or underhanded about them.<br />
<br />
Of course, the real question is:<br />
<br />
;Can they do so in ways not sanctioned by Bitcoin network? Is there any way to rip off the network and make loads of money dishonestly?<br />
<br />
Bitcoin isn't infallible. It can be cheated, but doing so is extremely difficult. Bitcoin was designed to evade some of the central problems with modern currencies – namely, that their trustworthiness hinges upon that of people who might not have users' best interests in mind. Every currency in the world (other than Bitcoin) is controlled by large institutions who keep track of what's done with it, and who can manipulate its value. And every other currency has value because people trust the institutions that control them.<br />
<br />
Bitcoin doesn't ask that its users trust any institution. Its security is based on the cryptography that is an integral part of its structure, and that is readily available for any and all to see. Instead of one entity keeping track of transactions, the entire network does, so Bitcoins are astoundingly difficult to steal, or double-spend. Bitcoins are created in a regular and predictable fashion, and by many different users, so no one can decide to make a whole lot more and lessen their value. In short, Bitcoin is designed to be inflation-proof, double-spend-proof and completely distributed.<br />
<br />
Nonetheless, there are a few ways that one can acquire Bitcoins dishonestly. Firstly, one can steal private keys. Key theft isn't something that Bitcoin security has been designed to prevent: it's up to users to keep their keys safe. But the cryptography is designed so that it is completely impossible to deduce someone's private key from their public one. As long as you keep your private key to yourself, you don't have much to worry about. Furthermore, one could theoretically create a new block chain, but due to the way in which the block chain is constructed, this would be extremely difficult and require massive amounts of processing power. A full explanation of the difficulties involved can be found in the [[block chain]] article.<br />
<br />
Bitcoin can be ripped off – but doing so would be extremely hard and require considerable expertise and a staggering amount of processing power. And it's only going to get harder with time. Bitcoin isn't impenetrable, but it's close enough to put any real worries in the peripherals.<br />
<br />
;Could miners fundamentally change the nature of Bitcoin?<br />
<br />
Once again, almost certainly not.<br />
<br />
Bitcoin is a distributed network, so any changes implemented to the system must be accepted by all users. Someone trying to change the way Bitcoins are generated would have to convince every user to download and use their software – so the only changes that would go through are those that would be equally benefit all users. <br />
<br />
And thus, it is more or less impossible for anyone to change the function of Bitcoin to their advantage. If users don't like the changes, they won't adopt them, whereas if users do like them, then these will help everyone equally. Of course, one can conceive of a situation where someone manages to get a change pushed through that provides them with an advantage that no one notices, but given that Bitcoin is structurally relatively simple, it is unlikely that any major changes will go through without someone noticing first.<br />
<br />
The fact that such changes are so difficult to make testifies to the fully distributed nature of Bitcoin. Any centrally controlled currency can be modified by its central agency without the consent of its adherents. Bitcoin has no central authority, so it changes only at the behest of the whole community. Bitcoins development represents a kind of collective evolution; the first of its kind among currencies.<br />
<br />
==Help==<br />
===I'd like to learn more. Where can I get help?===<br />
<br />
* Read the [[Introduction|introduction to bitcoin]] <br />
* See the videos, podcasts, and blog posts from the [[Press]]<br />
* Read and post on the [[:Bitcoin Wiki:Community_portal#Bitcoin_Community_Forums|forums]]<br />
* Chat on one of the [[:Bitcoin Wiki:Community_portal#IRC_Chat|Bitcoin IRC]] channels<br />
* Listen to [http://omegataupodcast.net/2011/03/59-bitcoin-a-digital-decentralized-currency/ this podcast], which goes into the details of how bitcoin works<br />
* Ask questions on the [http://bitcoin.stackexchange.com Bitcoin Stack Exchange]<br />
* Use [http://bitcoinx.io BitcoinX.io] to help beginners learn about reputable Bitcoin exchanges and Bitcoin wallets<br />
<br />
==See Also==<br />
<br />
* [[Man page]]<br />
* [[Introduction]]<br />
* [[Prohibited changes]]<br />
<br />
==References==<br />
<references><br />
<references/><br />
{{Reflist|2}}<br />
<br />
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[[zh-cn:FAQ]]<br />
[[fr:FAQ]]<br />
[[ru:FAQ]]<br />
<br />
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* [http://cryptodetail.com/charts Cryptocurrencies Price Index]<br />
<br />
[[Category:Blogs]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=File:Rsz_cryptodetail-logo-black_big.png&diff=65477File:Rsz cryptodetail-logo-black big.png2018-06-18T16:23:29Z<p>RunCPA: CryptoDetail will be your guide to crypto world, Blockchain, ICO, fintech, etc. Fair reviews, funny pics and big community. Go crypto😉</p>
<hr />
<div>CryptoDetail will be your guide to crypto world, Blockchain, ICO, fintech, etc. Fair reviews, funny pics and big community. Go crypto😉</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Cryptocomes&diff=65476Cryptocomes2018-06-18T15:58:45Z<p>RunCPA: </p>
<hr />
<div>{{infobox company|name=CryptoComes|image=[[File:Rsz_cryptocomes_logo_new.jpg]]<br />
|industry=News<br />
|founder=Cyril Gilson<br />
|foundation=February 1, 2018<br />
|website=https://www.cryptocomes.com/<br />
}}CryptoComes is a news, analysis and educational platform that covers the crypto industry, Blockchain and new gen tech.<br />
[https://cryptocomes.com/cyril-gilson Cyril Gilson] is Editor-in-Chief of CryptoComes. In 2015 - 2017 <ref>https://coinlive.io/interview/cyril</ref>, he worked as Editor-in-Chief of Cointelegraph.<br />
<br />
==CryptoComes Daily Pricewise==<br />
CryptoComes daily [https://cryptocomes.com/pricewise Pricewise] explains the latest price movements and tells you what to expect.<br />
<br />
==CryptoComes Coins Guide==<br />
CryptoComes [https://cryptocomes.com/guides/coins-guide Coins Guide] covers informative guides about all top cryptocurrencies and how to deal with them.<br />
<br />
==References==<br />
<references/><br />
<br />
==External Links==<br />
* [https://cryptocomes.com/ CryptoComes Website]<br />
* [https://twitter.com/CryptoComes Twitter]<br />
* [https://www.facebook.com/CryptoComes/ Facebook]<br />
* [https://t.me/cryptocomes Telegram]<br />
* [https://www.youtube.com/cryptocomes Youtube]<br />
* [https://www.feedspot.com/infiniterss.php?q=site:https%3A%2F%2Fcryptocomes.com%2Frss_feed RSS Feed] <br />
* [https://news360.com/search/cryptocomes news360] <br />
* [https://www.linkedin.com/company/CryptoComes LinkedIn] <br />
* [https://www.trustpilot.com/review/cryptocomes.com TrustPilot] <br />
*[https://cryptocomes.com/priceindex/bitcoin-price-index Bitcoin Price Index]<br />
<br />
[[Category:Blogs]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Cryptocomes&diff=65475Cryptocomes2018-06-18T15:58:36Z<p>RunCPA: </p>
<hr />
<div>{{infobox company|name=CryptoComes|image=[[File:Rsz_cryptocomes_logo_new.jpg]]<br />
|industry=News<br />
|founder=Cyril Gilson]<br />
|foundation=February 1, 2018<br />
|website=https://www.cryptocomes.com/<br />
}}CryptoComes is a news, analysis and educational platform that covers the crypto industry, Blockchain and new gen tech.<br />
[https://cryptocomes.com/cyril-gilson Cyril Gilson] is Editor-in-Chief of CryptoComes. In 2015 - 2017 <ref>https://coinlive.io/interview/cyril</ref>, he worked as Editor-in-Chief of Cointelegraph.<br />
<br />
==CryptoComes Daily Pricewise==<br />
CryptoComes daily [https://cryptocomes.com/pricewise Pricewise] explains the latest price movements and tells you what to expect.<br />
<br />
==CryptoComes Coins Guide==<br />
CryptoComes [https://cryptocomes.com/guides/coins-guide Coins Guide] covers informative guides about all top cryptocurrencies and how to deal with them.<br />
<br />
==References==<br />
<references/><br />
<br />
==External Links==<br />
* [https://cryptocomes.com/ CryptoComes Website]<br />
* [https://twitter.com/CryptoComes Twitter]<br />
* [https://www.facebook.com/CryptoComes/ Facebook]<br />
* [https://t.me/cryptocomes Telegram]<br />
* [https://www.youtube.com/cryptocomes Youtube]<br />
* [https://www.feedspot.com/infiniterss.php?q=site:https%3A%2F%2Fcryptocomes.com%2Frss_feed RSS Feed] <br />
* [https://news360.com/search/cryptocomes news360] <br />
* [https://www.linkedin.com/company/CryptoComes LinkedIn] <br />
* [https://www.trustpilot.com/review/cryptocomes.com TrustPilot] <br />
*[https://cryptocomes.com/priceindex/bitcoin-price-index Bitcoin Price Index]<br />
<br />
[[Category:Blogs]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Cryptocomes&diff=65474Cryptocomes2018-06-18T15:43:39Z<p>RunCPA: </p>
<hr />
<div>{{infobox company|name=CryptoComes|image=[[File:Rsz_cryptocomes_logo_new.jpg]]<br />
|industry=News<br />
|founder=[[Cyril Gilson]]<br />
|foundation=February 1, 2018<br />
|website=https://www.cryptocomes.com/<br />
}}CryptoComes is a news, analysis and educational platform that covers the crypto industry, Blockchain and new gen tech.<br />
[https://cryptocomes.com/cyril-gilson Cyril Gilson] is Editor-in-Chief of CryptoComes. In 2015 - 2017 <ref>https://coinlive.io/interview/cyril</ref>, he worked as Editor-in-Chief of Cointelegraph.<br />
<br />
==CryptoComes Daily Pricewise==<br />
CryptoComes daily [https://cryptocomes.com/pricewise Pricewise] explains the latest price movements and tells you what to expect.<br />
<br />
==CryptoComes Coins Guide==<br />
CryptoComes [https://cryptocomes.com/guides/coins-guide Coins Guide] covers informative guides about all top cryptocurrencies and how to deal with them.<br />
<br />
==References==<br />
<references/><br />
<br />
==External Links==<br />
* [https://cryptocomes.com/ CryptoComes Website]<br />
* [https://twitter.com/CryptoComes Twitter]<br />
* [https://www.facebook.com/CryptoComes/ Facebook]<br />
* [https://t.me/cryptocomes Telegram]<br />
* [https://www.youtube.com/cryptocomes Youtube]<br />
* [https://www.feedspot.com/infiniterss.php?q=site:https%3A%2F%2Fcryptocomes.com%2Frss_feed RSS Feed] <br />
* [https://news360.com/search/cryptocomes news360] <br />
* [https://www.linkedin.com/company/CryptoComes LinkedIn] <br />
* [https://www.trustpilot.com/review/cryptocomes.com TrustPilot] <br />
*[https://cryptocomes.com/priceindex/bitcoin-price-index Bitcoin Price Index]<br />
<br />
[[Category:Blogs]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Cryptocomes&diff=65473Cryptocomes2018-06-18T15:43:18Z<p>RunCPA: </p>
<hr />
<div>{{infobox company|name=CryptoComes|image=[[File:Rsz_cryptocomes_logo_new.jpg]]<br />
|industry=News<br />
|founder=[[Cyril Gilson]]<br />
|foundation=February 1, 2018<br />
|website=https://www.cryptocomes.com/<br />
}}CryptoComes is a news, analysis and educational platform that covers the crypto industry, Blockchain and new gen tech.<br />
[https://cryptocomes.com/cyril-gilson Cyril Gilson] is Editor-in-Chief of CryptoComes. In 2015 - 2017 <ref>https://coinlive.io/interview/cyril</ref>, he worked as Editor-in-Chief of Cointelegraph.<br />
<br />
==CryptoComes Daily Pricewise==<br />
CryptoComes daily [https://cryptocomes.com/pricewise Pricewise] explains the latest price movements and tells you what to expect.<br />
<br />
==CryptoComes Coins Guide==<br />
CryptoComes [https://cryptocomes.com/guides/coins-guide Coins Guide] covers informative guides about all top cryptocurrencies and how to deal with them.<br />
<br />
==References==<br />
<references/><br />
<br />
==External Links==<br />
* [https://cryptocomes.com/ CryptoComes Website]<br />
* [https://twitter.com/CryptoComes Twitter]<br />
* [https://www.facebook.com/CryptoComes/ Facebook]<br />
* [https://t.me/cryptocomes Telegram]<br />
* [https://www.youtube.com/cryptocomes Youtube]<br />
<br />
[[Category:Blogs]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Cryptocomes&diff=65472Cryptocomes2018-06-18T15:42:53Z<p>RunCPA: </p>
<hr />
<div>{{infobox company|name=CryptoComes|image=[[File:Rsz_cryptocomes_logo_new.jpg]]<br />
|industry=News<br />
|founder=[[Cyril Gilson]]<br />
|foundation=February 1, 2018<br />
|website=https://www.cryptocomes.com/<br />
}}CryptoComes is a news, analysis and educational platform that covers the crypto industry, Blockchain and new gen tech.<br />
[https://cryptocomes.com/cyril-gilson Cyril Gilson] is Editor-in-Chief of CryptoComes. In 2015 - 2017 <ref>https://coinlive.io/interview/cyril</ref>, he worked as Editor-in-Chief of Cointelegraph.<br />
<br />
==CryptoComes Daily Pricewise==<br />
CryptoComes daily [https://cryptocomes.com/pricewise Pricewise] explains the latest price movements and tells you what to expect.<br />
<br />
==CryptoComes Coins Guide==<br />
CryptoComes [https://cryptocomes.com/guides/coins-guide Coins Guide] covers informative guides about all top cryptocurrencies and how to deal with them.<br />
<br />
==References==<br />
<references/><br />
<br />
==External Links==<br />
* [https://cryptocomes.com/ CryptoComes Website]<br />
* [https://twitter.com/CryptoComes Twitter]<br />
* [https://www.facebook.com/CryptoComes/ Facebook]<br />
* [https://t.me/cryptocomes Telegram]<br />
<br />
[[Category:Blogs]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Cryptocomes&diff=65471Cryptocomes2018-06-18T15:42:25Z<p>RunCPA: </p>
<hr />
<div>{{infobox company|name=CryptoComes|image=[[File:Rsz_cryptocomes_logo_new.jpg]]<br />
|industry=News<br />
|founder=[[Cyril Gilson]]<br />
|foundation=February 1, 2018<br />
|website=https://www.cryptocomes.com/<br />
}}CryptoComes is a news, analysis and educational platform that covers the crypto industry, Blockchain and new gen tech.<br />
[https://cryptocomes.com/cyril-gilson Cyril Gilson] is Editor-in-Chief of CryptoComes. In 2015 - 2017 <ref>https://coinlive.io/interview/cyril</ref>, he worked as Editor-in-Chief of Cointelegraph.<br />
<br />
==CryptoComes Daily Pricewise==<br />
CryptoComes daily [https://cryptocomes.com/pricewise Pricewise] explains the latest price movements and tells you what to expect.<br />
<br />
==CryptoComes Coins Guide==<br />
CryptoComes [https://cryptocomes.com/guides/coins-guide Coins Guide] covers informative guides about all top cryptocurrencies and how to deal with them.<br />
<br />
==References==<br />
<references/><br />
<br />
==External Links==<br />
* [https://cryptocomes.com/ CryptoComes Website]<br />
* [https://www.youtube.com/cryptocomes Youtube]<br />
<br />
[[Category:Blogs]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=Cryptocomes&diff=65470Cryptocomes2018-06-18T15:41:14Z<p>RunCPA: Created page with "{{infobox company|name=CryptoComes|image=File:Rsz_cryptocomes_logo_new.jpg |industry=News |founder=Cyril Gilson |foundation=February 1, 2018 |website=https://www.crypt..."</p>
<hr />
<div>{{infobox company|name=CryptoComes|image=[[File:Rsz_cryptocomes_logo_new.jpg]]<br />
|industry=News<br />
|founder=[[Cyril Gilson]]<br />
|foundation=February 1, 2018<br />
|website=https://www.cryptocomes.com/<br />
}}CryptoComes is a news, analysis and educational platform that covers the crypto industry, Blockchain and new gen tech.<br />
[https://cryptocomes.com/cyril-gilson Cyril Gilson] is Editor-in-Chief of CryptoComes. In 2015 - 2017 <ref>https://coinlive.io/interview/cyril</ref>, he worked as Editor-in-Chief of Cointelegraph.<br />
<br />
==CryptoComes Daily Pricewise==<br />
CryptoComes daily [https://cryptocomes.com/pricewise Pricewise] explains the latest price movements and tells you what to expect.<br />
<br />
==CryptoComes Coins Guide==<br />
CryptoComes [https://cryptocomes.com/guides/coins-guide Coins Guide] covers informative guides about all top cryptocurrencies and how to deal with them.<br />
<br />
==References==<br />
<references/><br />
<br />
==External Links==<br />
[[Category:Blogs]]</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=File:Rsz_cryptocomes_logo_new.jpg&diff=65469File:Rsz cryptocomes logo new.jpg2018-06-18T14:43:53Z<p>RunCPA: Bitcoin, Ethereum, Blockchain, ICO news 24/7</p>
<hr />
<div>Bitcoin, Ethereum, Blockchain, ICO news 24/7</div>RunCPAhttps://en.bitcoin.it/w/index.php?title=File:CryptoComes_Logo_New.jpg&diff=65468File:CryptoComes Logo New.jpg2018-06-18T14:36:16Z<p>RunCPA: Bitcoin, Ethereum, Blockchain, ICO news 24/7</p>
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<div>Bitcoin, Ethereum, Blockchain, ICO news 24/7</div>RunCPA