CryptoNote v 2.0 Nicolas van Saberhagen October 17, 2013 1 Introduction “Bitcoin”  has been a successful implementation of the concept of p2p electronic cash. Both professionals and the general public have come to appreciate the convenient combination of public transactions and proof-of-work as a trust model. Today, the user base of electronic cash is growing at a steady pace; customers are attracted to low fees and the anonymity provided by electronic cash and merchants value its predicted and decentralized emission. Bitcoin has effectively proved that electronic cash can be as simple as paper money and as convenient as credit cards. Unfortunately, Bitcoin suffers from several deficiencies. For example, the system’s distributed nature is inflexible, preventing the implementation of new features until almost all of the net- work users update their clients. Some critical flaws that cannot be fixed rapidly deter Bitcoin’s widespread propagation. In such inflexible models, it is more efficient to roll-out a new project rather than perpetually fix the original project. In this paper, we study and propose solutions to the main deficiencies of Bitcoin. We believe that a system taking into account the solutions we propose will lead to a healthy competition among different electronic cash systems. We also propose our own electronic cash, “CryptoNote”, a name emphasizing the next breakthrough in electronic cash. 2 Bitcoin drawbacks and some possible solutions 2.1 Traceability of transactions Privacy and anonymity are the most important aspects of electronic cash. Peer-to-peer payments seek to be concealed from third party’s view, a distinct difference when compared with traditional banking. In particular, T. Okamoto and K. Ohta described six criteria of ideal electronic cash, which included “privacy: relationship between the user and his purchases must be untraceable by anyone” . From their description, we derived two properties which a fully anonymous electronic cash model must satisfy in order to comply with the requirements outlined by Okamoto and Ohta: Untraceability: for each incoming transaction all possible senders are equiprobable. Unlinkability: for any two outgoing transactions it is impossible to prove they were sent to the same person. Unfortunately, Bitcoin does not satisfy the untraceability requirement. Since all the trans- actions that take place between the network’s participants are public, any transaction can be unambiguously traced to a unique origin and final recipient. Even if two participants exchange funds in an indirect way, a properly engineered path-finding method will reveal the origin and final recipient. It is also suspected that Bitcoin does not satisfy the second property. Some researchers stated ([33, 35, 29, 31]) that a careful blockchain analysis may reveal a connection between the users of the Bitcoin network and their transactions. Although a number of methods are disputed , it is suspected that a lot of hidden personal information can be extracted from the public database. Bitcoin’s failure to satisfy the two properties outlined above leads us to conclude that it is not an anonymous but a pseudo-anonymous electronic cash system. Users were quick to develop solutions to circumvent this shortcoming. Two direct solutions were “laundering services”  and the development of distributed methods [3, 4]. Both solutions are based on the idea of mixing several public transactions and sending them through some intermediary address; which in turn suffers the drawback of requiring a trusted third party. Recently, a more creative scheme was proposed by I. Miers et al. : “Zerocoin”. Zerocoin utilizes a cryptographic one-way accumulators and zero-knoweldge proofs which permit users to “convert” bitcoins to zerocoins and spend them using anonymous proof of ownership instead of explicit public-key based digital signatures. However, such knowledge proofs have a constant but inconvenient size - about 30kb (based on today’s Bitcoin limits), which makes the proposal impractical. Authors admit that the protocol is unlikely to ever be accepted by the majority of Bitcoin users . 2.2 The proof-of-work function Bitcoin creator Satoshi Nakamoto described the majority decision making algorithm as “one- CPU-one-vote” and used a CPU-bound pricing function (double SHA-256) for his proof-of-work scheme. Since users vote for the single history of transactions order , the reasonableness and consistency of this process are critical conditions for the whole system. The security of this model suffers from two drawbacks. First, it requires 51% of the network’s mining power to be under the control of honest users. Secondly, the system’s progress (bug fixes, security fixes, etc...) require the overwhelming majority of users to support and agree to the changes (this occurs when the users update their wallet software) .Finally this same voting mechanism is also used for collective polls about implementation of some features . This permits us to conjecture the properties that must be satisfied by the proof-of-work pricing function. Such function must not enable a network participant to have a significant advantage over another participant; it requires a parity between common hardware and high cost of custom devices. From recent examples , we can see that the SHA-256 function used in the Bitcoin architecture does not posses this property as mining becomes more efficient on GPUs and ASIC devices when compared to high-end CPUs. Therefore, Bitcoin creates favourable conditions for a large gap between the voting power of participants as it violates the “one-CPU-one-vote” principle since GPU and ASIC owners posses a much larger voting power when compared with CPU owners. It is a classical example of the Pareto principle where 20% of a system’s participants control more than 80% of the votes. One could argue that such inequality is not relevant to the network’s security since it is not the small number of participants controlling the majority of the votes but the honesty of these participants that matters. However, such argument is somewhat flawed since it is rather the possibility of cheap specialized hardware appearing rather than the participants’ honesty which poses a threat. To demonstrate this, let us take the following example. Suppose a malevolent individual gains significant mining power by creating his own mining farm through the cheap hardware described previously. Suppose that the global hashrate decreases significantly, even for a moment, he can now use his mining power to fork the chain and double-spend. As we shall see later in this article, it is not unlikely for the previously described event to take place. 2.3 Irregular emission Bitcoin has a predetermined emission rate: each solved block produces a fixed amount of coins. Approximately every four years this reward is halved. The original intention was to create a limited smooth emission with exponential decay, but in fact we have a piecewise linear emission function whose breakpoints may cause problems to the Bitcoin infrastructure. When the breakpoint occurs, miners start to receive only half of the value of their previous reward. The absolute difference between 12.5 and 6.25 BTC (projected for the year 2020) may seem tolerable. However, when examining the 50 to 25 BTC drop that took place on November 28 2012, felt inappropriate for a significant number of members of the mining community. Figure 1 shows a dramatic decrease in the network’s hashrate in the end of November, exactly when the halving took place. This event could have been the perfect moment for the malevolent individual described in the proof-of-work function section to carry-out a double spending attack . Fig. 1. Bitcoin hashrate chart (source: http://bitcoin.sipa.be) 2.4 Hardcoded constants Bitcoin has many hard-coded limits, where some are natural elements of the original design (e.g. block frequency, maximum amount of money supply, number of confirmations) whereas other seem to be artificial constraints. It is not so much the limits, as the inability of quickly changing them if necessary that causes the main drawbacks. Unfortunately, it is hard to predict when the constants may need to be changed and replacing them may lead to terrible consequences. A good example of a hardcoded limit change leading to disastrous consequences is the block size limit set to 250kb1. This limit was sufficient to hold about 10000 standard transactions. In early 2013, this limit had almost been reached and an agreement was reached to increase the limit. The change was implemented in wallet version 0.8 and ended with a 24-blocks chain split and a successful double-spend attack . While the bug was not in the Bitcoin protocol, but rather in the database engine it could have been easily caught by a simple stress test if there was no artificially introduced block size limit. Constants also act as a form of centralization point. Despite the peer-to-peer nature of Bitcoin, an overwhelming majority of nodes use the official reference client  developed by a small group of people. This group makes the decision to implement changes to the protocol and most people accept these changes irrespective of their “correctness”. Some decisions caused heated discussions and even calls for boycott , which indicates that the community and the developers may disagree on some important points. It therefore seems logical to have a protocol with user-configurable and self-adjusting variables as a possible way to avoid these problems. 2.5 Bulky scripts The scripting system in Bitcoin is a heavy and complex feature. It potentially allows one to create sophisticated transactions , but some of its features are disabled due to security concerns and some have never even been used . The script (including both senders’ and receivers’ parts) for the most popular transaction in Bitcoin looks like this: OP DUP OP HASH160 OP EQUALVERIFY OP CHECKSIG. The script is 164 bytes long whereas its only purpose is to check if the receiver possess the secret key required to verify his signature. Read the rest of the white paper here: https://cryptonote.org/whitepaper.pdf
Where can I find credible charts with Bitcoin metrics such as hashrate?
I'm writing some articles to help be users understand the importance of Bitcoin. Looking for a chart with hashrate over the last 5-10 years on the BTC network. Looking for charts of many other things. Confirmed transactions, transactions in the mempool. Fee charts, etc
New blockchair.com charts reveal bitcoin's mining decentralization and hashrate distribution outcompetes all other presented cryptos. Exactly the opposite of the often claimed mining centralization of BTC. Very interesting!
You've probably been hearing a lot about Bitcoin recently and are wondering what's the big deal? Most of your questions should be answered by the resources below but if you have additional questions feel free to ask them in the comments. It all started with the release of the release of Satoshi Nakamoto's whitepaper however that will probably go over the head of most readers so we recommend the following videos for a good starting point for understanding how bitcoin works and a little about its long term potential:
Limited Supply - There will only ever be 21,000,000 bitcoins created and they are issued in a predictable fashion, you can view the inflation schedule here. Once they are all issued Bitcoin will be truly deflationary. The halving countdown can be found here.
Open source - Bitcoin code is fully auditable. You can read the source code yourself here.
Accountable - The public ledger is transparent, all transactions are seen by everyone.
Decentralized - Bitcoin is globally distributed across thousands of nodes with no single point of failure and as such can't be shut down similar to how Bittorrent works. You can even run a node on a Raspberry Pi.
Censorship resistant - No one can prevent you from interacting with the bitcoin network and no one can censor, alter or block transactions that they disagree with, see Operation Chokepoint.
Push system - There are no chargebacks in bitcoin because only the person who owns the address where the bitcoins reside has the authority to move them.
Low fee scaling - On chain transaction fees depend on network demand and how much priority you wish to assign to the transaction. Most wallets calculate on chain fees automatically but you can view current fees here and mempool activity here. On chain fees may rise occasionally due to network demand, however instant micropayments that do not require confirmations are happening via the Lightning Network, a second layer scaling solution currently rolling out on the Bitcoin mainnet.
Borderless - No country can stop it from going in/out, even in areas currently unserved by traditional banking as the ledger is globally distributed.
Portable - Bitcoins are digital so they are easier to move than cash or gold. They can even be transported by simply memorizing a string of words for wallet recovery (while cool this method is generally not recommended due to potential for insecure key generation by inexperienced users. Hardware wallets are the preferred method for new users due to ease of use and additional security).
Bitcoin.org and BuyBitcoinWorldwide.com are helpful sites for beginners. You can buy or sell any amount of bitcoin (even just a few dollars worth) and there are several easy methods to purchase bitcoin with cash, credit card or bank transfer. Some of the more popular resources are below, also check out the bitcoinity exchange resources for a larger list of options for purchases.
Here is a listing of local ATMs. If you would like your paycheck automatically converted to bitcoin use Bitwage. Note: Bitcoins are valued at whatever market price people are willing to pay for them in balancing act of supply vs demand. Unlike traditional markets, bitcoin markets operate 24 hours per day, 365 days per year. Preev is a useful site that that shows how much various denominations of bitcoin are worth in different currencies. Alternatively you can just Google "1 bitcoin in (your local currency)".
Securing your bitcoins
With bitcoin you can "Be your own bank" and personally secure your bitcoins OR you can use third party companies aka "Bitcoin banks" which will hold the bitcoins for you.
If you prefer to "Be your own bank" and have direct control over your coins without having to use a trusted third party, then you will need to create your own wallet and keep it secure. If you want easy and secure storage without having to learn computer security best practices, then a hardware wallet such as the Trezor, Ledger or ColdCard is recommended. Alternatively there are many software wallet options to choose from here depending on your use case.
If you prefer to let third party "Bitcoin banks" manage your coins, try Gemini but be aware you may not be in control of your private keys in which case you would have to ask permission to access your funds and be exposed to third party risk.
Note: For increased security, use Two Factor Authentication (2FA) everywhere it is offered, including email! 2FA requires a second confirmation code to access your account making it much harder for thieves to gain access. Google Authenticator and Authy are the two most popular 2FA services, download links are below. Make sure you create backups of your 2FA codes.
As mentioned above, Bitcoin is decentralized, which by definition means there is no official website or Twitter handle or spokesperson or CEO. However, all money attracts thieves. This combination unfortunately results in scammers running official sounding names or pretending to be an authority on YouTube or social media. Many scammers throughout the years have claimed to be the inventor of Bitcoin. Websites like bitcoin(dot)com and the btc subreddit are active scams. Almost all altcoins (shitcoins) are marketed heavily with big promises but are really just designed to separate you from your bitcoin. So be careful: any resource, including all linked in this document, may in the future turn evil. Don't trust, verify. Also as they say in our community "Not your keys, not your coins".
Where can I spend bitcoins?
Check out spendabit or bitcoin directory for millions of merchant options. Also you can spend bitcoin anywhere visa is accepted with bitcoin debit cards such as the CashApp card. Some other useful site are listed below.
Mining bitcoins can be a fun learning experience, but be aware that you will most likely operate at a loss. Newcomers are often advised to stay away from mining unless they are only interested in it as a hobby similar to folding at home. If you want to learn more about mining you can read more here. Still have mining questions? The crew at /BitcoinMining would be happy to help you out. If you want to contribute to the bitcoin network by hosting the blockchain and propagating transactions you can run a full node using this setup guide. If you would prefer to keep it simple there are several good options. You can view the global node distribution here.
Just like any other form of money, you can also earn bitcoins by being paid to do a job.
You can also earn bitcoins by participating as a market maker on JoinMarket by allowing users to perform CoinJoin transactions with your bitcoins for a small fee (requires you to already have some bitcoins.
The following is a short list of ongoing projects that might be worth taking a look at if you are interested in current development in the bitcoin space.
One Bitcoin is quite large (hundreds of £/$/€) so people often deal in smaller units. The most common subunits are listed below:
one bitcoin is equal to 100 million satoshis
1,000 per bitcoin
used as default unit in recent Electrum wallet releases
1,000,000 per bitcoin
colloquial "slang" term for microbitcoin (μBTC)
100,000,000 per bitcoin
smallest unit in bitcoin, named after the inventor
For example, assuming an arbitrary exchange rate of $10000 for one Bitcoin, a $10 meal would equal:
For more information check out the Bitcoin units wiki. Still have questions? Feel free to ask in the comments below or stick around for our weekly Mentor Monday thread. If you decide to post a question in /Bitcoin, please use the search bar to see if it has been answered before, and remember to follow the community rules outlined on the sidebar to receive a better response. The mods are busy helping manage our community so please do not message them unless you notice problems with the functionality of the subreddit. Note: This is a community created FAQ. If you notice anything missing from the FAQ or that requires clarification you can edit it here and it will be included in the next revision pending approval. Welcome to the Bitcoin community and the new decentralized economy!
"My mom asked what "bitcoins" were this morning. After telling her I had her download a wallet & wanted to show her. I sent her $1 in BCH and then tried to send $1 in BTC so she could watch it change in value. I couldn't send her BTC due to fees lol. Oh well."
How many of the 25 steps in the bitcoin rabbit hole have you mastered? Be honest. Count how many and divide your score by 2.5. Your Score: <5: learner / weak hands 5-7: hodler 8-9: mature 10: orange pilled Post your result below. The Bitcoin Journey: 1. That (log) price chart! 🧐 2. Digital scarce? 🤔 3. Satochi 4. Blockchain 5. Alts 6. Mining, halvings, diff adjustment 7. How do I get it? 8. Wallets, keys, seeds, exchanges 9. Crypto Twitter 10. Fees, hashrate, mempool, txs 11. Money, inflation, central banks 12. Stocks, S&P500, 13. Charts, TA, RSI, MA’s, triangles, patterns 🤓 14. Keynes, Austrian economics 15. Bull/bear market, trading, win/lose 16. Network effects & adoption 17. Gold, Silver, real estate 18. Full node, electrum pvt server 19. Evangelize / orange pilled 💊 20. All-in / auto-dca 21. Immaculate conception 22. NGU, game theory 23. Cosmic renaissance 24. Opsec, multisig 25. Maximalism Let me know your score & what’s missing from your journey. Also accepting suggestions for better results categories/ descriptions.
‘Boring’ Bitcoin Market Sends Miners’ Fee Earnings to 3-Month Low
Image: Andre Francois Mckenzie - Unsplash Bitcoin’s (BTC) on-chain transaction activity has cooled amid the recent lull in price action, and that’s hurting miners’ earnings. The cryptocurrency's blockchain processed 231,437 transactions on Oct. 18, the lowest since May 24, according to data provided by blockchain analytics firm Glassnode. That means the daily transaction count was down nearly 40% from a peak of 382,408 observed on July 1. With network processing far fewer transactions currently, the percentage of miners' revenue derived from fees also dropped to a three-month low of 3.49% over the weekend. Last week, CoinDesk reported bitcoin's hashrate had hit a new high as a record amount of computing power was applied to mining on the network. The slide in the tally of transactions is the result of the cryptocurrency's low-volatility trading of late, and may have bullish implications for price, according to analysts. Continue reading for charts and graphs Originally published by Omkar Godbole | October 19, 2020 Coindesk
Bitcoin Average hashrate (hash/s) per day Chart. Transactions Block Size Sent from addresses Difficulty Hashrate Price in USD Mining Profitability Sent in USD Avg. Transaction Fee Median Transaction Fee Block Time Market Capitalization Avg. Transaction Value Median Transaction Value Tweets GTrends Active Addresses Top100ToTotal Fee in Reward Because the Hash Rate requires real world computing power and resource investment that cannot be faked, this chart also represents technical and monetary investment in the infrastructure of Bitcoin Cash (BCH). A cryptographic hash function takes digital data of any size as input and produces a random (but fixed-size) string of digital data as ... Because the Hash Rate requires real world computing power and resource investment that cannot be faked, this chart also represents technical and monetary investment in the infrastructure of Bitcoin Core (BTC). A cryptographic hash function takes digital data of any size as input and produces a random (but fixed-size) string of digital data as ... Mining Hash Rate. This chart shows an estimate of how many hashes per second bitcoin miners are performing on the network. Estimate = difficulty * 2 32 / time. The bitcoin network has a global block difficulty that adjusts every 2016 blocks (~2 weeks) based on a target time of 10 minutes per block. Bitcoin Hashrate Chart. The Bitcoin hashrate chart provides the current Bitcoin hashrate history in graph format with an option to expand the Bitcoin global hashrate chart time frame back to 2009. Bitcoin Hashrate Now: 146.25 EH/s Oct 24, 2020 10:12 PM UTC - 146,248,343,505,995,000,000 H/s
Last time bitcoin hash rate took a nosedive to a new low, bitcoin price turned bullish. This is what btc price charts tell us! #Bitcoin #btc Headlines: https... Bitcoin Hashrate Crash? - Hintergründe Basics zur BTC Hashrate In unserem heutigen CryptoMonday Talk wollen wir uns die Hashrate von Bitcoin und den jüngsten Crash mal genauer anschauen. 0:59 - Marktupdate & Bitcoin Kurs 4:35 - Was steckt hinter dem mysteriösem Block 629.999? 7:36 - Die Auswirkungen des Halvings und die Reaktion der Miner: Wer verkauft? Happy Easter! Today we look at how cryptocurrency bucks the trend according to a new report by eToro. Bitcoin's halving (block reward) is fast approaching, and we examine the recently increases ... Link:- https://tinyurl.com/ybdv7z83 #bitcoin #bitcoincouldmining #bitcoinnews Our bitcoin mining software is a major bitcoin generator that can mine bitcoin ...