读书笔记（一）--初识比特币
Narayanan, Arvind, et al. “Bitcoin and cryptocurrency technologies,” in Proc. of Princeton University Press, 2016.
A. Problem Statement
Chapter 1 and 2 of the paper targets the problem of Bitcoin encryption and decentralization. Particularly, how to use cryptographic technology for cryptocurrency and how incentive rules can maintain the integrity of the entire system?
B. Problem Significance
For the currency of the entity, you must verify that the currency is true or false through a special anti-counterfeiting logo, but the criminals can still forge to lie to you. But encryption currency only requires encryption technology, not any central authority, which makes it more reliable.
The significance of Bitcoin mining is to maintain the properties of the entire Bitcoin. Just as the National Central Bank and other banks use resources to build various systems (electronic systems) to maintain the circulation of legal currency.
C. State of the Art
The cryptocurrency only uses a small amount of theory in cryptography. The cryptocurrency mainly uses the encrypted hash function. For a safe hash function, we will require it to have the following three additional attributes: (1) collisionresistance; (2) hiding; (3) puzzle-friendliness. Collisionresistance hashing provides an elegant and efficient solution to cryptocurrency storage problems. The Hiding feature fulfills the commitment of cryptocurrency exchange. The puzzlefriendliness is mainly used to search puzzles, which is the work of the miners. The cryptocurrency uses hash pointers, blockchains/Merkle trees, and digital signatures. In cryptocurrencies, digital signatures are used, and public money is an identity. The convention and private system help us introduce decentralized identity management. Digital signatures are based on hash functions, so decentralized identity management becomes anonymous and secretive. The simplest cryptocurrency is Goofy Coin. But it has a fatal hidden danger, which is a double attack. To solve the double attack, you can create an ID for the virtual currency, which is called coinage, all signed by Scrooge. Or you can eliminate the consumed coins directly and create new coins with the same total value, but only Scrooge can create new coins. Both of these methods mean that we need a third party to manage.
Bitcoin has been decentralized as a popular cryptocurrency. It is not complete use of technical means, but a combination of technical means and a sensible incentive mechanism. The Bitcoin system passes the transaction block to most nodes. According to the rules of Bitcoin, we can start working at home with a computer or mining equipment. If we are lucky enough, we have the opportunity to dig into a block and get 25 Bitcoin rewards, along with the fees for all transactions in that block. Mining, professional interpretation is the process of calculating random collisions of hashes. To put it simply, the Bitcoin incentive system has a math problem to see who has the mining equipment first. The incentive system itself also adjusts the difficulty and controls the time of solving the problem. Generally speaking, mining a block is every 10 minutes. In these 10 minutes, the computer can only continue to calculate and try various strings. The miners who have more computer/mining machines have more revenue, which also motivates everyone to invest in more CPU power. Mining is the only way to create new coins. Then how can we guarantee that miners without central management are playing fair? Most honest miners insist on continuing on the main chain. The difficulty of replacing the main chain means that the attacker needs multiple attempts to succeed. These failed attempts mean a huge price – mining outside the longest chain will not get any mining rewards.
D. Contributions
When I first read this incentive rules of Bitcoin, I was amazed at how there would be such a flawless design. In my understanding, the blockchain is a decentralized ledger. The “bookkeeping” work itself is very simple, that is, the real and effective transfer records are faithfully written into the books. Blockchain accounts are open and transparent, and everyone can keep accounts. The problem is that although accounting is simple, you have to let others be willing to help you keep your account. Therefore, the traditional bank has to pay wages to recruit people to complete the bookkeeping, and the Bitcoin system encourages the miners to complete the bookkeeping through the incentive way. When Satoshi designed Bitcoin, he adopted the PoW mechanism. The miners competed fairly and competed for the billing rights of the Bitcoin network. The Bitcoin network has been in operation for nearly a decade and is still operating steadily, indicating that the incentive mechanism is effective.
E. Remaining Questions
By 2140, after the total amount of Bitcoin issuance reaches 21 million, there will be no rewards, and the final method of generating new coins is only the transaction fee, which means that the miners only want to dig blocks with large transaction fees. This will affect the security and status of Bitcoin incentive mechanism. So is there a new cryptocurrency generation or is there a solution?