Satoshi Nakamoto Sat, 01 Nov 2008 16:16:33 -0700 I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party. The paper is available at: http://www.bitcoin.org/bitcoin.pdf The main properties: Double-spending is prevented with a peer-to-peer network. No mint or other trusted parties. Participants can be anonymous. New coins are made from Hashcash style proof-of-work. The proof-of-work for new coin generation also powers the network to prevent double-spending. Bitcoin: A Peer-to-Peer Electronic Cash System Abstract. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without the burdens of going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as honest nodes control the most CPU power on the network, they can generate the longest chain and outpace any attackers. The network itself requires minimal structure. Messages are broadcasted on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone. Full paper at: http://www.bitcoin.org/bitcoin.pdf Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] James A. Donald Sun, 02 Nov 2008 17:55:45 -0800 Satoshi Nakamoto wrote: I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party. The paper is available at: http://www.bitcoin.org/bitcoin.pdf We very, very much need such a system, but the way I understand your proposal, it does not seem to scale to the required size. For transferable proof of work tokens to have value, they must have monetary value. To have monetary value, they must be transferred within a very large network - for example a file trading network akin to bittorrent. To detect and reject a double spending event in a timely manner, one must have most past transactions of the coins in the transaction, which, naively implemented, requires each peer to have most past transactions, or most past transactions that occurred recently. If hundreds of millions of people are doing transactions, that is a lot of bandwidth - each must know all, or a substantial part thereof. --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] John Levine Mon, 03 Nov 2008 11:45:11 -0800 > As long as honest nodes control the most CPU power on the network, > they can generate the longest chain and outpace any attackers. But they don't. Bad guys routinely control zombie farms of 100,000 machines or more. People I know who run a blacklist of spam sending zombies tell me they often see a million new zombies a day. This is the same reason that hashcash can't work on today's Internet -- the good guys have vastly less computational firepower than the bad guys. I also have my doubts about other issues, but this one is the killer. R's, John --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Sun, 02 Nov 2008 17:56:27 -0800 >Satoshi Nakamoto wrote: >> I've been working on a new electronic cash system that's fully >> peer-to-peer, with no trusted third party. >> >> The paper is available at: >> http://www.bitcoin.org/bitcoin.pdf > >We very, very much need such a system, but the way I understand your >proposal, it does not seem to scale to the required size. > >For transferable proof of work tokens to have value, they must have >monetary value. To have monetary value, they must be transferred within >a very large network - for example a file trading network akin to >bittorrent. > >To detect and reject a double spending event in a timely manner, one >must have most past transactions of the coins in the transaction, which, > naively implemented, requires each peer to have most past >transactions, or most past transactions that occurred recently. If >hundreds of millions of people are doing transactions, that is a lot of >bandwidth - each must know all, or a substantial part thereof. > Long before the network gets anywhere near as large as that, it would be safe for users to use Simplified Payment Verification (section 8) to check for double spending, which only requires having the chain of block headers, or about 12KB per day. Only people trying to create new coins would need to run network nodes. At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware. A server farm would only need to have one node on the network and the rest of the LAN connects with that one node. The bandwidth might not be as prohibitive as you think. A typical transaction would be about 400 bytes (ECC is nicely compact). Each transaction has to be broadcast twice, so lets say 1KB per transaction. Visa processed 37 billion transactions in FY2008, or an average of 100 million transactions per day. That many transactions would take 100GB of bandwidth, or the size of 12 DVD or 2 HD quality movies, or about $18 worth of bandwidth at current prices. If the network were to get that big, it would take several years, and by then, sending 2 HD movies over the Internet would probably not seem like a big deal. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] James A. Donald Wed, 05 Nov 2008 13:47:40 -0800 James A. Donald: > > To detect and reject a double spending event in a > > timely manner, one must have most past transactions > > of the coins in the transaction, which, naively > > implemented, requires each peer to have most past > > transactions, or most past transactions that > > occurred recently. If hundreds of millions of people > > are doing transactions, that is a lot of bandwidth - > > each must know all, or a substantial part thereof. Satoshi Nakamoto wrote: > Long before the network gets anywhere near as large as > that, it would be Safe for users to use Simplified > Payment Verification (section 8) to check for double > spending, which only requires having the chain of > block headers, If I understand Simplified Payment Verification correctly: New coin issuers need to store all coins and all recent coin transfers. There are many new coin issuers, as many as want to be issuers, but far more coin users. Ordinary entities merely transfer coins. To see if a coin transfer is OK, they report it to one or more new coin issuers and see if the new coin issuer accepts it. New coin issuers check transfers of old coins so that their new coins have valid form, and they report the outcome of this check so that people will report their transfers to the new coin issuer. If someone double spends a coin, and one expenditure is reported to one new coin issuer, and the other simultaneously reported to another new coin issuer, then both issuers to swifly agree on a unique sequence order of payments. This, however, is a non trivial problem of a massively distributed massive database, a notoriously tricky problem, for which there are at present no peer to peer solutions. Obiously it is a solvable problem, people solve it all the time, but not an easy problem. People fail to solve it rather more frequently. But let us suppose that the coin issue network is dominated by a small number of issuers as seems likely. If a small number of entities are issuing new coins, this is more resistant to state attack that with a single issuer, but the government regularly attacks financial networks, with the financial collapse ensuing from the most recent attack still under way as I write this. Government sponsored enterprises enter the business, in due course bad behavior is made mandatory, and the evil financial network is bigger than the honest financial network, with the result that even though everyone knows what is happening, people continue to use the paper issued by the evil financial network, because of network effects - the big, main issuers, are the issuers you use if you want to do business. Then knowledgeable people complain that the evil financial network is heading for disaster, that the government sponsored enterprises are about to cause a "collapse of the total financial system", as Wallison and Alan Greenspan complained in 2005, the government debates shrinking the evil government sponsored enterprises, as with "S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005" but they find easy money too seductive, and S. 190 goes down in flames before a horde of political activists chanting that easy money is sound, and opposing it is racist, nazi, ignorant, and generally hateful, the recent S. 190 debate on limiting portfolios (bond issue supporting dud mortgages) by government sponsored enterprises being a perfect reprise of the debates on limiting the issue of new assignats in the 1790s. The big and easy government attacks on money target a single central money issuer, as with the first of the modern political attacks, the French Assignat of 1792, but in the late nineteenth century political attacks on financial networks began, as for example the Federal reserve act of 1913, the goal always being to wind up the network into a single too big to fail entity, and they have been getting progressively bigger, more serious, and more disastrous, as with the most recent one. Each attack is hugely successful, and after the cataclysm that the attack causes the attackers are hailed as saviors of the poor, the oppressed, and the nation generally, and the blame for the the bad consequences is dumped elsewhere, usually on Jews, greedy bankers, speculators, etc, because such attacks are difficult for ordinary people understand. I have trouble understanding your proposal - ordinary users will be easily bamboozled by a government sponsored security update. Further, when the crisis hits, to disagree with the line, to doubt that the regulators are right, and the problem is the evil speculators, becomes political suicide, as it did in America in 2007, sometimes physical suicide, as in Weimar Germany. Still, it is better, and more resistant to attack by government sponsored enterprises, than anything I have seen so far. > Visa processed 37 billion transactions in FY2008, or > an average of 100 million transactions per day. That > many transactions would take 100GB of bandwidth, or > the size of 12 DVD or 2 HD quality movies, or about > $18 worth of bandwidth at current prices. > If the network were to get that big, it would take > several years, and by then, sending 2 HD movies over > the Internet would probably not seem like a big deal. If there were a hundred or a thousand money issuers by the time the government attacks, the kind of government attacks on financial networks that we have recently seen might well be more difficult. But I think we need to concern ourselves with minimizing the data and bandwidth required by money issuers - for small coins, the protocol seems wasteful. It would be nice to have the full protocol for big coins, and some shortcut for small coins wherein people trust account based money for small amounts till they get wrapped up into big coins. The smaller the data storage and bandwidth required for money issuers, the more resistant the system is the kind of government attacks on financial networks that we have recently seen. --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Ray Dillinger Fri, 07 Nov 2008 09:29:47 -0800 On Tue, 2008-11-04 at 06:20 +1000, James A. Donald wrote: > If I understand Simplified Payment Verification > correctly: > > New coin issuers need to store all coins and all recent > coin transfers. > > There are many new coin issuers, as many as want to be > issuers, but far more coin users. > > Ordinary entities merely transfer coins. To see if a > coin transfer is OK, they report it to one or more new > coin issuers and see if the new coin issuer accepts it. > New coin issuers check transfers of old coins so that > their new coins have valid form, and they report the > outcome of this check so that people will report their > transfers to the new coin issuer. I think the real issue with this system is the market for bitcoins. Computing proofs-of-work have no intrinsic value. We can have a limited supply curve (although the "currency" is inflationary at about 35% as that's how much faster computers get annually) but there is no demand curve that intersects it at a positive price point. I know the same (lack of intrinsic value) can be said of fiat currencies, but an artificial demand for fiat currencies is created by (among other things) taxation and legal-tender laws. Also, even a fiat currency can be an inflation hedge against another fiat currency's higher rate of inflation. But in the case of bitcoins the inflation rate of 35% is almost guaranteed by the technology, there are no supporting mechanisms for taxation, and no legal-tender laws. People will not hold assets in this highly-inflationary currency if they can help it. Bear --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] James A. Donald Sun, 09 Nov 2008 11:15:00 -0800 Satoshi Nakamoto wrote: > The bandwidth might not be as prohibitive as you > think. A typical transaction would be about 400 bytes > (ECC is nicely compact). Each transaction has to be > broadcast twice, so lets say 1KB per transaction. > Visa processed 37 billion transactions in FY2008, or > an average of 100 million transactions per day. That > many transactions would take 100GB of bandwidth, or > the size of 12 DVD or 2 HD quality movies, or about > $18 worth of bandwidth at current prices. The trouble is, you are comparing with the Bankcard network. But a new currency cannot compete directly with an old, because network effects favor the old. You have to go where Bankcard does not go. At present, file sharing works by barter for bits. This, however requires the double coincidence of wants. People only upload files they are downloading, and once the download is complete, stop seeding. So only active files, files that quite a lot of people want at the same time, are available. File sharing requires extremely cheap transactions, several transactions per second per client, day in and day out, with monthly transaction costs being very small per client, so to support file sharing on bitcoins, we will need a layer of account money on top of the bitcoins, supporting transactions of a hundred thousandth the size of the smallest coin, and to support anonymity, chaumian money on top of the account money. Let us call a bitcoin bank a bink. The bitcoins stand in the same relation to account money as gold stood in the days of the gold standard. The binks, not trusting each other to be liquid when liquidity is most needed, settle out any net discrepancies with each other by moving bit coins around once every hundred thousand seconds or so, so bitcoins do not change owners that often, Most transactions cancel out at the account level. The binks demand bitcoins of each other only because they don't want to hold account money for too long. So a relatively small amount of bitcoins infrequently transacted can support a somewhat larger amount of account money frequently transacted. --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Mon, 03 Nov 2008 11:45:58 -0800 >> As long as honest nodes control the most CPU power on the network, >> they can generate the longest chain and outpace any attackers. > >But they don't. Bad guys routinely control zombie farms of 100,000 >machines or more. People I know who run a blacklist of spam sending >zombies tell me they often see a million new zombies a day. > >This is the same reason that hashcash can't work on today's Internet >-- the good guys have vastly less computational firepower than the bad >guys. Thanks for bringing up that point. I didn't really make that statement as strong as I could have. The requirement is that the good guys collectively have more CPU power than any single attacker. There would be many smaller zombie farms that are not big enough to overpower the network, and they could still make money by generating bitcoins. The smaller farms are then the "honest nodes". (I need a better term than "honest") The more smaller farms resort to generating bitcoins, the higher the bar gets to overpower the network, making larger farms also too small to overpower it so that they may as well generate bitcoins too. According to the "long tail" theory, the small, medium and merely large farms put together should add up to a lot more than the biggest zombie farm. Even if a bad guy does overpower the network, it's not like he's instantly rich. All he can accomplish is to take back money he himself spent, like bouncing a check. To exploit it, he would have to buy something from a merchant, wait till it ships, then overpower the network and try to take his money back. I don't think he could make as much money trying to pull a carding scheme like that as he could by generating bitcoins. With a zombie farm that big, he could generate more bitcoins than everyone else combined. The Bitcoin network might actually reduce spam by diverting zombie farms to generating bitcoins instead. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Fri, 07 Nov 2008 09:30:36 -0800 >[Lengthy exposition of vulnerability of a systm to use-of-force >monopolies ellided.] > >You will not find a solution to political problems in cryptography. Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own. Satoshi --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] "Hal Finney" Sat, 08 Nov 2008 10:57:08 -0800 Bitcoin seems to be a very promising idea. I like the idea of basing security on the assumption that the CPU power of honest participants outweighs that of the attacker. It is a very modern notion that exploits the power of the long tail. When Wikipedia started I never thought it would work, but it has proven to be a great success for some of the same reasons. I also do think that there is potential value in a form of unforgeable token whose production rate is predictable and can't be influenced by corrupt parties. This would be more analogous to gold than to fiat currencies. Nick Szabo wrote many years ago about what he called "bit gold"[1] and this could be an implementation of that concept. There have also been proposals for building light-weight anonymous payment schemes on top of heavy-weight non-anonymous systems, so Bitcoin could be leveraged to allow for anonymity even beyond the mechanisms discussed in the paper. Unfortunately I am having trouble fully understanding the system. The paper describes key concepts and some data structures, but does not clearly specify the various rules and verifications that the participants in the system would have to follow. In particular I don't understand exactly what verifications P2P nodes perform when they receive new blocks from other nodes, and how they handle transactions that have been broadcast to them. For example, it is mentioned that if a broadcast transaction does not reach all nodes, it is OK, as it will get into the block chain before long. How does this happen - what if the node that creates the "next" block (the first node to find the hashcash collision) did not hear about the transaction, and then a few more blocks get added also by nodes that did not hear about that transaction? Do all the nodes that did hear it keep that transaction around, hoping to incorporate it into a block once they get lucky enough to be the one which finds the next collision? Or for example, what if a node is keeping two or more chains around as it waits to see which grows fastest, and a block comes in for chain A which would include a double-spend of a coin that is in chain B? Is that checked for or not? (This might happen if someone double-spent and two different sets of nodes heard about the two different transactions with the same coin.) This kind of data management, and the rules for handling all the packets that are flowing around is largely missing from the paper. I also don't understand exactly how double-spending, or cancelling transactions, is accomplished by a superior attacker who is able to muster more computing power than all the honest participants. I see that he can create new blocks and add them to create the longest chain, but how can he erase or add old transactions in the chain? As the attacker sends out his new blocks, aren't there consistency checks which honest nodes can perform, to make sure that nothing got erased? More explanation of this attack would be helpful, in order to judge the gains to an attacker from this, versus simply using his computing power to mint new coins honestly. As far as the spending transactions, what checks does the recipient of a coin have to perform? Does she need to go back through the coin's entire history of transfers, and make sure that every transaction on the list is indeed linked into the "timestamp" block chain? Or can she just do the latest one? Do the timestamp nodes check transactions, making sure that the previous transaction on a coin is in the chain, thereby enforcing the rule that all transactions in the chain represent valid coins? Sorry about all the questions, but as I said this does seem to be a very promising and original idea, and I am looking forward to seeing how the concept is further developed. It would be helpful to see a more process oriented description of the idea, with concrete details of the data structures for the various objects (coins, blocks, transactions), the data which is included in messages, and algorithmic descriptions of the procedures for handling the various events which would occur in this system. You mentioned that you are working on an implementation, but I think a more formal, text description of the system would be a helpful next step. Hal Finney [1] http://unenumerated.blogspot.com/2005/12/bit-gold.html --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Ray Dillinger: > the "currency" is inflationary at about 35% > as that's how much faster computers get annually > ... the inflation rate of 35% is almost guaranteed > by the technology Increasing hardware speed is handled: "To compensate for increasing hardware speed and varying interest in running nodes over time, the proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour. If they're generated too fast, the difficulty increases." As computers get faster and the total computing power applied to creating bitcoins increases, the difficulty increases proportionally to keep the total new production constant. Thus, it is known in advance how many new bitcoins will be created every year in the future. The fact that new coins are produced means the money supply increases by a planned amount, but this does not necessarily result in inflation. If the supply of money increases at the same rate that the number of people using it increases, prices remain stable. If it does not increase as fast as demand, there will be deflation and early holders of money will see its value increase. Coins have to get initially distributed somehow, and a constant rate seems like the best formula. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] James A. Donald Sun, 09 Nov 2008 11:16:50 -0800 Satoshi Nakamoto wrote: > Increasing hardware speed is handled: "To compensate > for increasing hardware speed and varying interest in > running nodes over time, the proof-of-work difficulty > is determined by a moving average targeting an average > number of blocks per hour. If they're generated too > fast, the difficulty increases." This does not work - your proposal involves complications I do not think you have thought through. Furthermore, it cannot be made to work, as in the proposed system the work of tracking who owns what coins is paid for by seigniorage, which requires inflation. This is not an intolerable flaw - predictable inflation is less objectionable than inflation that gets jiggered around from time to time to transfer wealth from one voting block to another. --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Sun, 09 Nov 2008 11:13:34 -0800 Hal Finney wrote: > it is mentioned that if a broadcast transaction does not reach all nodes, > it is OK, as it will get into the block chain before long. How does this > happen - what if the node that creates the "next" block (the first node > to find the hashcash collision) did not hear about the transaction, > and then a few more blocks get added also by nodes that did not hear > about that transaction? Do all the nodes that did hear it keep that > transaction around, hoping to incorporate it into a block once they get > lucky enough to be the one which finds the next collision? Right, nodes keep transactions in their working set until they get into a block. If a transaction reaches 90% of nodes, then each time a new block is found, it has a 90% chance of being in it. > Or for example, what if a node is keeping two or more chains around as > it waits to see which grows fastest, and a block comes in for chain A > which would include a double-spend of a coin that is in chain B? Is that > checked for or not? (This might happen if someone double-spent and two > different sets of nodes heard about the two different transactions with > the same coin.) That does not need to be checked for. The transaction in whichever branch ends up getting ahead becomes the valid one, the other is invalid. If someone tries to double spend like that, one and only one spend will always become valid, the others invalid. Receivers of transactions will normally need to hold transactions for perhaps an hour or more to allow time for this kind of possibility to be resolved. They can still re-spend the coins immediately, but they should wait before taking an action such as shipping goods. > I also don't understand exactly how double-spending, or cancelling > transactions, is accomplished by a superior attacker who is able to muster > more computing power than all the honest participants. I see that he can > create new blocks and add them to create the longest chain, but how can > he erase or add old transactions in the chain? As the attacker sends out > his new blocks, aren't there consistency checks which honest nodes can > perform, to make sure that nothing got erased? More explanation of this > attack would be helpful, in order to judge the gains to an attacker from > this, versus simply using his computing power to mint new coins honestly. The attacker isn't adding blocks to the end. He has to go back and redo the block his transaction is in and all the blocks after it, as well as any new blocks the network keeps adding to the end while he's doing that. He's rewriting history. Once his branch is longer, it becomes the new valid one. This touches on a key point. Even though everyone present may see the shenanigans going on, there's no way to take advantage of that fact. It is strictly necessary that the longest chain is always considered the valid one. Nodes that were present may remember that one branch was there first and got replaced by another, but there would be no way for them to convince those who were not present of this. We can't have subfactions of nodes that cling to one branch that they think was first, others that saw another branch first, and others that joined later and never saw what happened. The CPU power proof-of-work vote must have the final say. The only way for everyone to stay on the same page is to believe that the longest chain is always the valid one, no matter what. > As far as the spending transactions, what checks does the recipient of a > coin have to perform? Does she need to go back through the coin's entire > history of transfers, and make sure that every transaction on the list is > indeed linked into the "timestamp" block chain? Or can she just do the > latest one? The recipient just needs to verify it back to a depth that is sufficiently far back in the block chain, which will often only require a depth of 2 transactions. All transactions before that can be discarded. > Do the timestamp nodes check transactions, making sure that > the previous transaction on a coin is in the chain, thereby enforcing > the rule that all transactions in the chain represent valid coins? Right, exactly. When a node receives a block, it checks the signatures of every transaction in it against previous transactions in blocks. Blocks can only contain transactions that depend on valid transactions in previous blocks or the same block. Transaction C could depend on transaction B in the same block and B depends on transaction A in an earlier block. > Sorry about all the questions, but as I said this does seem to be a > very promising and original idea, and I am looking forward to seeing > how the concept is further developed. It would be helpful to see a more > process oriented description of the idea, with concrete details of the > data structures for the various objects (coins, blocks, transactions), > the data which is included in messages, and algorithmic descriptions > of the procedures for handling the various events which would occur in > this system. You mentioned that you are working on an implementation, > but I think a more formal, text description of the system would be a > helpful next step. I appreciate your questions. I actually did this kind of backwards. I had to write all the code before I could convince myself that I could solve every problem, then I wrote the paper. I think I will be able to release the code sooner than I could write a detailed spec. You're already right about most of your assumptions where you filled in the blanks. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Sun, 09 Nov 2008 11:14:17 -0800 James A. Donald wrote: > The core concept is that lots of entities keep complete and consistent > information as to who owns which bitcoins. > > But maintaining consistency is tricky. It is not clear to me what > happens when someone reports one transaction to one maintainer, and > someone else transports another transaction to another maintainer. The > transaction cannot be known to be valid until it has been incorporated > into a globally shared view of all past transactions, and no one can > know that a globally shared view of all past transactions is globally > shared until after some time has passed, and after many new > transactions have arrived. > > Did you explain how to do this, and it just passed over my head, or > were you confident it could be done, and a bit vague as to the details? The proof-of-work chain is the solution to the synchronisation problem, and to knowing what the globally shared view is without having to trust anyone. A transaction will quickly propagate throughout the network, so if two versions of the same transaction were reported at close to the same time, the one with the head start would have a big advantage in reaching many more nodes first. Nodes will only accept the first one they see, refusing the second one to arrive, so the earlier transaction would have many more nodes working on incorporating it into the next proof-of-work. In effect, each node votes for its viewpoint of which transaction it saw first by including it in its proof-of-work effort. If the transactions did come at exactly the same time and there was an even split, it's a toss up based on which gets into a proof-of-work first, and that decides which is valid. When a node finds a proof-of-work, the new block is propagated throughout the network and everyone adds it to the chain and starts working on the next block after it. Any nodes that had the other transaction will stop trying to include it in a block, since it's now invalid according to the accepted chain. The proof-of-work chain is itself self-evident proof that it came from the globally shared view. Only the majority of the network together has enough CPU power to generate such a difficult chain of proof-of-work. Any user, upon receiving the proof-of-work chain, can see what the majority of the network has approved. Once a transaction is hashed into a link that's a few links back in the chain, it is firmly etched into the global history. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] James A. Donald Sun, 09 Nov 2008 11:15:38 -0800 -- Satoshi Nakamoto wrote: > The proof-of-work chain is the solution to the > synchronisation problem, and to knowing what the > globally shared view is without having to trust > anyone. > > A transaction will quickly propagate throughout the > network, so if two versions of the same transaction > were reported at close to the same time, the one with > the head start would have a big advantage in reaching > many more nodes first. Nodes will only accept the > first one they see, refusing the second one to arrive, > so the earlier transaction would have many more nodes > working on incorporating it into the next > proof-of-work. In effect, each node votes for its > viewpoint of which transaction it saw first by > including it in its proof-of-work effort. OK, suppose one node incorporates a bunch of transactions in its proof of work, all of them honest legitimate single spends and another node incorporates a slightly different bunch of transactions in its proof of work, all of them equally honest legitimate single spends, and both proofs are generated at about the same time. What happens then? --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Sun, 09 Nov 2008 11:17:24 -0800 James A. Donald wrote: >OK, suppose one node incorporates a bunch of >transactions in its proof of work, all of them honest >legitimate single spends and another node incorporates a >different bunch of transactions in its proof of >work, all of them equally honest legitimate single >spends, and both proofs are generated at about the same >time. > >What happens then? They both broadcast their blocks. All nodes receive them and keep both, but only work on the one they received first. We'll suppose exactly half received one first, half the other. In a short time, all the transactions will finish propagating so that everyone has the full set. The nodes working on each side will be trying to add the transactions that are missing from their side. When the next proof-of-work is found, whichever previous block that node was working on, that branch becomes longer and the tie is broken. Whichever side it is, the new block will contain the other half of the transactions, so in either case, the branch will contain all transactions. Even in the unlikely event that a split happened twice in a row, both sides of the second split would contain the full set of transactions anyway. It's not a problem if transactions have to wait one or a few extra cycles to get into a block. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] James A. Donald Mon, 10 Nov 2008 11:08:43 -0800 -- > James A. Donald wrote: >> OK, suppose one node incorporates a bunch of >> transactions in its proof of work, all of them honest >> legitimate single spends and another node >> incorporates a different bunch of transactions in its >> proof of work, all of them equally honest legitimate >> single spends, and both proofs are generated at about >> the same time. >> >> What happens then? Satoshi Nakamoto wrote: > They both broadcast their blocks. All nodes receive > them and keep both, but only work on the one they > received first. We'll suppose exactly half received > one first, half the other. > > In a short time, all the transactions will finish > propagating so that everyone has the full set. The > nodes working on each side will be trying to add the > transactions that are missing from their side. When > the next proof-of-work is found, whichever previous > block that node was working on, that branch becomes > longer and the tie is broken. Whichever side it is, > the new block will contain the other half of the > transactions, so in either case, the branch will > contain all transactions. Even in the unlikely event > that a split happened twice in a row, both sides of > the second split would contain the full set of > transactions anyway. > > It's not a problem if transactions have to wait one or > a few extra cycles to get into a block. So what happened to the coin that lost the race? On the one hand, we want people who make coins to be motivated to keep and record all transactions, and obtain an up to date record of all transactions in a timely manner. On the other hand, it is a bit harsh if the guy who came second is likely to lose his coin. Further, your description of events implies restrictions on timing and coin generation - that the entire network generates coins slowly compared to the time required for news of a new coin to flood the network, otherwise the chains diverge more and more, and no one ever knows which chain is the winner. You need to make these restrictions explicit, for network flood time may well be quite slow. Which implies that the new coin rate is slower. We want spenders to have certainty that their transaction is valid at the time it takes a spend to flood the network, not at the time it takes for branch races to be resolved. At any given time, for example at 1 040 689 138 seconds we can look back at the past and say: At 1 040 688 737 seconds, node 5 was *it*, and he incorporated all the coins he had discovered into the chain, and all the new transactions he knew about on top of the previous link At 1 040 688 792 seconds, node 2 was *it*, and he incorporated all the coins he had discovered into the chain, and all the new transactions he knew about into the chain on top of node 5's link. At 1 040 688 745 seconds, node 7 was *it*, and he incorporated all the coins he had discovered into the chain, and all the new transactions he knew about into the chain on top of node 2's link. But no one can know who is *it* right now So how does one know when to reveal one's coins? One solution is that one does not. One incorporates a hash of the coin secret whenever one thinks one might be *it*, and after that hash is securely in the chain, after one knows that one was *it* at the time, one can then safely spend the coin that one has found, revealing the secret. This solution takes care of the coin revelation problem, but does not solve the spend recording problem. If one node is ignoring all spends that it does not care about, it suffers no adverse consequences. We need a protocol in which your prospects of becoming *it* also depend on being seen by other nodes as having a reasonably up to date and complete list of spends - which this protocol is not, and your protocol is not either. --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Mon, 10 Nov 2008 11:09:26 -0800 James A. Donald wrote: > Furthermore, it cannot be made to work, as in the > proposed system the work of tracking who owns what coins > is paid for by seigniorage, which requires inflation. If you're having trouble with the inflation issue, it's easy to tweak it for transaction fees instead. It's as simple as this: let the output value from any transaction be 1 cent less than the input value. Either the client software automatically writes transactions for 1 cent more than the intended payment value, or it could come out of the payee's side. The incentive value when a node finds a proof-of-work for a block could be the total of the fees in the block. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Tue, 11 Nov 2008 06:30:22 -0800 James A. Donald wrote: > So what happened to the coin that lost the race? > > ... it is a bit harsh if the guy who came second > is likely to lose his coin. When there are multiple double-spent versions of the same transaction, one and only one will become valid. The receiver of a payment must wait an hour or so before believing that it's valid. The network will resolve any possible double-spend races by then. The guy who received the double-spend that became invalid never thought he had it in the first place. His software would have shown the transaction go from "unconfirmed" to "invalid". If necessary, the UI can be made to hide transactions until they're sufficiently deep in the block chain. > Further, your description of events implies restrictions > on timing and coin generation - that the entire network > generates coins slowly compared to the time required for > news of a new coin to flood the network Sorry if I didn't make that clear. The target time between blocks will probably be 10 minutes. Every block includes its creation time. If the time is off by more than 36 hours, other nodes won't work on it. If the timespan over the last 6*24*30 blocks is less than 15 days, blocks are being generated too fast and the proof-of-work difficulty doubles. Everyone does the same calculation with the same chain data, so they all get the same result at the same link in the chain. > We want spenders to have certainty that their > transaction is valid at the time it takes a spend to > flood the network, not at the time it takes for branch > races to be resolved. Instantant non-repudiability is not a feature, but it's still much faster than existing systems. Paper cheques can bounce up to a week or two later. Credit card transactions can be contested up to 60 to 180 days later. Bitcoin transactions can be sufficiently irreversible in an hour or two. > If one node is ignoring all spends that it does not > care about, it suffers no adverse consequences. With the transaction fee based incentive system I recently posted, nodes would have an incentive to include all the paying transactions they receive. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] James A. Donald Thu, 13 Nov 2008 07:13:21 -0800 Satoshi Nakamoto wrote: > When there are multiple double-spent versions of the > same transaction, one and only one will become valid. That is not the question I am asking. It is not trust that worries me, it is how it is possible to have a a globally shared view even if everyone is well behaved. The process for arriving at a globally shared view of who owns what bitgold coins is insufficiently specified. Once specified, then we can start considering whether everyone has incentives to behave correctly. It is not sufficient that everyone knows X. We also need everyone to know that everyone knows X, and that everyone knows that everyone knows that everyone knows X - which, as in the Byzantine Generals problem, is the classic hard problem of distributed data processing. This problem becomes harder when X is quite possibly a very large amount of data - agreement on who was the owner of every bitgold coin at such and such a time. And then on top of that we need everyone to have a motive to behave in such a fashion that agreement arises. I cannot see that they have motive when I do not know the behavior to be motivated. You keep repeating your analysis of the system under attack. We cannot say how the system will behave under attack until we know how the system is supposed to behave when not under attack. If there are a lot of transactions, it is hard to efficiently discover the discrepancies between one node's view and another node's view, and because new transactions are always arriving, no two nodes will ever have the same view, even if all nodes are honest, and all reported transactions are correct and true single spends. We should be able to accomplish a system where two nodes are likely to come to agreement as to who owned what bitgold coins at some very recent past time, but it is not simple to do so. If one node constructs a hash that represents its knowledge of who owned what bitgold coins at a particular time, and another node wants to check that hash, it is not simple to do it in such a way that agreement is likely, and disagreement between honest well behaved nodes is efficiently detected and efficiently resolved. And if we had a specification of how agreement is generated, it is not obvious why the second node has incentive to check that hash. The system has to work in such a way that nodes can easily and cheaply change their opinion about recent transactions, so as to reach consensus, but in order to provide finality and irreversibility, once consensus has been reached, and then new stuff has be piled on top of old consensus, in particular new bitgold has been piled on top of old consensus, it then becomes extremely difficult to go back and change what was decided. Saying that is how it works, does not give us a method to make it work that way. > The receiver of a payment must wait an hour or so > before believing that it's valid. The network will > resolve any possible double-spend races by then. You keep discussing attacks. I find it hard to think about response to attack when it is not clear to me what normal behavior is in the case of good conduct by each and every party. Distributed databases are *hard* even when all the databases perfectly follow the will of a single owner. Messages get lost, links drop, syncrhonization delays become abnormal, and entire machines go up in flames, and the network as a whole has to take all this in its stride. Figuring out how to do this is hard, even in the complete absence of attacks. Then when we have figured out how to handle all this, then come attacks. --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] "Hal Finney" Thu, 13 Nov 2008 13:05:36 -0800 James A. Donald writes: > Satoshi Nakamoto wrote: > > When there are multiple double-spent versions of the > > same transaction, one and only one will become valid. > > That is not the question I am asking. > > It is not trust that worries me, it is how it is > possible to have a a globally shared view even if > everyone is well behaved. > > The process for arriving at a globally shared view of > who owns what bitgold coins is insufficiently specified. I agree that the description is not completely clear on how these matters are handled. Satoshi has suggested that releasing source code may be the best way to clarify the design. As I have tried to work through details on my own, it does appear that the rules become rather complicated and indeed one needs at least a pseudo-code algorithm to specify the behavior. So perhaps writing real code is not a bad way to go. I found that there is a sourceforge project set up for bitgold, although it does not have any code yet. In answer to James' specific question, about what happens when different nodes see different sets of transactions, due to imperfect broadcast, here is how I understand it. Each node must be prepared to maintain potentially several "candidate" block chains, each of which may eventually turn out to become the longest one, the one which wins. Once a given block chain becomes sufficiently longer than a competitor, the shorter one can be deleted. This length differential is a parameter which depends on the node's threat model for how much compute power an attacker can marshall, in terms of the fraction of the "honst" P2P network's work capacity, and is estimated in the paper. The idea is that once a chain gets far enough behind the longest one, there is essentially no chance that it can ever catch up. In order to resolve the issue James raised, I think it is necessary that nodes keep a separate pending-transaction list associated with each candidate chain. This list would include all transactions the node has received (via broadcast by the transactees) but which have not yet been incorporated into that block chain. At any given time, the node is working to extend the longest block chain, and the block it is working to find a hash collision for will include all of the pending transactions associated with that chain. I think that this way, when a candidate chain is deleted because it got too much shorter than the longest one, transactions in it are not lost, but have continued to be present in the pending-transaction list associated with the longest chain, in those nodes which heard the original transaction broadcast. (I have also considered whether nodes should add transactions to their pending-transaction list that they learn about through blocks from other nodes, even if those blocks do not end up making their way into the longest block chain; but I'm not sure if that is necessary or helpful.) Once these rules are clarified, more formal modeling will be helpful in understanding the behavior of the network given imperfect reliability. For example, if on average a fraction f of P2P nodes receive a given transaction broadcast, then I think one would expect 1/f block-creation times to elapse before the transaction appears in what is destined to become the longest chain. One might also ask, given that the P2P network broadcast is itself imperfectly reliable, how many candidate chains must a given node keep track of at one time, on average? Or as James raised earlier, if the network broadcast is reliable but depends on a potentially slow flooding algorithm, how does that impact performance? > And then on top of that we need everyone to have a > motive to behave in such a fashion that agreement > arises. I cannot see that they have motive when I do > not know the behavior to be motivated. I am somewhat less worried about motivation. I'd be satisfied if the system can meet the following criteria: 1. No single node operator, or small collection of node operators which controls only a small fraction of overall network resources, can effectively cheat, if other players are honest. 2. The long tail of node operators is sufficiently large that no small collection of nodes can control more than a small fraction of overall resources. (Here, the "tail" refers to a ranking based on amount of resources controlled by each operator.) 3. The bitcoin system turns out to be socially useful and valuable, so that node operators feel that they are making a beneficial contribution to the world by their efforts (similar to the various "@Home" compute projects where people volunteer their compute resources for good causes). In this case it seems to me that simple altruism can suffice to keep the network running properly. > Distributed databases are *hard* even when all the > databases perfectly follow the will of a single owner. > Messages get lost, links drop, syncrhonization delays > become abnormal, and entire machines go up in flames, > and the network as a whole has to take all this in its > stride. A very good point, and a more complete specification is necessary in order to understand how the network will respond to imperfections like this. I am looking forward to seeing more detail emerge. One thing I might mention is that in many ways bitcoin is two independent ideas: a way of solving the kinds of problems James lists here, of creating a globally consistent but decentralized database; and then using it for a system similar to Wei Dai's b-money (which is referenced in the paper) but transaction/coin based rather than account based. Solving the global, massively decentralized database problem is arguably the harder part, as James emphasizes. The use of proof-of-work as a tool for this purpose is a novel idea well worth further review IMO. Hal Finney --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Thu, 13 Nov 2008 19:34:25 -0800 James A. Donald wrote: > It is not sufficient that everyone knows X. We also > need everyone to know that everyone knows X, and that > everyone knows that everyone knows that everyone knows X > - which, as in the Byzantine Generals problem, is the > classic hard problem of distributed data processing. The proof-of-work chain is a solution to the Byzantine Generals' Problem. I'll try to rephrase it in that context. A number of Byzantine Generals each have a computer and want to attack the King's wi-fi by brute forcing the password, which they've learned is a certain number of characters in length. Once they stimulate the network to generate a packet, they must crack the password within a limited time to break in and erase the logs, otherwise they will be discovered and get in trouble. They only have enough CPU power to crack it fast enough if a majority of them attack at the same time. They don't particularly care when the attack will be, just that they all agree. It has been decided that anyone who feels like it will announce a time, and whatever time is heard first will be the official attack time. The problem is that the network is not instantaneous, and if two generals announce different attack times at close to the same time, some may hear one first and others hear the other first. They use a proof-of-work chain to solve the problem. Once each general receives whatever attack time he hears first, he sets his computer to solve an extremely difficult proof-of-work problem that includes the attack time in its hash. The proof-of-work is so difficult, it's expected to take 10 minutes of them all working at once before one of them finds a solution. Once one of the generals finds a proof-of-work, he broadcasts it to the network, and everyone changes their current proof-of-work computation to include that proof-of-work in the hash they're working on. If anyone was working on a different attack time, they switch to this one, because its proof-of-work chain is now longer. After two hours, one attack time should be hashed by a chain of 12 proofs-of-work. Every general, just by verifying the difficulty of the proof-of-work chain, can estimate how much parallel CPU power per hour was expended on it and see that it must have required the majority of the computers to produce that much proof-of-work in the allotted time. They had to all have seen it because the proof-of-work is proof that they worked on it. If the CPU power exhibited by the proof-of-work chain is sufficient to crack the password, they can safely attack at the agreed time. The proof-of-work chain is how all the synchronisation, distributed database and global view problems you've asked about are solved. --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Ray Dillinger Mon, 17 Nov 2008 09:04:04 -0800 Okay.... I'm going to summarize this protocol as I understand it. I'm filling in some operational details that aren't in the paper by supplementing what you wrote with what my own "design sense" tells me are critical missing bits or "obvious" methodologies for use. First, people spend computer power creating a pool of coins to use as money. Each coin is a proof-of-work meeting whatever criteria were in effect for money at the time it was created. The time of creation (and therefore the criteria) is checkable later because people can see the emergence of this particular coin in the transaction chain and track it through all its "consensus view" spends. (more later on coin creation tied to adding a link). When a coin is spent, the buyer and seller digitally sign a (blinded) transaction record, and broadcast it to a bunch of nodes whose purpose is keeping track of consensus regarding coin ownership. If someone double spends, then the transaction record can be unblinded revealing the identity of the cheater. This is done via a fairly standard cut- and-choose algorithm where the buyer responds to several challenges with secret shares, and the seller then asks him to "unblind" and checks all but one, verifying that they do contain secret shares any two of which are sufficient to identify the buyer. In this case the seller accepts the unblinded spend record as "probably" containing a valid secret share. The nodes keeping track of consensus regarding coin ownership are in a loop where they are all trying to "add a link" to the longest chain they've so far recieved. They have a pool of reported transactions which they've not yet seen in a "consensus" signed chain. I'm going to call this pool "A". They attempt to add a link to the chain by moving everything from pool A into a pool "L" and using a CPU- intensive digital signature algorithm to sign the chain including the new block L. This results in a chain extended by a block containing all the transaction records they had in pool L, plus the node's digital signature. While they do this, new transaction records continue to arrive and go into pool A again for the next cycle of work. They may also recieve chains as long as the one they're trying to extend while they work, in which the last few "links" are links that are *not* in common with the chain on which they're working. These they ignore. (? Do they ignore them? Under what circumstances would these become necessary to ever look at again, bearing in mind that any longer chain based on them will include them?) But if they recieve a _longer_ chain while working, they immediately check all the transactions in the new links to make sure it contains no double spends and that the "work factors" of all new links are appropriate. If it contains a double spend, then they create a "transaction" which is a proof of double spending, add it to their pool A, broadcast it, and continue work. If one of the "new" links has an inappropriate work factor (ie, someone didn't put enough CPU into it for it to be "licit" according to the rules) a new "transaction" which is a proof of the protocol violation by the link-creating node is created, broadcast, and added to pool A, and the chain is rejected. In the case of no double spends and appropriate work factors for all links not yet seen, they accept the new chain as consensus. If the new chain is accepted, then they give up on adding their current link, dump all the transactions from pool L back into pool A (along with transactions they've recieved or created since starting work), eliminate from pool A those transaction records which are already part of a link in the new chain, and start work again trying to extend the new chain. If they complete work on a chain extended with their new link, they broadcast it and immediately start work on another new link with all the transactions that have accumulated in pool A since they began work. Do I understand it correctly? Biggest Technical Problem: Is there a mechanism to make sure that the "chain" does not consist solely of links added by just the 3 or 4 fastest nodes? 'Cause a broadcast transaction record could easily miss those 3 or 4 nodes and if it does, and those nodes continue to dominate the chain, the transaction might never get added. To remedy this, you need to either ensure provable propagation of transactions, or vary the work factor for a node depending on how many links have been added since that node's most recent link. Unfortunately, both measures can be defeated by sock puppets. This is probably the worst problem with your protocol as it stands right now; you need some central point to control the identities (keys) of the nodes and prevent people from making new sock puppets. Provable propagation would mean that When Bob accepts a new chain from Alice, he needs to make sure that Alice has (or gets) all transactions in his "A" and "L" pools. He sends them, and Alice sends back a signed hash to prove she got them. Once Alice has recieved this block of transactions, if any subsequent chains including a link added by Alice do not include those transactions at or before that link, then Bob should be able to publish the block he sent Alice, along with her signature, in a transaction as proof that Alice violated protocol. Sock puppets defeat this because Alice just signs subsequent chains using a new key, pretending to be a different node. If we go with varying the work factor depending on how many new links there are, then we're right back to domination by the 3 or 4 fastest nodes, except now they're joined by 600 or so sock puppets which they use to avoid the work factor penalty. If we solve the sock-puppet issue, or accept that there's a central point controlling the generation of new keys, then generation of coins should be tied to the act of successfully adding a block to the "consensus" chain. This is simple to do; creation of a coin is a transaction, it gets added along with all the other transactions in the block. But you can only create one coin per link, and of course if your version of the chain isn't the one that gets accepted, then in the "accepted" view you don't have the coin and can't spend it. This gives the people maintaining the consensus database a reason to spend CPU cycles, especially since the variance in work factor by number of links added since their own last link (outlined above) guarantees that everyone, not just the 3 or 4 fastest nodes, occasionally gets the opportunity to create a coin. Also, the work requirement for adding a link to the chain should vary (again exponentially) with the number of links added to that chain in the previous week, causing the rate of coin generation (and therefore inflation) to be strictly controlled. You need coin aggregation for this to scale. There needs to be a "provable" transaction where someone retires ten single coins and creates a new coin with denomination ten, etc. This is not too hard, using the same infrastructure you've already got; it simply becomes part of the chain, and when the chain is accepted consensus, then everybody can see that it happened. Bear --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] James A. Donald Tue, 18 Nov 2008 14:52:26 -0800 Ray Dillinger wrote: > Okay.... I'm going to summarize this protocol as I > understand it. > > I'm filling in some operational details that aren't in > the paper by supplementing what you wrote with what my > own "design sense" tells me are critical missing bits > or "obvious" methodologies for use. There are a number of significantly different ways this could be implemented. I have been working on my own version based on Patricia hash trees, (not yet ready to post, will post in a week or so) with the consensus generation being a generalization of file sharing using Merkle hash trees. Patricia hash trees where the high order part of the Patricia key represents the high order part of the time can be used to share data that evolves in time. The algorithm, if implemented by honest correctly functioning peers, regularly generates consensus hashes of the recent past - thereby addressing the problem I have been complaining about - that we have a mechanism to protect against consensus distortion by dishonest or malfunctioning peers, which is useless absent a definition of consensus generation by honest and correctly functioning peers. > First, people spend computer power creating a pool of > coins to use as money. Each coin is a proof-of-work > meeting whatever criteria were in effect for money at > the time it was created. The time of creation (and > therefore the criteria) is checkable later because > people can see the emergence of this particular coin > in the transaction chain and track it through all its > "consensus view" spends. (more later on coin creation > tied to adding a link). > > When a coin is spent, the buyer and seller digitally > sign a (blinded) transaction record, and broadcast it > to a bunch of nodes whose purpose is keeping track of > consensus regarding coin ownership. I don't think your blinding works. If there is a public record of who owns what coin, we have to generate a public diff on changes in that record, so the record will show that a coin belonged to X, and soon thereafter belonged to Y. I don't think blinding can be made to work. We can blind the transaction details easily enough, by only making hashes of the details public, (X paid Y for 49vR7xmwYcKXt9zwPJ943h9bHKC2pG68m) but that X paid Y is going to be fairly obvious. If when Joe spends a coin to me, then I have to have the ability to ask "Does Joe rightfully own this coin", then it is difficult to see how this can be implemented in a distributed protocol without giving people the ability to trawl through data detecting that Joe paid me. To maintain a consensus on who owns what coins, who owns what coins has to be public. We can build a privacy layer on top of this - account money and chaumian money based on bitgold coins, much as the pre 1915 US banking system layered account money and bank notes on top of gold coins, and indeed we have to build a layer on top to bring the transaction cost down to the level that supports agents performing micro transactions, as needed for bandwidth control, file sharing, and charging non white listed people to send us communications. So the entities on the public record are entities functioning like pre 1915 banks - let us call them binks, for post 1934 banks no longer function like that. > But if they recieve a _longer_ chain while working, > they immediately check all the transactions in the new > links to make sure it contains no double spends and > that the "work factors" of all new links are > appropriate. I am troubled that this involves frequent retransmissions of data that is already mostly known. Consensus and widely distributed beliefs about bitgold ownership already involves significant cost. Further, each transmission of data is subject to data loss, which can result in thrashing, with the risk that the generation of consensus may slow below the rate of new transactions. We already have problems getting the cost down to levels that support micro transactions by software agents, which is the big unserved market - bandwidth control, file sharing, and charging non white listed people to send us communications. To work as useful project, has to be as efficient as it can be - hence my plan to use a Patricia hash tree because it identifies and locate small discrepancies between peers that are mostly in agreement already, without them needing to transmit their complete data. We also want to avoid very long hash chains that have to be frequently checked in order to validate things. Any time a hash chain can potentially become enormously long over time, we need to ensure that no one ever has to rewalk the full length. Chains that need to be re-walked can only be permitted to grow as the log of the total number of transactions - if they grow as the log of the transactions in any one time period plus the total number of time periods, we have a problem. > Biggest Technical Problem: > > Is there a mechanism to make sure that the "chain" > does not consist solely of links added by just the 3 > or 4 fastest nodes? 'Cause a broadcast transaction > record could easily miss those 3 or 4 nodes and if it > does, and those nodes continue to dominate the chain, > the transaction might never get added. > > To remedy this, you need to either ensure provable > propagation of transactions, or vary the work factor > for a node depending on how many links have been added > since that node's most recent link. > > Unfortunately, both measures can be defeated by sock > puppets. This is probably the worst problem with your > protocol as it stands right now; you need some central > point to control the identities (keys) of the nodes > and prevent people from making new sock puppets. We need a protocol wherein to be a money tracking peer (an entity that validates spends) you have to be accepted by at least two existing peers who agree to synchronize data with you - presumably through human intervention by the owners of existing peers, and these two human approved synchronization paths indirectly connect you to the other peers in the network through at least one graph cycle. If peer X is only connected to the rest of the network by one existing peer, peer Y, perhaps because X's directly connecting peer has dropped out, then X is demoted to a client, not a peer - any transactions X submits are relabeled by Y as submitted to Y, not X, and the time of submission (which forms part of the Patricia key) is the time X submitted them to Y, not the time they were submitted to X. The algorithm must be able swiftly detect malfunctioning peers, and automatically exclude them from the consensus temporarily - which means that transactions submitted through malfunctioning peers do not get included in the consensus, therefore have to be resubmitted, and peers may find themselves temporarily demoted to clients, because one of the peers through which they were formerly connected to the network has been dropped by the consensus. If a peer gets a lot of automatic temporary exclusions, there may be human intervention by the owners of those peers to which it exchanges data directly to permanently drop them. Since peers get accepted by human invite, they have reputation to lose, therefore we can make the null hypothesis (the primary Bayesian prior) honest intent, valid data, but unreliable data transmission - trust with infrequent random verification. Designing the system on this basis considerably reduces processing costs. Recall that SET died on its ass in large part because every transaction involved innumerable public key operations. Similarly, we have huge security flaws in https because it has so many redundant public key operations that web site designers try to minimize the use of https to cover only those areas that truly need it - and they always get the decision as to what truly needs it subtly wrong. Efficiency is critical, particularly as the part of the market not yet served is the market for very low cost transactions. > If we solve the sock-puppet issue, or accept that > there's a central point controlling the generation of > new keys, A central point will invite attack, will be attacked. The problem with computer networked money is that the past can so easily be revised, so nodes come under pressure to adjust the past - "I did not pay that" swiftly becomes "I should not have paid that", which requires arbitration, which is costly, and introduces uncertainty, which is costly, and invites government regulation, which is apt to be utterly ruinous and wholly devastating. For many purposes, reversal and arbitration is highly desirable, but there is no way anyone can compete with the arbitration provided by Visa and Mastercard, for they have network effects on their side, and they do a really good job of arbitration, at which they have vast experience, accumulated skills, wisdom, and good repute. So any new networked transaction system has to target the demand for final and irreversible transactions. The idea of a distributed network consensus is that one has a lot of peers in a lot of jurisdictions, and once a transaction has entered into the consensus, undoing it is damn near impossible - one would have to pressure most of the peers in most of the jurisdictions to agree, and many of them don't even talk your language, and those that do, will probably pretend that they do not. So people will not even try. To avoid pressure, the network has to avoid any central point at which pressure can be applied. Recall Nero's wish that Rome had a single throat that he could cut. If we provide them with such a throat, it will be cut. --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Fri, 14 Nov 2008 14:29:22 -0800 Hal Finney wrote: > I think it is necessary that nodes keep a separate > pending-transaction list associated with each candidate chain. > ... One might also ask ... how many candidate chains must > a given node keep track of at one time, on average? Fortunately, it's only necessary to keep a pending-transaction pool for the current best branch. When a new block arrives for the best branch, ConnectBlock removes the block's transactions from the pending-tx pool. If a different branch becomes longer, it calls DisconnectBlock on the main branch down to the fork, returning the block transactions to the pending-tx pool, and calls ConnectBlock on the new branch, sopping back up any transactions that were in both branches. It's expected that reorgs like this would be rare and shallow. With this optimisation, candidate branches are not really any burden. They just sit on the disk and don't require attention unless they ever become the main chain. > Or as James raised earlier, if the network broadcast > is reliable but depends on a potentially slow flooding > algorithm, how does that impact performance? Broadcasts will probably be almost completely reliable. TCP transmissions are rarely ever dropped these days, and the broadcast protocol has a retry mechanism to get the data from other nodes after a while. If broadcasts turn out to be slower in practice than expected, the target time between blocks may have to be increased to avoid wasting resources. We want blocks to usually propagate in much less time than it takes to generate them, otherwise nodes would spend too much time working on obsolete blocks. I'm planning to run an automated test with computers randomly sending payments to each other and randomly dropping packets. > 3. The bitcoin system turns out to be socially useful and valuable, so > that node operators feel that they are making a beneficial contribution > to the world by their efforts (similar to the various "@Home" compute > projects where people volunteer their compute resources for good causes). > > In this case it seems to me that simple altruism can suffice to keep the > network running properly. It's very attractive to the libertarian viewpoint if we can explain it properly. I'm better with code than with words though. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] James A. Donald Mon, 17 Nov 2008 09:06:45 -0800 Satoshi Nakamoto wrote: > Fortunately, it's only necessary to keep a > pending-transaction pool for the current best branch. This requires that we know, that is to say an honest well behaved peer whose communications and data storage is working well knows, what the current best branch is - but of course, the problem is that we are trying to discover, trying to converge upon, a best branch, which is not easy at the best of times, and becomes harder when another peer is lying about its connectivity and capabilities, and yet another peer has just had a major disk drive failure obfuscated by a software crash, and the international fibers connecting yet a third peer have been attacked by terrorists. > When a new block arrives for the best branch, > ConnectBlock removes the block's transactions from > the pending-tx pool. If a different branch becomes > longer Which presupposes the branches exist, that they are fully specified and complete. If they exist as complete works, rather than works in progress, then the problem is already solved, for the problem is making progress. > Broadcasts will probably be almost completely > reliable. There is a trade off between timeliness and reliability. One can make a broadcast arbitrarily reliable if time is of no consequence. However, when one is talking of distributed data, time is always of consequence, because it is all about synchronization (that peers need to have corresponding views at corresponding times) so when one does distributed data processing, broadcasts are always highly unreliable Attempts to ensure that each message arrives at least once result in increased timing variation. Thus one has to make a protocol that is either UDP or somewhat UDP like, in that messages are small, failure of messages to arrive is common, messages can arrive in different order to the order in which they were sent, and the same message may arrive multiple times. Either we have UDP, or we need to accommodate the same problems as UDP has on top of TCP connections. Rather than assuming that each message arrives at least once, we have to make a mechanism such that the information arrives even though conveyed by messages that frequently fail to arrive. > TCP transmissions are rarely ever dropped these days People always load connections near maximum. When a connection is near maximum, TCP connections suffer frequent unreasonably long delays, and connections simply fail a lot - your favorite web cartoon somehow shows it is loading forever, and you try again, or it comes up with a little x in place of a picture, and you try again Further very long connections - for example ftp downloads of huge files, seldom complete. If you try to ftp a movie, you are unlikely to get anywhere unless both client and server have a resume mechanism so that they can talk about partially downloaded files. UDP connections, for example Skype video calls, also suffer frequent picture freezes, loss of quality, and so forth, and have to have mechanisms to keep going regardless. > It's very attractive to the libertarian viewpoint if > we can explain it properly. I'm better with code than > with words though. No, it is very attractive to the libertarian if we can design a mechanism that will scale to the point of providing the benefits of rapidly irreversible payment, immune to political interference, over the internet, to very large numbers of people. You have an outline and proposal for such a design, which is a big step forward, but the devil is in the little details. I really should provide a fleshed out version of your proposal, rather than nagging you to fill out the blind spots. --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Mon, 17 Nov 2008 09:04:47 -0800 I'll try and hurry up and release the sourcecode as soon as possible to serve as a reference to help clear up all these implementation questions. Ray Dillinger (Bear) wrote: > When a coin is spent, the buyer and seller digitally sign a (blinded) > transaction record. Only the buyer signs, and there's no blinding. > If someone double spends, then the transaction record > can be unblinded revealing the identity of the cheater. Identities are not used, and there's no reliance on recourse. It's all prevention. > This is done via a fairly standard cut-and-choose > algorithm where the buyer responds to several challenges > with secret shares No challenges or secret shares. A basic transaction is just what you see in the figure in section 2. A signature (of the buyer) satisfying the public key of the previous transaction, and a new public key (of the seller) that must be satisfied to spend it the next time. > They may also receive chains as long as the one they're trying to > extend while they work, in which the last few "links" are links > that are *not* in common with the chain on which they're working. > These they ignore. Right, if it's equal in length, ties are broken by keeping the earliest one received. > If it contains a double spend, then they create a "transaction" > which is a proof of double spending, add it to their pool A, > broadcast it, and continue work. There's no need for reporting of "proof of double spending" like that. If the same chain contains both spends, then the block is invalid and rejected. Same if a block didn't have enough proof-of-work. That block is invalid and rejected. There's no need to circulate a report about it. Every node could see that and reject it before relaying it. If there are two competing chains, each containing a different version of the same transaction, with one trying to give money to one person and the other trying to give the same money to someone else, resolving which of the spends is valid is what the whole proof-of-work chain is about. We're not "on the lookout" for double spends to sound the alarm and catch the cheater. We merely adjudicate which one of the spends is valid. Receivers of transactions must wait a few blocks to make sure that resolution has had time to complete. Would be cheaters can try and simultaneously double-spend all they want, and all they accomplish is that within a few blocks, one of the spends becomes valid and the others become invalid. Any later double-spends are immediately rejected once there's already a spend in the main chain. Even if an earlier spend wasn't in the chain yet, if it was already in all the nodes' pools, then the second spend would be turned away by all those nodes that already have the first spend. > If the new chain is accepted, then they give up on adding their > current link, dump all the transactions from pool L back into pool > A (along with transactions they've received or created since > starting work), eliminate from pool A those transaction records > which are already part of a link in the new chain, and start work > again trying to extend the new chain. Right. They also refresh whenever a new transaction comes in, so L pretty much contains everything in A all the time. > CPU-intensive digital signature algorithm to > sign the chain including the new block L. It's a Hashcash style SHA-256 proof-of-work (partial pre-image of zero), not a signature. > Is there a mechanism to make sure that the "chain" does not consist > solely of links added by just the 3 or 4 fastest nodes? 'Cause a > broadcast transaction record could easily miss those 3 or 4 nodes > and if it does, and those nodes continue to dominate the chain, the > transaction might never get added. If you're thinking of it as a CPU-intensive digital signing, then you may be thinking of a race to finish a long operation first and the fastest always winning. The proof-of-work is a Hashcash style SHA-256 collision finding. It's a memoryless process where you do millions of hashes a second, with a small chance of finding one each time. The 3 or 4 fastest nodes' dominance would only be proportional to their share of the total CPU power. Anyone's chance of finding a solution at any time is proportional to their CPU power. There will be transaction fees, so nodes will have an incentive to receive and include all the transactions they can. Nodes will eventually be compensated by transaction fees alone when the total coins created hits the pre-determined ceiling. > Also, the work requirement for adding a link to the chain should > vary (again exponentially) with the number of links added to that > chain in the previous week, causing the rate of coin generation > (and therefore inflation) to be strictly controlled. Right. > You need coin aggregation for this to scale. There needs to be > a "provable" transaction where someone retires ten single coins > and creates a new coin with denomination ten, etc. Every transaction is one of these. Section 9, Combining and Splitting Value. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Ray Dillinger Mon, 17 Nov 2008 09:05:24 -0800 On Sat, 2008-11-15 at 12:43 +0800, Satoshi Nakamoto wrote: > I'll try and hurry up and release the sourcecode as soon as possible > to serve as a reference to help clear up all these implementation > questions. > Ray Dillinger (Bear) wrote: > > When a coin is spent, the buyer and seller digitally sign a (blinded) > > transaction record. > > Only the buyer signs, and there's no blinding. > > > > If someone double spends, then the transaction record > > can be unblinded revealing the identity of the cheater. > > Identities are not used, and there's no reliance on recourse. It's all > prevention. Okay, that's surprising. If you're not using buyer/seller identities, then you are not checking that a spend is being made by someone who actually is the owner of (on record as having recieved) the coin being spent. There are three categories of identity that are useful to think about. Category one: public. Real-world identities are a matter of record and attached to every transaction. Category two: Pseudonymous. There are persistent "identities" within the system and people can see if something was done by the same nym that did something else, but there's not necessarily any way of linking the nyms with real-world identities. Category three: unlinkably anonymous. There is no concept of identity, persistent or otherwise. No one can say or prove whether the agents involved in any transaction are the same agents as involved in any other transaction. Are you claiming category 3 as you seem to be, or category 2? Lots of people don't distinguish between anonymous and pseudonymous protocols, so it's worth asking exactly what you mean here. Anyway: I'll proceed on the assumption that you meant very nearly (as nearly as I can imagine, anyway) what you said, unlinkably anonymous. That means that instead of an "identity", a spender has to demonstrate knowledge of a secret known only to the real owner of the coin. One way to do this would be to have the person recieving the coin generate an asymmetric key pair, and then have half of it published with the transaction. In order to spend the coin later, s/he must demonstrate posession of the other half of the asymmetric key pair, probably by using it to sign the key provided by the new seller. So we cannot prove anything about "identity", but we can prove that the spender of the coin is someone who knows a secret that the person who recieved the coin knows. And what you say next seems to confirm this: > No challenges or secret shares. A basic transaction is just > what you see in the figure in section 2. A signature (of the > buyer) satisfying the public key of the previous transaction, > and a new public key (of the seller) that must be satisfied to > spend it the next time. Note, even though this doesn't involve identity per se, it still makes the agent doing the spend linkable to the agent who earlier recieved the coin, so these transactions are linkable. In order to counteract this, the owner of the coin needs to make a transaction, indistinguishable to others from any normal transaction, in which he creates a new key pair and transfers the coin to its posessor (ie, has one sock puppet "spend" it to another). No change in real-world identity of the owner, but the transaction "linkable" to the agent who spent the coin is unlinked. For category-three unlinkability, this has to be done a random number of times - maybe one to six times? BTW, could you please learn to use carriage returns?? Your lines are scrolling stupidly off to the right and I have to scroll to see what the heck you're saying, then edit to add carriage returns before I respond. > > If it contains a double spend, then they create a "transaction" > > which is a proof of double spending, add it to their pool A, > > broadcast it, and continue work. > There's no need for reporting of "proof of double spending" like > that. If the same chain contains both spends, then the block is > invalid and rejected. > Same if a block didn't have enough proof-of-work. That block is > invalid and rejected. There's no need to circulate a report > about it. Every node could see that and reject it before relaying it. Mmmm. I don't know if I'm comfortable with that. You're saying there's no effort to identify and exclude nodes that don't cooperate? I suspect this will lead to trouble and possible DOS attacks. > If there are two competing chains, each containing a different > version of the same transaction, with one trying to give money > to one person and the other trying to give the same money to > someone else, resolving which of the spends is valid is what > the whole proof-of-work chain is about. Okay, when you say "same" transaction, and you're talking about transactions that are obviously different, you mean a double spend, right? Two transactions signed with the same key? > We're not "on the lookout" for double spends to sound the alarm > and catch the cheater. We merely adjudicate which one of the > spends is valid. Receivers of transactions must wait a few > blocks to make sure that resolution has had time to complete. Until.... until what? How does anybody know when a transaction has become irrevocable? Is "a few" blocks three? Thirty? A hundred? Does it depend on the number of nodes? Is it logarithmic or linear in number of nodes? > Would be cheaters can try and simultaneously double-spend all > they want, and all they accomplish is that within a few blocks, > one of the spends becomes valid and the others become invalid. But in the absence of identity, there's no downside to them if spends become invalid, if they've already recieved the goods they double-spent for (access to website, download, whatever). The merchants are left holding the bag with "invalid" coins, unless they wait that magical "few blocks" (and how can they know how many?) before treating the spender as having paid. The consumers won't do this if they spend their coin and it takes an hour to clear before they can do what they spent their coin on. The merchants won't do it if there's no way to charge back a customer when they find the that their coin is invalid because the customer has doublespent. > Even if an earlier spend wasn't in the chain yet, if it was > already in all the nodes' pools, then the second spend would > be turned away by all those nodes that already have the first > spend. So there's a possibility of an early catch when the broadcasts of the initial simultaneous spends interfere with each other. I assume here that the broadcasts are done by the sellers, since the buyer has a possible disincentive to broadly disseminate spends. > > If the new chain is accepted, then they give up on adding their > > current link ... and start work again trying to extend the new > > chain. > > Right. They also refresh whenever a new transaction comes in, > so L pretty much contains everything in A all the time. Okay, that's a big difference between a proof of work that takes a huge set number of CPU cycles and a proof of work that takes a tiny number of CPU cycles but has a tiny chance of success. You can change the data set while working, and it doesn't mean you need to start over. This is good in this case, as it means nobody has to hold recently recieved transactions out of the link they're working on. > > Is there a mechanism to make sure that the "chain" does not consist > > solely of links added by just the 3 or 4 fastest nodes? > If you're thinking of it as a CPU-intensive digital signing, then > you may be thinking of a race to finish a long operation first and > the fastest always winning. Right. That was the misconception I was working with. Again, the difference between a proof taking a huge set number of CPU cycles and a proof that takes a tiny number of CPU cycles but has a tiny chance of success. > Anyone's chance of finding a solution at any > time is proportional to their CPU power. It's like a random variation in the work factor; in this way it works in your favor. > There will be transaction fees, so nodes will have an incentive > to receive and include all the transactions they can. Nodes > will eventually be compensated by transaction fees alone when > the total coins created hits the pre-determined ceiling. I don't understand how "transaction fees" would work, and how the money would find its way from the agents doing transactions to those running the network. But the economic effect is the same (albeit somewhat randomized) if adding a link to the chain allows the node to create a coin, so I would stick with that. Also, be aware that the compute power of different nodes can be expected to vary by two orders of magnitude at any given moment in history. Bear --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Nicolas Williams Tue, 18 Nov 2008 14:51:44 -0800 On Fri, Nov 14, 2008 at 11:04:21PM -0800, Ray Dillinger wrote: > On Sat, 2008-11-15 at 12:43 +0800, Satoshi Nakamoto wrote: > > > If someone double spends, then the transaction record > > > can be unblinded revealing the identity of the cheater. > > > > Identities are not used, and there's no reliance on recourse. It's all > > prevention. > > Okay, that's surprising. If you're not using buyer/seller > identities, then you are not checking that a spend is being made > by someone who actually is the owner of (on record as having > recieved) the coin being spent. How do identities help? It's supposed to be anonymous cash, right? And say you identify a double spender after the fact, then what? Perhaps you're looking at a disposable ID. Or perhaps you can't chase them down. Double spend detection needs to be real-time or near real-time. Nico -- --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Mon, 17 Nov 2008 09:06:02 -0800 Ray Dillinger wrote: > One way to do this would be > to have the person recieving the coin generate an asymmetric > key pair, and then have half of it published with the > transaction. In order to spend the coin later, s/he must > demonstrate posession of the other half of the asymmetric > key pair, probably by using it to sign the key provided by > the new seller. Right, it's ECC digital signatures. A new key pair is used for every transaction. It's not pseudonymous in the sense of nyms identifying people, but it is at least a little pseudonymous in that the next action on a coin can be identified as being from the owner of that coin. > Mmmm. I don't know if I'm comfortable with that. You're saying > there's no effort to identify and exclude nodes that don't > cooperate? I suspect this will lead to trouble and possible DOS > attacks. There is no reliance on identifying anyone. As you've said, it's futile and can be trivially defeated with sock puppets. The credential that establishes someone as real is the ability to supply CPU power. > Until.... until what? How does anybody know when a transaction > has become irrevocable? Is "a few" blocks three? Thirty? A > hundred? Does it depend on the number of nodes? Is it logarithmic > or linear in number of nodes? Section 11 calculates the worst case under attack. Typically, 5 or 10 blocks is enough for that. If you're selling something that doesn't merit a network-scale attack to steal it, in practice you could cut it closer. > But in the absence of identity, there's no downside to them > if spends become invalid, if they've already received the > goods they double-spent for (access to website, download, > whatever). The merchants are left holding the bag with > "invalid" coins, unless they wait that magical "few blocks" > (and how can they know how many?) before treating the spender > as having paid. > > The consumers won't do this if they spend their coin and it takes > an hour to clear before they can do what they spent their coin on. > The merchants won't do it if there's no way to charge back a > customer when they find the that their coin is invalid because > the customer has doublespent. This is a version 2 problem that I believe can be solved fairly satisfactorily for most applications. The race is to spread your transaction on the network first. Think 6 degrees of freedom -- it spreads exponentially. It would only take something like 2 minutes for a transaction to spread widely enough that a competitor starting late would have little chance of grabbing very many nodes before the first one is overtaking the whole network. During those 2 minutes, the merchant's nodes can be watching for a double-spent transaction. The double-spender would not be able to blast his alternate transaction out to the world without the merchant getting it, so he has to wait before starting. If the real transaction reaches 90% and the double-spent tx reaches 10%, the double-spender only gets a 10% chance of not paying, and 90% chance his money gets spent. For almost any type of goods, that's not going to be worth it for the scammer. Information based goods like access to website or downloads are non-fencible. Nobody is going to be able to make a living off stealing access to websites or downloads. They can go to the file sharing networks to steal that. Most instant-access products aren't going to have a huge incentive to steal. If a merchant actually has a problem with theft, they can make the customer wait 2 minutes, or wait for something in e-mail, which many already do. If they really want to optimize, and it's a large download, they could cancel the download in the middle if the transaction comes back double-spent. If it's website access, typically it wouldn't be a big deal to let the customer have access for 5 minutes and then cut off access if it's rejected. Many such sites have a free trial anyway. Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] Satoshi Nakamoto Mon, 17 Nov 2008 13:33:04 -0800 James A. Donald wrote: > > Fortunately, it's only necessary to keep a > > pending-transaction pool for the current best branch. > > This requires that we know, that is to say an honest > well behaved peer whose communications and data storage > is working well knows, what the current best branch is - I mean a node only needs the pending-tx pool for the best branch it has. The branch that it currently thinks is the best branch. That's the branch it'll be trying to make a block out of, which is all it needs the pool for. > > Broadcasts will probably be almost completely > > reliable. > > Rather than assuming that each message arrives at least > once, we have to make a mechanism such that the > information arrives even though conveyed by messages > that frequently fail to arrive. I think I've got the peer networking broadcast mechanism covered. Each node sends its neighbours an inventory list of hashes of the new blocks and transactions it has. The neighbours request the items they don't have yet. If the item never comes through after a timeout, they request it from another neighbour that had it. Since all or most of the neighbours should eventually have each item, even if the coms get fumbled up with one, they can get it from any of the others, trying one at a time. The inventory-request-data scheme introduces a little latency, but it ultimately helps speed more by keeping extra data blocks off the transmit queues and conserving bandwidth. > You have an outline > and proposal for such a design, which is a big step > forward, but the devil is in the little details. I believe I've worked through all those little details over the last year and a half while coding it, and there were a lot of them. The functional details are not covered in the paper, but the sourcecode is coming soon. I sent you the main files. (available by request at the moment, full release soon) Satoshi Nakamoto --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED] James A. Donald Tue, 18 Nov 2008 14:52:59 -0800 Nicolas Williams wrote: > How do identities help? It's supposed to be anonymous > cash, right? Actually no. It is however supposed to be pseudonymous, so dinging someone's reputation still does not help much. > And say you identify a double spender after the fact, > then what? Perhaps you're looking at a disposable ID. > Or perhaps you can't chase them down. > > Double spend detection needs to be real-time or near > real-time. Near real time means we have to use UDP or equivalent, rather than TCP or equivalent, and we have to establish an approximate consensus, not necessarily the final consensus, not necessarily exact agreement, but close to it, in a reasonably small number of round trips. --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]