Bitcoin Forum

I am currently studying Satoshi Nakamoto's original paper (https://bitcoin.org/bitcoin.pdf), "Bitcoin: A Peer-to-Peer Electronic Cash System". I came to the conclusion after I read this part below.


Honestly, I am not so much of techie so I am a little bit slow in understanding the technical aspects of the paper from from the little I understand about Bitcoin being based on proof and not trust. The proofs are:

• Timestamp Server network
• A proof-of-work system

I apologize; I'm still reading the article, so I might not be able to clearly explain the Timestamp server network and the proof-of-work method in my own words, but I'm understanding the gist of it. If someone could explain it to me as if I were five years old, I would be grateful.

Thank you.

In essence, bitcoin is a distributed append-only database made up of cryptographic transactions. The integrity of the data and who was given authorization to write data to the database are both open to public scrutiny.

By Timestamp Server Satoshi didn't mean that there's some separate server, it just describes timestamping, which is the part of the protocol and done by miners. When miners find a new block, they tell at which time it was found so that the decentralized database can be properly updated without conflicts.

Proof of work is the core of mining. It's a task that can be solved with a large amount of computing power, and this task is designed in such way that on average it always takes the whole network 10 minutes to solve it. If there's more processing power solving it, the next task becomes harder, if less - it becomes easier. Thanks to proof of work mining the blocks of data arrive with a large delay which allows the whole network to stay on the same page. Additionally, proof of work prevents people from rewriting history by making such attempts so costly that no one tried to do them in the whole history of Bitcoin.

Both the proof and trust work in hand with bitcoin because you've got to trust it because of the proof you were able bto verify with bitcoin, the proof of work, the consistency, the immutability, decentralization and ever increasing value it has always developed over time unlike other cryptos that never maintain their consistency to remain relevance with value, so there's no how you could claim the proof without having the trust in it, bith work in line.

I wouldn't say that's accurate. Blocks are not ordered based on time at all - they are ordered based on each block's hash containing a reference to the previous block. Miners are free to alter the timestamp on a block by a window of approximately 3 hours, and there are plenty of instances of later blocks having earlier timestamps than the blocks they were built on top of.

What I would add to this is that the proof of work system which bitcoin uses means that it is hard to find the solution, but easy to verify the solution. It is hard for miners to find a block header which results in the required hash for their block to be valid, but once they've found the solution, other nodes can verify their solution in milliseconds. There is no way to fake the work required to find the solution, so by broadcasting a valid block which other nodes can verify very quickly, you are proving you have done the work required to find that block.

You can go further, I can advise you to read the The Bitcoin Standard

More infos on this github link : https://github.com/darkwarshadow/The-Bitcoin-Standard-Bits

I think is based in both... I know the protocol name is PoW but not everyone understands how it really works, and there is where the trust comes. People don't need to understand the technical side of bitcoin to make transactions, they only need to trust it and have a wallet. That's how it works nowadays.


A good starting point is a book Mastering Bitcoin. If you google it you will find it. If after reading the book you have more questions, then feel free to ask them on the forum.

I prefer it as: "Bitcoin is based on math, fiat money is based on debt". And I trust math much more than debt.

It is based on trust, in the sense that you trust a system to keep on working as it has, a system that rewards good actors and punishes bad actors, (I think also of Bitcoin SV and what not that tried to fork Bitcoin).

That trust works, and the proof is in 10+ years of working well as planned and even growing in users, nodes, etc.

afaik timestamping would rely on the local time of the machine that mined btc which will never be accurate so you would get inaccurate times and therefore conflicts in the blockchain. Using a unique hash of a block prevents that because it will be the same. Blockchains have timestamps of when a block was mined but I do not think this can be 100% relied upon because of the differences. My computer and your computer despite being connected to the internet and getting the time directly from the rtc are probably not the same. This can be tested with some of your devices in your own household.

When something has proven itself to you over the years, you no longer doubt it. It is deeper than trust because trust can easily be given without any form of proof. I can just chose to trust something even if I haven't known it for long. The ease with which trust is given is also the ease with which it is broken. So I can say that I agree with the topic that Bitcoin is based on proof over the years and not just on trust.

Merry Christmas :D

That's true, but the important distinction is that people can understand the technical side of bitcoin if they want to. They can verify everything themselves, from the genesis block to the latest broadcasted transaction, they can examine and run the code themselves, they can learn exactly how elliptic curve multiplication works, and so on. You can choose to trust it if you want, but you can also choose to understand and verify it all yourself. With fiat on the other hand (or with centralized exchanges), you can only trust, and history has shown us repeatedly that that trust is often misplaced and abused.

They can't. The timestamps are predominantly used to help calculate the difficulty over a two week period. They are in no way accurate enough to determine the order of blocks. Here is an example of subsequent blocks with timestamps which are out of order:

145045 (https://blockchair.com/bitcoin/block/145045) - 16:05
145046 (https://blockchair.com/bitcoin/block/145046) - 16:00
145047 (https://blockchair.com/bitcoin/block/145047) - 15:53
145048 (https://blockchair.com/bitcoin/block/145048) - 16:04
145049 (https://blockchair.com/bitcoin/block/145049) - 16:08

I wouldn't really say that you no longer doubt it. At least for me, there's nothing in this world that I don't doubt in terms of trust. Bitcoin can still fail, it doesn't have to completely fail but it can fail enough to not make it worthwhile for people to accept it, and that's when it goes to trouble. I don't think it'll ever happen but that's not the same as putting all my trust in it.

Bitcoin is also based on debt (or work) that was put in by the miners to obtain the coins. This is a good thing, because it sets a base price for every bitcoin, that will also rise as energy costs go up. The difference is that you dont have to trust, that nobody presses the button and starts a inflation or deflation because of political decisions.

Anything still is possible to happen. For example, a war occur, what will happen then? Will this industry be used? Likewise with wide economic crisis, how will this technology be useful then? Also, it is okay to doubt things to avoid being too optimistic, which on latter might affect your anticipation of the market behavior. Be preventive than to be sorry at the end of the day. It would be better to be able to still see the loopholes or downsides of your investment to be able to take precautionary actions as qhat I am trying to say. Bitcoin or this industry in general has a huge potential towards advancement of technology but for sure not everything around us would revolve around it.

That's not what I meant. It doesn't matter how the miners finance their operation, the Bitcoins they create are real. Fiat money, on the other hand, is created out of nothing when someone takes a debt. It's the magic of fractional reserve banking.

That's not how it works: if energy prices go up, (some) miners quit, and after a few weeks the difficulty drops. If anything, it works the other way around: higher Bitcoin prices lead to more miners, higher energy prices lead to less miners (or they move to a different geographic location).

And that's the scary thing with fiat money: central banks are now taking political decisions, while they're supposed to be independent. They can do whatever they want.

Yes and what is even more an issue, is that even if one central bank tries to be independent it still needs to react to different central banks that are not independent.

That's the best methods to use is to make a proper research on your own I hope it will enable you to understand some certain things that you find very difficult to understand and secondary you have to go to technical station where you ask question and you will see a different solution of it so therefore I believe that that is the best option to look for a solution

The system being based on proof is what proportionate people trusting on it.

Proof and trust are connected here and both are needed to make bitcoin workable as currency and widely adopted by a large number of people.

What is the chance of having a group of attacker nodes controlling more CPU power?

That's what I'm saying. We can't predict what will happen, and we can't predict what will have an impact on things like Bitcoin.

And as much as I trust Bitcoin, I don't know enough about it technically to know what risks there are to prepare for.

So in the end, we can only trust what we think we know, what we are knowledgeable enough to understand, what we can prepare for. So it IS about trust.

Future blocks must be based on past blocks and past data of Bitcoin public ledger to move and confirm new blocks.

It's clear that Bitcoin Proof-of-Work blockchain is based on proof of works. Proof from works of miners on the network and these proofs are stored in Bitcoin nodes, full nodes, prune nodes and its public ledger. With many nodes, the blockchain data is stored on many locations and totally decentralized by geographical locations.

Miners and nodes don't work based on trust but they assess data from other nodes, other miners before adding new blocks to their node data base.

blockchains are simply a batch of data(a block of data) where that block is linked to a previous block, thus chaining the blocks.. thus blockchain


blockchains are based on new blocks acceptance as viable my many rules and features needed, main one firstly is by including reference to a previous block. meaning the newest block could not have existed/been formed/mined before the previous block, due to needing the previous blocks reference to create the newest block thus blocks become a "proof of time"(the "timestamp" term used in bitcoin is not based on actual unix time of a day/hour format. but based on a physics and math fact of 'this block was made after that block' proof)

then comes the proof of work which not only adds complexity to the hash calculation of a block reference to ensure that effort was put into it, meaning attackers need effort too.. but also comes at a cost for that effort(electric/hardware)
the reason for the effort is that.
if it costs someone X to make 1 block then it costs X^N to make N blocks. making it more expensive to try going back and editing old blocks and then trying catching up again to outcompete a good healthy chain that just moves forward

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to cover costs of this miners would calculate their costs. and refuse to sell their rewards for that time cost at a loss. but want to sell at a premium(profit) which case, enters the premium(public exchanges)

these become speculative as those with higher costs find it easier to acquire coin buy buying it when prices are low and mine it when prices are high.. but i am talking about the hobby miners that didnt buy hardware at wholesale/bulk cost, and not in regions where electric is cheap
these hobby miners jump in and out of the market-mining industries and acquire coin in both depending on market whim/speculation

these hobby miners are what oeleo describes, but these hobby miners are not the value discovery miners. they are the premium price discovery miners affecting market sentiment

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the base value of bitcoin is not what oeleo pretends is based on a spread of different miners at different costs jumping in and out daily and causing some underpinned value to be as volatile as the market speculative premium

base value is beneath the market. its a more stable slow grother over lengthier periods of time.  its the non zero bottom of the most efficient cheapest miners on the planet. a number thats more stable than oeleo try to assume.

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bitcoins base value is the most efficient miners that dont jump in and out. they are not looking at daily prices to make choices. they have contracted into hardware and electric deals for 2 years+ thus they just mine regardless of the speculative premium public market whims
they as the cheapest miners/acquirers of coin look at a periodic timescale of 6 months+ and then look at total coin collected in 6 months+ period to then see their coin per cost. aka cost per coin

these low cost acquirers of coin wont sell for less and because they are the cheapest acquirers of coin on the planet become the base level no one sells below, thus supporting a base value

as time moves on and things change. competition ramps up and other factors raise the cost of the base. which then reciprocates to affect the market numbers

this "value discovery" is a known thing as far back as the first trades of 2010
where users were calculating their PC usage time per coin and electric to come up with a value to refuse to sell below,.  and then develop a separate "price discovery" above it of what they can sell coin for to those that had higher costs or just didnt want to mine.

there are times when the premium market rises meaning other locations with higher cost can jump in and profit too by mining. but that does not negate away from the role of the most efficient miners who still mine regardless and set the base non zero bottom value

Satoshi Nakamoto (based on the work of his predecessors) created a perfect system of decentralized virtual money. 

He excluded from the monetary transaction third parties - intermediaries (banks, payment companies, etc.).  Instead, a software algorithm mediates the transaction. 

The guarantor of the security and functionality of the entire system are miners - individuals and legal entities that mine bitcoins using special equipment.