5 Questions about transaction

[masize]

Hello, Im a real newbie in Bitcoin. Been reading quite a few days about the topic, Im driving crazy about this. Im about to break up with my girlfriend soon if I continue with this obsession lol.

Im programmer and need to fully understand the system to use it, so here my 5 questions about transactions.

1. All nodes in the network, are them bitcoin clients or are them official nodes by bitcoin network? (I know its dicentralized but my client must connect to a specific server to do the work, just like a bittorrent tracker)

2. Miners solve the blocks made by transactions, 25 BTC each, those are filled by transaction fees?

3. Where do the miners or mining pools get the blocks? If blocks are generated by transactions, How is it that 1 block is created every exactly 10 minutes ?

4. Even if its anonymous I can see the whole transaction process with this website http://blockexplorer.com? I someone pays me, I can see how many bitcoins he earned by using his public address, even if he transfer to another address, I can trace the whole bitcoins. In the future, a address to person can be done if they posted their public address anywhere in the internet, or even if they verified their account in any place where they get their bitcoins like mt gox.

5. I love this decentralized thing, but how are transactions confirmed? if they are confirmed by miners, what if they change the software of the algorith, afterall, theres no authority on this. With enough GPU power you can rule the whole coin.


I really like this, and Im sure theres an answer for each of my questions. But theres must be a nice and easy understanding guide on all this system. Im pretty sure 90% of the users dont fully understand how it works and Im one of them. I want to invest both time and money to get people on this, but I need to be convinced on this. It looks like a Game but it costs real $90 each Bitcoin.


Sorry for the long post.

[Isokivi]

1. there is no central server. Peers connect to peers.

2. No the 25btc is new money created in to the system, as it slowly works toards the 21 million bitcoin (something over 10 million have been made so far).

3. All nodes on the network broadcast transactions, a miner or a mining pool picks them up just like other peers do.

4. It's not entireley anonymous and you shouldnt consider it that. You can take steps toards reaching anonymity, but it takes constant effort. As this is something Im not interested with, Im propably not the best person to comment it.

5. Miners confirm transactions by including them in to blocks. With 51% you could "rule the entire coin", but if someone had that power thay would still have more to gain by playing by the rules, than by starting to steal and thus destroying bitcoin. Aqquiring such power is difficult and would appear to be getting even more difficult over time.

[woodles]

Good questions and good answers it seems. How does owning 51% of BitCoins mean that you kill BitCoin? What if some group of wealthy people were simultaneously mining and buying up as much BitCoin as possible, could they then control Bitcoin?

[Isokivi]

Good questions and good answers it seems. How does owning 51% of BitCoins mean that you kill BitCoin? What if some group of wealthy people were simultaneously mining and buying up as much BitCoin as possible, could they then control Bitcoin?

We are talking about controlling 51% of the network hashrate (mining power). If you want to lear more about the subject you should search these forums for "51% attack" the issue has been discussed for years, from every single point of view and I seriously doubt anyone could actually contribute anything new to the discussion at this point.

[masize]

Good questions and good answers it seems. How does owning 51% of BitCoins mean that you kill BitCoin? What if some group of wealthy people were simultaneously mining and buying up as much BitCoin as possible, could they then control Bitcoin?

Attacker has a lot of computing power
An attacker that controls more than 50% of the network's computing power can, for the time that he is in control, exclude and modify the ordering of transactions. This allows him to:
- Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
- Prevent some or all transactions from gaining any confirmations
- Prevent some or all other miners from mining any valid blocks

The attacker can't:
- Reverse other people's transactions
- Prevent transactions from being sent at all (they'll show as 0/unconfirmed)
- Change the number of coins generated per block
- Create coins out of thin air
- Send coins that never belonged to him

[masize]

Well, I hope this doesnt happen, but I think theres a good chance that the US Government try this out in the future.
Remember the whole system is a threat for the whole country economy, credit cards and paypal are deying payments for these purpose, thats just the beginning.

Isokivi, thanks a lot for your answers, I have some more questions too.

1. there is no central server. Peers connect to peers.

These peers are only with Official Bitcoin clients, not lightweighted ones like Multibit right?

2. No the 25btc is new money created in to the system, as it slowly works toards the 21 million bitcoin (something over 10 million have been made so far).

If they dont mine the transaction blocks, who gets the transaction fee?

3. All nodes on the network broadcast transactions, a miner or a mining pool picks them up just like other peers do.

Can you mine a transaction for itself or you have to wait until it gets a block?

4. It's not entireley anonymous and you shouldnt consider it that. You can take steps toards reaching anonymity, but it takes constant effort. As this is something Im not interested with, Im propably not the best person to comment it.

Ill create another post asking how to recognize transactions made online, or in an actual store.

5. Miners confirm transactions by including them in to blocks. With 51% you could "rule the entire coin", but if someone had that power thay would still have more to gain by playing by the rules, than by starting to steal and thus destroying bitcoin. Aqquiring such power is difficult and would appear to be getting even more difficult over time.

Already discussed


Thanks for your reply.

[Isokivi]

Well, I hope this doesnt happen, but I think theres a good chance that the US Government try this out in the future.
Remember the whole system is a threat for the whole country economy, credit cards and paypal are deying payments for these purpose, thats just the beginning.

Isokivi, thanks a lot for your answers, I have some more questions too.

1. there is no central server. Peers connect to peers.

These peers are only with Official Bitcoin clients, not lightweighted ones like Multibit right?
Lightweight clients work like a shared client that is located on a server and connects to the network

2. No the 25btc is new money created in to the system, as it slowly works toards the 21 million bitcoin (something over 10 million have been made so far).

If they dont mine the transaction blocks, who gets the transaction fee?
Miners get the tx fees, over time they will become more important to miners than the new coins generated, at current they amount to 1-2% of mining income.

3. All nodes on the network broadcast transactions, a miner or a mining pool picks them up just like other peers do.

Can you mine a transaction for itself or you have to wait until it gets a block?
Only blocks can confirm transactions, you could coose to exlude other than the transaction you want, but that would make little sense. Some big bitcoin service providers have teamed up with mining pools so they get all their transactions in to said pools blocks.

4. It's not entireley anonymous and you shouldnt consider it that. You can take steps toards reaching anonymity, but it takes constant effort. As this is something Im not interested with, Im propably not the best person to comment it.

Ill create another post asking how to recognize transactions made online, or in an actual store.

5. Miners confirm transactions by including them in to blocks. With 51% you could "rule the entire coin", but if someone had that power thay would still have more to gain by playing by the rules, than by starting to steal and thus destroying bitcoin. Aqquiring such power is difficult and would appear to be getting even more difficult over time.

Already discussed


Thanks for your reply.