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Bitcoin P2P e-cash paper
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
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>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
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>> 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
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>[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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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