Communications of the ACM

Vviewpoints

block by computing partial hash collisions, hoping to find a value less than a dynamically tuned difficulty factor by taking a potential block and modifying various mutable fields until the miner discovers a partial collision that meets the difficulty requirement.

Once a miner discovers a new block, it broadcasts this block over the peer-to-peer network; all other miners then validate the new block and start mining the next block. As a consequence, changing the last n blocks in the ledger requires approximately the same number of hash calculations as creating those n blocks. Each block also contains a transaction that pays a fixed reward to the winning miner, as well as all transaction fees sent in the block. In order to implement a fixed monetary policy, the difficulty factor self-adjusts on regular intervals to limit the block creation rate to one block approximately every 10 minutes, and the block reward halves approximately every four years.

This naturally creates a “Red
Queen’s Race,” which currently causes
the Bitcoin network to consume more
power than Ireland. When there is
This peer-to-peer (P2P) network
then validates the transaction as valid
in the public ledger and commits it to
another block in the ledger containing
at most 1MB of data. In order to prevent
the block from being tampered, the
Bitcoin system uses “proof of work” 1 to
protect its hash chain. Each block con-
tains a pointer to the previous block
(creating the “blockchain”), and every
miner attempts to create a new valid