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
DOI: 10.1145/3208095
The primary notion
behind Bitcoin’s
design is to enable
a censorship-resistant
and irreversible
payment system.
Inside Risks
Risks of
Cryptocurrencies
Considering the inherent risks of cryptocurrency ecosystems.
˲ Peter G. Neumann, Column Editor