Quotable Satoshi

Writing a description for this thing for general audiences is bloody hard. There's nothing to relate it to.

With the transaction fee based incentive system I recently posted, nodes would have an incentive to include all the paying transactions they receive.

It's very attractive to the libertarian viewpoint if we can explain it properly. I'm better with code than with words though.

You can get coins by getting someone to send you some, or turn on Options->Generate Coins to run a node and generate blocks. I made the proof-of-work difficulty ridiculously easy to start with, so for a little while in the beginning a typical PC will be able to generate coins in just a few hours. It'll get a lot harder when competition makes the automatic adjustment drive up the difficulty. Generated coins must wait 120 blocks to mature before they can be spent.

Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years.

Writing a description for this thing for general audiences is bloody hard. There's nothing to relate it to.

Proof-of-work has the nice property that it can be relayed through untrusted middlemen. We don't have to worry about a chain of custody of communication. It doesn't matter who tells you a longest chain, the proof-of-work speaks for itself.

You could say coins are issued by the majority. They are issued in a limited, predetermined amount.

By convention, the first transaction in a block is a special transaction that starts a new coin owned by the creator of the block. This adds an incentive for nodes to support the network, and provides a way to initially distribute coins into circulation, since there is no central authority to issue them. The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended.

Eventually at most only 21 million coins for 6.8 billion people in the world if it really gets huge. But don't worry, there are another 6 decimal places that aren't shown, for a total of 8 decimal places internally. It shows 1.00 but internally it's 1.00000000. If there's massive deflation in the future, the software could show more decimal places.

Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services. With the possibility of reversal, the need for trust spreads.

The price of any commodity tends to gravitate toward the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more. At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price.

The result is a distributed system with no single point of failure. Users hold the crypto keys to their own money and transact directly with each other, with the help of the P2P network to check for double-spending.

The timing is strange, just as we are getting a rapid increase in 3rd party coverage after getting slashdotted. I hope there's not a big hurry to wrap the discussion and decide. How long does Wikipedia typically leave a question like that open for comment? It would help to condense the article and make it less promotional sounding as soon as possible. Just letting people know what it is, where it fits into the electronic money space, not trying to convince them that it's good. They probably want something that just generally identifies what it is, not tries to explain all about how it works.

Difficulty just increased by 4 times, so now your cost is US$0.02/BTC.

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.

The average total coins generated across the network per day stays the same. Faster machines just get a larger share than slower machines. If everyone bought faster machines, they wouldn't get more coins than before.

I've developed a new open source P2P e-cash system called Bitcoin. It's completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust. Give it a try, or take a look at the screenshots and design paper: Download Bitcoin v0.1 at http://www.bitcoin.org

To implement a distributed timestamp server on a peer-to-peer basis, we will need to use a proof-of-work system similar to Adam Back's Hashcash, rather than newspaper or Usenet posts. The proof-of-work involves scanning for a value that when hashed, such as with SHA-256, the hash begins with a number of zero bits. The average work required is exponential in the number of zero bits required and can be verified by executing a single hash.

Total circulation will be 21,000,000 coins. It'll be distributed to network nodes when they make blocks, with the amount cut in half every 4 years. first 4 years: 10,500,000 coins next 4 years: 5,250,000 coins next 4 years: 2,625,000 coins next 4 years: 1,312,500 coins etc... When that runs out, the system can support transaction fees if needed. It's based on open market competition, and there will probably always be nodes willing to process transactions for free.