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CgAn Course 4: Todays lesson what is BTC

| November 6th, 2017 by Doemela | Comments Off on CgAn Course 4: Todays lesson what is BTC

See https://archive.cyberguerrilla.org/a/2017/cgan-teach-the-world-about-hacking-hacktivism/

Bitcoin is a worldwide cryptocurrency and digital payment system called the first decentralized digital currency, as the system works without a central repository or single administrator. The system is peer-to-peer, and transactions take place between users directly, without an intermediary.These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. The blockchain is a public ledger that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: the maintenance of the blockchain is performed by a network of communicating nodes running bitcoin software

Transactions consist of one or more inputs and one or more outputs. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain. The use of multiple inputs corresponds to the use of multiple coins in a cash transaction. Paying a transaction fee is optional. Miners can choose which transactions to process and prioritize those that pay higher fees

In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address is nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse (computing the private key of a given bitcoin address) is mathematically unfeasible and so users can tell others and make public a bitcoin address without compromising its corresponding private key. Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds If the private key is lost, the bitcoin network will not recognize any other evidence of ownership; the coins are then unusable, and effectively lost

Mining is a record-keeping service done through the use of computer processing power.[d] Miners keep the blockchain consistent, complete, and unalterable by repeatedly verifying and collecting newly broadcast transactions into a new group of transactions called a block. Each block contains a cryptographic hash of the previous block, using the SHA-256 hashing algorithm, which links it to the previous block, thus giving the blockchain its name.
To be accepted by the rest of the network, a new block must contain a so-called proof-of-work. The proof-of-work requires miners to find a number called a nonce, such that when the block content is hashed along with the nonce, the result is numerically smaller than the network’s difficulty target The successful miner finding the new block is rewarded with newly created bitcoins and transaction fees

A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold or store bitcoins, due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A better way to describe a wallet is something that “stores the digital credentials for your bitcoin holdings” and allows one to access (and spend) them. Bitcoin uses public-key cryptography, in which two cryptographic keys, one public and one private, are generated. At its most basic, a wallet is a collection of these keys.

Bitcoin is pseudonymous, meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through “idioms of use” (e.g., transactions that spend coins from multiple inputs indicate that the inputs may have a common owner) and corroborating public transaction data with known information on owners of certain addresses

https://en.wikipedia.org/wiki/Bitcoin

A double spend is where two different transactions sent into the Bitcoin network are trying to spend the same account balance. Bitcoin naturally defends against this by confirming which the transaction which is included in a block first. If two transactions are sent into the network using the same private key and the same funds but sent to different bitcoin addresses – then as the transaction propagates through the network one half of the network will accept one transaction and the other half, another. If two transactions are sent into the network using the same private key and the same funds but sent to different bitcoin addresses – then as the transaction propagates through the network one half of the network will accept one transaction and the other half, another. The situation is resolved by which side of the network resolves one of the two transactions into a block first.
full aticle: https://www.cryptocompare.com/coins/guides/what-is-a-bitcoin-double-spend-and-how-does-it-work/
Irreversible Transactions: https://en.bitcoin.it/wiki/Irreversible_Transactions

[Mink] ok, there is a little pad to start talking
[Mink] https://pad.riseup.net/p/idTkDLu4c59M
[Chanlog] Title: Riseup Pad (at pad.riseup.net)
[Arkhangel] *c
[Arkhangel] *.*
[Mink] we’ll be taking the topics one by one
[Go5u1337] Missed the last one, but thank god there are logs ;d
[Mink] Go5u1337, : https://pad.riseup.net/p/idTkDLu4c59M
[Chanlog] Title: Riseup Pad (at pad.riseup.net)
*** Mink changes topic to “Todays lesson is BTC : https://pad.riseup.net/p/idTkDLu4c59M”
[Moods] what are the causes of btc increase and decrease
[Moods] like what sets the value
[Mink] demand and offer, like normal currencies
[l0t3D_] first things first
[l0t3D_] who is satoshi nakamoto
[l0t3D_] πŸ˜€
[Moods] the creator
[Moods] of btc
[Moods] from japan
[l0t3D_] yeah ik
[Moods] or one of them
[Moods] i think it was a team
[Moods] not sure tho
[l0t3D_] it’s just an alias
[l0t3D_] for the team/person
[Moods] ye
[Moods] what is blockchain
[Mink] nobody really knows whom created it, best bet is a team, rather than individual
[Moods] 2 much 4 one person
[Moods] who created blockchain
[Moods] the same people that created btc?
[Mink] the blockchain is really the key to bitcoins
[Mink] basically it a ledger, a record of ALL the transactios that have taken place
[Arkhangel] QUESTION – when a person mines a bitcoin, it means that he is converting private key to btc address or btc address to private key?
[Mink] at the moment 1,032.09 kb
[Moods] proccessing the transaction
[Mink] every time there is a transaction, the blockchain registers it
[Moods] did you know that to make 1 btc transaction it takes as much power as your whole house in a week
[Mink] plus every time a new bitcoin is “mined” (discovered)
[Moods] the higher the btc is in value the harder to mine right?
[l0t3D_] how are bitcoing “mined”/”discovered
[Mink] no, it’s not the value of bitcoins to make it grow, it’s the quatity of bitcoins
[Arkhangel] what is the difference between block and bitcoin in mining?
[l0t3D_] sorry dc
[l0t3D_] [l0t3D_] how are bitcoing “mined”/”discovered
[Mink] one at the time pls
[Arkhangel] or better: when I mine, I get single bitcoins or one block?
[Go5u1337] bitcoins are rewards for data mining
[Mink] Arkhangel, , rewards for mining varies, at the moment you will be very lucky to discover a whole bitcoin
[Mink] by yourself
[Mink] people use “mining pools” where many add little job to discover new coins
[Arkhangel] but when I mine, precisely what I’m doing?
[Arkhangel] I’m decrypt something?
[Arkhangel] decrypting*
[Mink] in mining many things happen
[Mink] bookeeping (transactions added to the blockchain)
[Mink] discovery of new hashes (calculated)
[Mink] modification of the blockchain
[Arkhangel] uhm
[Arkhangel] is it like a distributed computation where I compute different things of a system?
[Mink] maybe this will help Arkhangel
[Mink] https://en.wikipedia.org/wiki/Proof-of-work
[Chanlog] Title: Proof-of-work system – Wikipedia (at en.wikipedia.org)
[Mink] the proof-of-work make impossible to fake the discovery of new blocks
[Arkhangel] but the mining means that I compute some data that can be discovery of new hashes or transactions and so on, and then I get bitcoin as reward?
[Mink] like you see, it’s very technical and way behind my knoledge and the scope of today
[Mink] in few words, yes Arkhangel
[Arkhangel] so it means that mining does not mean “generating bitcoin”
[Arkhangel] it means “help a system to do computations” and as reward u get bitcoin
[Arkhangel] right?
[Mink] not only, think it as a reward
[Mink] yes
[Arkhangel] can you list me what are the activities tied to the mining? U listed: transactions added to the blockchain, discovery of new hashes, then?
[Aspire] but were the btc the argument of the lesson?
[Mink] understanding bitcoin is the topic, not mining
[Aspire] ah ok
[Aspire] i thought were the darknets
[Mink] remember bitcoin started in 2008 , when computer power was a fraction of what we have today
[Arkhangel] one question
[Mink] ok, when new bitcoins are created/bought they will usually go in a “wallet”
[Arkhangel] I read on internet that now we need more power to hash code to get one bitcoin… why along the time the hashing is harder?
[Mink] Arkhangel, “Each block contains a cryptographic hash of the previous block, using the SHA-256 hashing algorithm, which links it to the previous block,”
[Mink] as the blockchain becomes bigger, the computation turns harder
[Arkhangel] does it mean that for getting ONE bitcoin, I must hash the entire blockchain EACH TIME?
[Mink] at the moment the blockchain is 165 gb
[Mink] no, but let’s say the number to be hashed gets bigger
[Arkhangel] so the number of bits increases?
[Arkhangel] bits to be hashed I mean
[Mink] yes, kind of
[Arkhangel] lol
[Mink] https://bitinfocharts.com/
[Arkhangel] what hash algorithm is used?
[Arkhangel] SHA-1 or SHA-2?
[Mink] sha256
[Arkhangel] ok
[Aspire] but what is the meaning of mining?
[Mink] “Miners keep the blockchain consistent, complete, and unalterable by repeatedly verifying and collecting newly broadcast transactions into a new group of transactions called a block.”
[Arkhangel] each block how many transactions can contain?
[Mink] mm, good question, lemme check
[Mink] 12.5 bitcoins per block
[Mink] approx
[Arkhangel] so 12.5 bitcoins of transactions
[Arkhangel] so I can have a different number of transactions in each block
[Mink] thing to remember is you can only “create” new bitcoin that are been issued
[Mink] the number of btc (not their value) is fixed, so there is no devaluation
[Arkhangel] what is the difference between issued and create? If someone issues BTC, are not they already created?
[Mink] the number of btc issued is halved every four yers (i think)
[Arkhangel] lol
[Mink] “In other words, bitcoin’s inventor Nakamoto set a monetary policy based on artificial scarcity at bitcoin’s inception that there would only ever be 21 million bitcoins in total”
[Mink] ” Their numbers are being released roughly every ten minutes and the rate at which they are generated would drop by half every four years until all were in circulation.”
[Arkhangel] lol it means that in the near next years, we cannot mine BTC anymore?
[Mink] in theory , yes
[Mink] but i’m sure before 2020 they will come up with something
[Arkhangel] but issued means that someone issues some BTCs, then miners must hash these digital data?
[Mink] and remember, bitcoin is not the only cryptocurrency, just the most popular
[Arkhangel] ik
[Arkhangel] ETH
[Arkhangel] all the coins that are shown in your link above
[Mink] yes, thera are many, their value depends as well on how many people will accept it as payment
[Mink] everything discussed so far applies to all cryptocurrencies
[Arkhangel] but if I want to buy a 0.0001 BTC, how can I do?
[Mink] you buy bitcoins from “exchanges”
[Arkhangel] what does exchanges mean? exchanges of what?
[Arkhangel] I cannot buy BTC with dollars?
[Mink] to “hold” you btc , you need an electronic wallet
[Arkhangel] ok
[Mink] … yes, you exchange dollars/euro/yen with btc
[Arkhangel] ah ok… but who does this? I don’t think the banks
[Arkhangel] I must ask for some organization
[Mink] “A wallet stores the information necessary to transact bitcoins”
[Mink] it’s important to know when making a transaction (buy/sell) there could be a transfer fee
[Arkhangel] when I exchange my dollars with BTC, these dollars where do they go? They go to some organization?
[Mink] it’s optiopnal, but could make the transaction slower to resolve
[Arkhangel] that manages the exchanges?
[Mink] a fee makes the transaction faster
[Mink] may take few minutes (or hours) for the money to appear un your wallet becouse the transaction has to be added to the blockchain
[Mink] and the fee goes to the miner doing the job
[Arkhangel] the fee goes to the miner in form of BTC?
[Mink] yes
[Arkhangel] if you are miner, can you choose if you want to mine transactions process or hash computation? Or it is random?
[Mink] all automatically of course
[Mink] remember i said mining it’s not only creating new coins, it’s also keeping the blockchain
[Mink] Go5u1337, l0t3D_ and rest, you still with us?
[l0t3D_] yeah I’m reading
[l0t3D_] Arkhangel doing a great job with questions
[l0t3D_] keeping you busy Mink πŸ˜€
[Arkhangel] lol ty xD
[Mink] that’s fine,
[Mink] now, another very important part of cryptocurrency is your “private key”
[Arkhangel] Anyway, does it mean that even if all BTC will be issued, at that moment I can continue to mine? since I cannot gain by creating new coin but I can gain from keepoing blockchain?
[Mink] yes Arkhangel
[Mink] but that won’t happen until 2020
[Arkhangel] at that moment, for you it is convienient continue to mine?
[Arkhangel] if you have the possibility to do?
[Arkhangel] or it is better to go to another coin?
[Mink] now, the private key is like a password for your “wallet”, you lose it and there is no way to get yout btcs back
[Mink] to mine btc at the moment takes very powerful GPUs, for many it’s not worth the electricity spent
[Arkhangel] about private key, who provides u it?
[Mink] there are “mining farm” with 100s of rigs
[Mink] ok, the private key you make it yourself, like a long long long password
[Arkhangel] uhm ok… so each miner must have a wallet so I private key to store BTC coming from mining?
[Mink] no, you can have many miners sharing a single wallet
[Arkhangel] so private key*
[Arkhangel] lol
[Arkhangel] and how can I know what is my gain if N people stay in a single wallet?
[Mink] once the wallet has something in, then can be shared among the people who helped mining
[l0t3D_] and how can you start mining
[l0t3D_] or from where
[Arkhangel] but if in a single wallet there are N miners, there are N private keys or just one private key?
[l0t3D_] one wallet one key
[l0t3D_] i guess
[Mink] easy, depending on your hardware and OS there is software for it
[Arkhangel] in that case is not more private xD
[Mink] yes , one wallet, one private key
[Arkhangel] but if other miners know my private key, it is not “private”
[Mink] you have to trust the miner pool
[Arkhangel] indeed
[Arkhangel] someone can share that key
[Arkhangel] outside
[Arkhangel] in practice, if I have N miners and one wallet, the miners decide among them how to divide the gain?
[Mink] yes, that’s way usually the gain are shared as soon as.. there is something to share
[Arkhangel] so, if N miners in one wallet have one private key, where is the corresponding public key?
[Mink] and of course your rig could be more powerful than mine, so they have to decide on wich basis to share
[Arkhangel] ah ok
[Mink] anyway, software can be very “basic” or customized
[Mink] https://bitcoin.org/en/download
[Chanlog] Title: Download – Bitcoin (at bitcoin.org)
[Arkhangel] about the public key?
[Mink] the public key is used to make transactions, usually 256bit number
[Arkhangel] so the public key is used on mining
[Mink] encrypted with the private key
[Mink] no, is used to send receive btc
[Arkhangel] ah ok
[Arkhangel] so in mining, private key and public key are not used
[Mink] not really
[Mink] public key is like an address, you use it to send/receive btc
[Arkhangel] I thought that mining was an encryption or decryption… so, if mining does not use these keys, it means that mining is not an encryption or decryption, but it is a computation…
[Arkhangel] just a computation
[Arkhangel] an hash function to be computed, stop
[Mink] private/public key is related to wallets
[Arkhangel] now it is clearer
[Mink] yes Arkhangel
[Arkhangel] you should make a FAQ section for each lesson xD
[Mink] ok, i think i covered everything i wanted, of course there is much much more
[Arkhangel] I can imagine
[Arkhangel] thank you for the answers
[Mink] thank you all for been patient
[Mink] any other question?
[Arkhangel] my next question is too much technical, so it is better I avoid it
[Mink] the log of the lesson should be available shortly after we finish
[Mink] lol, thank you Arkhangel
[Mink] i managed to not embarass myself so far
[Arkhangel] Im afraid I steal a lot of time xD
[Anon_Blackcat01] good lesson Mink
[Mink] thanks Anon_Blackcat01 , was good for me aswell
[Arkhangel] uhm Im thinking I dont need to ask that technical question… U covered well all aspects that I need to take the answer
[n1ck1] and darknets?
[Arkhangel] next lesson I think
[l0t3D_] thanks Mink
[l0t3D_] and Arkhangel, lol
[n1ck1] Okay, thanks for the class
[Arkhangel] thank only Mink, I just made doubts, he gave answers

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