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Satoshi Nakamoto Quotes
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Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “The steps to run the network are as follows: 1. New transactions are broadcast to all nodes. 2. Each node collects new transactions into a block. 3. Each node works on finding a difficult proof-of-work for its block. 4. When a node finds a proof-of-work, it broadcasts the block to all nodes. 5. Nodes accept the block only if all transactions in it are valid and not already spent. 6. Nodes express their acceptance of the block by working on creating the next block in the chain, using the hash of the accepted block as the previous hash.”
Satoshi Nakamoto Quote: “As you figured out, the root problem is we shouldn’t be counting or spending transactions until they have at least 1 confirmation. 0/unconfirmed transactions are very much second class citizens. At most, they are advice that something has been received, but counting them as balance or spending them is premature.”
Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “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 proof-of-workers the network to prevent double-spending.”
Satoshi Nakamoto Quote: “In this sense, it’s more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.”
Satoshi Nakamoto Quote: “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers.”
Satoshi Nakamoto Quote: “It is strictly necessary that the longest chain is always considered the valid one.”
Satoshi Nakamoto Quote: “Bitcoin addresses you generate are kept forever. A bitcoin address must be kept to show ownership of anything sent to it. If you were able to delete a bitcoin address and someone sent to it, the money would be lost.”
Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “It’s the same situation as gold and gold mining. The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for Bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste.”
Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “Those coins can never be recovered, and the total circulation is less. Since the effective circulation is reduced, all the remaining coins are worth slightly more. It’s the opposite of when a government prints money and the value of existing money goes down.”
Satoshi Nakamoto Quote: “We have proposed a system for electronic transactions without relying on trust. We started with the usual framework of coins made from digital signatures, which provides strong control of ownership, but is incomplete without a way to prevent double-spending. To solve this, we proposed a peer-to-peer network using proof-of-work to record a public history of transactions that quickly becomes computationally impractical for an attacker to change if honest nodes control a majority of CPU proof-of-worker.”
Satoshi Nakamoto Quote: “I would be surprised if 10 years from now we’re not using electronic currency in some way, now that we know a way to do it that won’t inevitably get dumbed down when the trusted third party gets cold feet.”
Satoshi Nakamoto Quote: “The requirement is that the good guys collectively have more CPU proof-of-worker than any single attacker.”
Satoshi Nakamoto Quote: “Generation is basically free anywhere that has electric heat, since your computer’s heat is offsetting your baseboard electric heating. Many small flats have electric heat out of convenience.”
Satoshi Nakamoto Quote: “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 Quote: “A rational market price for something that is expected to increase in value will already reflect the present value of the expected future increases. In your head, you do a probability estimate balancing the odds that it keeps increasing.”
Satoshi Nakamoto Quote: “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 Quote: “We consider the scenario of an attacker trying to generate an alternate chain faster than the honest chain. Even if this is accomplished, it does not throw the system open to arbitrary changes, such as creating value out of thin air or taking money that never belonged to the attacker. Nodes are not going to accept an invalid transaction as payment, and honest nodes will never accept a block containing them. An attacker can only try to change one of his own transactions to take back money he recently spent.”
Satoshi Nakamoto Quote: “As computers get faster and the total computing proof-of-worker 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.”
Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “Subscription sites that need some extra proof-of-work for their free trial so it doesn’t cannibalize subscriptions could charge bitcoins for the trial.”
Satoshi Nakamoto Quote: “Yes, [we will not find a solution to political problems in cryptography,] 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 Nakamoto Quote: “I very much wanted to find some way to include a short message, but the problem is, the whole world would be able to see the message. As much as you may keep reminding people that the message is completely non-private, it would be an accident waiting to happen.”
Satoshi Nakamoto Quote: “The design supports a tremendous variety of possible transaction types that I designed years ago. Escrow transactions, bonded contracts, third party arbitration, multi-party signature, etc. If Bitcoin catches on in a big way, these are things we’ll want to explore in the future, but they all had to be designed at the beginning to make sure they would be possible later.”
Satoshi Nakamoto Quote: “The incentive can also be funded with transaction fees. If the output value of a transaction is less than its input value, the difference is a transaction fee that is added to the incentive value of the block containing the transaction. Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free.”
Satoshi Nakamoto Quote: “You could say coins are issued by the majority. They are issued in a limited, predetermined amount.”
Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “We should have a gentleman’s agreement to postpone the GPU arms race as long as we can for the good of the network. It’s much easer to get new users up to speed if they don’t have to worry about GPU drivers and compatibility. It’s nice how anyone with just a CPU can compete fairly equally right now.”
Satoshi Nakamoto Quote: “At equilibrium size, many nodes will be server farms with one or two network nodes that feed the rest of the farm over a LAN.”
Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “This helps keep you from turning your coins over rapidly unless you’re forcing it by actually turning all your coins over rapidly.”
Satoshi Nakamoto Quote: “Although it would be possible to handle coins individually, it would be unwieldy to make a separate transaction for every cent in a transfer. To allow value to be split and combined, transactions contain multiple inputs and outputs. Normally there will be either a single input from a larger previous transaction or multiple inputs combining smaller amounts, and at most two outputs: one for the payment, and one returning the change, if any, back to the sender.”
Satoshi Nakamoto Quote: “The incentive may help encourage nodes to stay honest. If a greedy attacker is able to assemble more CPU proof-of-worker than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth.”
Satoshi Nakamoto Quote: “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.”
Satoshi Nakamoto Quote: “The price of .com registrations is lower than it should be, therefore any good name you might think of is always already taken by some domain name speculator.”
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