31

Start with an invalid public key Bitcoin addresses are the pubkeyhash (not pubkey) plus version and checksum information, encoded in base 58. Bitcoin address = version + RIPEMD-160(SHA-256( Public Key )) + checksum The steps for converting a public key to an address can be found here: https://en.bitcoin.it/wiki/Address Since the address uses the ...


22

There will definitely be a tragedy of the commons problem if things stand as they are now. This was discussed at some length here and elsewhere. There are some proposed ways to address this and make transaction fees nonzero (block size limit, hardcoded fees, insurance entities, mining cartel, gentleman's agreements which are maintained for fear defection ...


18

Mike Hearn just posted about how Network Assured Contracts handle this problem. I don't find an immediate flaw with this. This is how I understand the proposed solution: Anyone with an interest in a high hash rate (basically, anyone holding a large amount of coins), can initiate or cooperate on SIGHASH_ANYONECANPAY transactions. Those are an ...


15

BitCoin is futureproof, because in the event that processing power (or more relevantly, mathematical advances) make its algorithms weak or obsolete, the protocol can simply be upgraded. Copied from Stack Overflow: Upgrades to the Bitcoin protocol that break compatibility are implementable by social mechanisms but not by any technical process, which is by ...


15

I am just guessing here given the little I know about bitcoin and distributed databases. This comes down to the how CAP theorem applies to the bitcoin blockchain DB. CAP theorem states that it is impossible for a distributed computer system to simultaneously provide all three of the following guarantees: Consistency (all nodes see the same data at the ...


10

Sorry Alex, but you're wrong on the question being asked. It's trivial to put bitcoins "beyond use" so that they can never be spent again. All you would have to do is send the bitcoins to a made up address, which no one would have a key to. This has already been done, since coins have been sent to addresses which are almost certainly unowned (like the ...


9

There are three parts to this: The miners have to verify each transaction that will go into the block and all transactions that are in the block they will be basing their own work on Each client needs to look for transaction destined to their own addresses, which can get hard if you have a large address pool Since all transactions are broadcast the network ...


9

The Namecoin block reward is to be halved every 4 years, similar to Bitcoins. The fee to register a domain in Namecoin is set to decrease by the factor of 2 every two months, and later by a factor of 4. As the price of registering a domain go down way faster than the block reward, there won't be a shortage of opportunities for registering domains. On the ...


8

I've read some of the linked discussions, and it seems some of the participants fail to understand the basic economic theory of the marginal cost. In any high fixed-capital business, the net present value (NPV) determines the ROI (IRR) and determines the opportunity cost where investors apply their capital. Thus, in normal functioning markets, the lowest ...


8

There are four basic ways, and they all work: Come up with an address that passes the basic sanity checks but is internally invalid. You can know for sure that no key could possibly match this address. Put strings of characters in the address that are way beyond what anyone could generate in a vanity address. For example, if the Bitcoin address has "...


7

Nmat answer is correct the absolute minimum you would need to rebuild a wallet is the private key of the address. An alternative is a deterministic wallet. What is a deterministic wallet? A deterministic wallet can use cryptographic algorithms to create (and recreate) and wallet containing multiple public/private keys from a single passphrase. A ...


7

There are actually a number of possible threat models to evaluate. But since you asked about overwhelming "the network", I'll look only at attempts to overwhelm the network as a whole and not talk about attempts to overwhelm a few nodes. (You can overwhelm a node with invalid transactions, but that won't hurt the network as a whole.) First, nodes will only ...


7

Attention: Ambiguity! Note that the term (or abbreviation) "PoB" can be used differently. For example, some cryptocurrencies allow users to get some of their coins for provably burning money in Bitcoin, essentially deriving their values from Bitcoin's value by deriving their scarcities from Bitcoin's scarcity. Yeah, but what about my question? The idea ...


5

If you want to be pretty sure nobody can retrieve the Bitcoins: Look at the wiki article on Addresses. Start at point 3 with an obviously fake number (like, "0000000000000000000000000000000000000000") Continue with points 4-9. You get a "valid" address for destroying Bitcoins. What is the catch? As normally you'd generate the public key from a private key ...


5

The bitcoin network constantly adjusts itself to account for increasing amounts of computational power applied to securing the network. Thus, faster computers will not adversely affect the integrity of bitcoin. However, there could be problems should the integrity of the underlying cryptographic algorithms be compromised. It is possible to move bitcoin to ...


5

Because there is no guarantee that bitcoin will be in demand in the future. Here's an example, in a recent Gawker article they put "(RIP)" when naming Bitcoin .. as if it had died. http://www.gizmodo.com.au/2011/09/is-digital-money-the-new-way-to-buy-drugs Of course, the existing $35 million or so valuation of the currency come from those speculating that ...


5

Multisig transaction types use standard CHECKMULTISIG opcodes (which have been present in Bitcoin since its initial release in January 2009) and P2SH addresses (standardized in BIP13 in October 2011). Both are very commonplace nowadays. Consensus changes sometimes happen in Bitcoin, to add features or improve security. However, to the best of my knowledge, ...


4

You only need to have the private key of the address. So if you have a wallet with lots of address, you need to store at least the private key for each of these addresses. To export/import the private keys from/into a wallet file you can use Pywallet (check this question). For long term archival it is common to write down private keys in a piece of paper ...


4

The value will definitely rise if Bitcoins are ever used widely. But there's no guarantee that will ever happen. Even if you think crytpo-currencies are awesome and that human beings will be using something like them for centuries, it' still entirely possible that it will not be Bitcoins but some similar crypto-currency. It is likely that almost all of the ...


4

If you want to use an address, it would be nice to generate an address that can be verified by a human as obviously unspendable just by looking at the Base58. When you look at these addresses, you will say, "wow, that is obviously unspendable." 1CounterpartyXXXXXXXXXXXXXXXUWLpVr <- used by Counterparty 1ChancecoinXXXXXXXXXXXXXXXXXZELUFD <- used by ...


4

Public Service Mining seems quite plausible to me. In 40 years time one would hope that Bitcoin would have a large number of stakeholders who have a very strong incentive for the financial system to keep running smoothly. Those stakeholders I would expect to put non-zero effort into mining even for near-zero direct reward.


4

While security is certainly an arms race, the trick that makes bitcoin future-proof is that it's an open source project and we can all actively participate in that arms race. If SHA-256, RIPEMD-160 or ECDSA (the hashing and encryption algorithms behind bitcoin) are ever broken or crippled, we can simply change the client to use whatever "new hotness" ...


4

The blockchain is public, and every block has (amongst other things) the following information for each transaction (or it can be calculated): The size of the transaction, in bytes The fee paid by the initiator of the transaction Miners in future are likely to calculate the earnings per byte for each transaction when selecting which ones to include in a ...


4

The power to change the Bitcoin protocol depends on the willingness of the economic majority to adopt the changes. A wishlist exists of some changes that have been considered. If the change is one that devalues the currency, then those who hold coins or plan to hold them in the future will be less willing to adopt the change(s). Some suggestions have ...


4

This is possible through the use of a multiplier. For example, you could add it to Bitcoin as follows: You add a "currency multiplier" and "next currency multiplier" to the block header. All Bitcoin amounts presented are multiplied by this multiplier. You have a set of rules for how the next currency multiplier changes. For example, miners could be ...


3

I now see a much more urgent and catastrophic threat vector potentially circa 2016. Difficulty will tend to rise and fall such that the system-wide cost of mining is nearly the value of the coins mined (not perfectly but on a smoothed basis roughly true). Thus the lowest-cost marginal miners will earn the highest profits and rates-of-return. Thus, as ...


3

Bitcoin accounts for the exponential growth in processing power (Moore's law) making hashing easier by re-adjusting the "difficulty" every 2016 blocks. The difficulty essentially determines how low the target for the hash of the block header is, the lower the target the harder it is to find. Each block should on average take 10 minutes to find, so 2016 ...


3

Any 256-bit value is a valid private key. And any value at all has a SHA-256 hash that is a 256-bit value. So essentially, anything that an attacker cannot predict is sufficient. The method is as follows: Pick something an attacker cannot predict, like "U cannot h4z my b1tCOINz!!". Compute the SHA-256 hash of that string. Compute the corresponding public ...


3

With pruning as envisioned today, only spent outputs are pruned. By making a small transaction and never spending it, you can keep the encoded data intact. In the future it may be that unspent outputs will still be pruned if they're old and low-value, for example as suggested here, in which case you can still extend the life of your message by putting it in ...


3

If there are to be people that only mine Bitcoins for living, mining has to be profitable. However, it needn't be only profitable through transaction fees and block rewards. People could subsidize the miners if needed be. Moreover, miners could be providing some paid services while mining - for example giving priority to certain transactions, embedding some ...


Only top voted, non community-wiki answers of a minimum length are eligible