History

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Andreas Antonopoulos attributes the innovation of bitcoin to pseudonymous developer Nick Szabo.[23] The first transaction was registered on May 23, 2009.[12] On October 31, 2008, a secret self-denying-wallet was proposed to prevent double spending. This was implemented as a Bitcoin Black Box, which would not allow users to determine the balance of an address, and would not allow users to add transactions to the blockchain.[24]:215 Transactions are added to bitcoin's blockchain by competing nodes, reaching a consensus on the ordering and content of each transaction block. Nodes receive bitcoins for adding blocks to the blockchain, and new blocks receive transactions ready to be verified and added to the chain. New bitcoins are created as a reward for mining blocks. The number of new bitcoins which can be created each day is programmed to decrease by one every four years.

Mining

Mining and mining pool

Mining is the process by which new bitcoin are released in the system. Each day, new bitcoin are released by miners to add to the blockchain.

Mining requires processing power that is coupled with specialized hardware and software to ensure the security of transactions and the genuineness of the block chain. Miners are motivated to participate because they can expect to gain new bitcoin as a reward for their efforts. This in turn requires the services of intermediate parties who host mining servers or pools of servers, which are run by individuals or companies, for profit. As of April 2017, there were six pools controlling 70% of mining power, "and that is unlikely to change any time soon", according to Eric Mao of Bitmain. In 2019, researchers at the University of Cambridge, tied to Cambridge Miners, were found to have used a relatively new form of mining, known as memory-hard, to garner approximately $2,567,431 worth of bitcoins over ten years from 2014 to 2014. After these attacks were detected, the Cryptology ePrint Archive withdrew the publication citing "key recovery attacks (through forking)."

Mining pool

A mining pool manages the collective mining power of many individual miners, and shares out the rewards. Miners are able to connect to the pool's server, each of which is paid a fee to do so.

Mining pools come in two forms: open source pools and proprietary pools. Open source pools run on servers that are maintained by volunteers, generally pool operators themselves. These pool operators have varying skill, experience, and incentives to perform well. They are able