The technical side of Bitcoin

    In recent months, peer-to-peer currency, Bitcoin has grown significantly in popularity, mainly due to media references and the involvement of a mass audience. At the same time, as far as I can tell, among experts there are skeptical assessments, right down to “Bitcoin is a scam” . In the past, I developed both payment systems and P2P systems, and I had to work with cryptography. Therefore, I read the available sources and tried to consider the Bitcoin technology from a technical point of view, as carefully as possible. I offer you a brief Russian translation of the material .

    So, it is argued that Bitcoin is a (1) peer-to-peer (2) anonymous (3) secure digital currency. In my opinion, all threestatements are controversial and can only be accepted if the definitions are somewhat expanded.

    Bitcoin is not a peer-to-peer, because a participant needs information on all operations in the system to complete operations. Accordingly, without complete information on each transaction (in the world!), It is impossible to make transactions on your own. If the system will handle any serious transaction flow, it will inevitably split into "peers" and "commoners" (commoners).
    Commoners will pay peers for the right to make transactions, and peers will need to have non-trivial matfond for their functions.

    With anonymity in Bitcoin, everything is also slightly vague. Yes, for each transaction, each participant creates a one-time wallet. However, in principle, complex transactions (involving multiple coins) can potentially reveal one-time wallets belonging to the same owner. Also, given the ability to track all transactions, the possibility of total surveillance of such a network cannot be ruled out. Such surveillance will be completely invisible to the participants; unlike the classic special services, here the lard will not leave any papers or evidence.

    With security, everything is also a little dubious. Cryptographic security is based on cost asymmetries: if I encrypt something with strong crypto, the attacker needs to burn two Suns to force the cipher. Alas, in Bitcoin, only individual transactions are strongly scripted. The whole structure as a whole rests on very dubious bolts - proof-of-work chains. If an attacker has computing resources comparable to the power of the network (peers), he can do different tricks (see the original text) The bad asymmetry is that peers need to burn electricity around the clock to maintain the network. An attacker can only mobilize his resources for a brief period. Another bad asymmetry: in order to try to double-spend, an attacker can only offer a coin to several victims at the same time. Victims need to either keep abreast of all transactions (in the world), or wait from 10 minutes to 1 hour until the transaction is reliably delayed in the history of the “peers”.

    Thus, the main point of the Bitcoin program - the prevention of double spending without involving trusted third parties, does not hold water. Third parties (peers) will not care, but as far as possible in practice it is possible to avoid fraud - it is not clear at all.

    What is also striking: with the exception of the “political” program and marketing packaging, it is not clear why Bitcoin is better than the modern European banking system. Moreover, it is much worse: in my Internet bank zero commissions and instant payments within the country. In Bitcoin, commissions are inevitable, plus the operation takes from 10 minutes.

    General conclusion: Bitcoin is a well-developed project :)

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