"Bitcoin Mining and Consensus: Insights from the University of Tokyo's Blockchain Chair."
Table of Contents
- Basic Concepts of Mining
- consensus mechanism
- Technical Details of Block Structure and Mining
- Technological Evolution of Mining
- Mining Pools and Security
- Mining Pool Details
- Security and potential attacks
- Future Issues and Prospects
- Conclusion.
- Bitcoin Basics
- Related article (Blockchain Public Lecture Series):
The fourth lecture of the University of Tokyo's Endowed Chair in Blockchain Innovation provided deep insights into the core technologies of Bitcoin: mining and consensus mechanisms. This article describes the key points of the lecture and summarizes key terminology.
Basic Concepts of Mining
Mining, which is responsible for the security of the Bitcoin network and the issuance of new coins, is based on a "proof of work" called Proof of Work (PoW). This is a mechanism whereby the right to generate new blocks is obtained by solving complex computational problems. Miners include unauthorized transactions in the block and repeat the calculation until they find a hash value that satisfies certain conditions.
Mining rewards are halved approximately every four years, and are 3.125 BTC per block as of April 2024. This mechanism, known as "halfing," will gradually reduce the supply of bitcoins.
consensus mechanism
In Bitcoin's decentralized system, a consensus mechanism is essential for all participants to reach a consensus. Consensus emergence is a mechanism where each node operates independently, but as a whole, one blockchain is considered correct.
According to the longest chain selection rule, each node selects the chain with the highest accumulation difficulty as the legitimate chain. Chains may temporarily diverge (fork) due to network delays, etc., but will eventually converge to the longest chain.
Technical Details of Block Structure and Mining
The block header contains information such as version, hash of previous block, marked root, timestamp, target, and nance. Difficulty (Difficulty) is adjusted approximately every two weeks to maintain a pace of one block generated every 10 minutes.
Technological Evolution of Mining
Mining technology has evolved rapidly, starting with CPUs and moving to GPUs, FPGAs, and then ASICs. This has led to an exponential increase in hash rates across the network, reaching approximately 500 EH/s (exahashes/second) as of April 2024.
Mining Pools and Security
Mining pools have become popular because mining by individuals has become difficult. This system allows multiple miners to cooperate in mining and distribute the rewards. However, centralization by large mining pools can increase security risks such as 51% attacks.
The content of this lecture is a valuable resource for a deep understanding of the technical foundations of Bitcoin. Mining and consensus mechanisms are fundamental elements of blockchain technology, and understanding these concepts is critical to the future development and application of blockchain technology and the design of new projects.
The lecture content provides important insights not only for technologists, but also for blockchain-related business people and policy makers. For the wide range of people interested in Bitcoin and blockchain, it is an invaluable resource for a deeper understanding of the technology and a look at its future potential.
Important Terms
- Nance (Nonce): Value that is changed to find a solution to the PoW
- Transaction pool: collection of unauthorized transactions
- Coinbase transaction: first transaction in a block, including mining rewards
- Node: A computer connected to the Bitcoin network
- Full node: a node that holds a complete copy of the blockchain and can validate all transactions
- Cumulative difficulty: Sum of difficulty of all blocks in the chain
- Fork: Blockchain branching (soft fork and hard fork)
- Markle Root: Summarized hash of all transactions in the block
- Difficulty: Index of difficulty in finding a PoW solution
- Target: Block hash must be less than or equal to this value
- Extranance: arbitrary data area within a Coinbase transaction
- ASIC: Highly efficient chip designed specifically for bitcoin mining
- Hash rate: number of hashes that can be calculated per second (a measure of mining capacity)
- 51% attack: Attack by controlling the hash power of the majority of the network
- Centralization: concentration of power and functions in one place
Mining Pool Details
With the spread of mining pools, even individual miners can now earn a stable income. In pool mining, multiple miners cooperate in mining, and the rewards obtained are distributed according to their contribution (share).
On the other hand, decentralized mining pools without a central administrator are also emerging. For example, P2PPool uses a small blockchain called a "sharechain" to fairly record participants' contributions and distribute rewards.
Security and potential attacks
While the Bitcoin network is highly regarded for its security, there are potential risks. Of greatest concern is the 51% attack. This is an attack that is possible if a single entity controls the majority hashing power of the network, which could allow fraudulent activities such as changing past transactions or double payments.
In practice, attacks can be successful with hash power of less than 511 TP3T, which is a major concern. There is also an increased risk of centralization when large mining pools control the hash power for a large portion of the network.
Future Issues and Prospects
Bitcoin's mining and consensus mechanisms, due to their innovative design, have enabled stable network operations to date. However, as the technology has evolved and adoption has grown, new challenges have emerged.
- Energy consumption: Mining with PoW consumes a large amount of electricity, which raises concerns about environmental impact.
- Scalability: Block size limitations limit transaction processing capacity.
- Tendency toward centralization: the rise of large mining pools may threaten the decentralized nature of the network.
Layer 2 solutions such as Lightning Network and more efficient consensus algorithms are being researched to address these challenges.
Conclusion.
The Bitcoin mining and consensus mechanisms described in the University of Tokyo lecture present innovative solutions in decentralized systems. These technologies do not merely support bitcoin as a digital currency, but are the foundation of the entire blockchain technology.
In the future, these concepts will be further developed and will influence the development of applications not only in the financial system, but also in many other areas. It is essential for the healthy development of blockchain technology that a wide range of people, including technologists, business people, and policy makers, understand these concepts and recognize their potential and challenges.
The innovative ideas demonstrated by Bitcoin will be an important factor in shaping the future of our digital society.
Bitcoin Basics
- Bitcoin.org
Official Bitcoin website. Provides a basic overview, how to choose a bitcoin wallet, and a guide to security. - Bitcoin Japanese Wiki
A bitcoin wiki written in Japanese, covering how bitcoin works, technical details, and explanations of related terms.
English 
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