healthcare distributed ledger

Satoshi Whitepaper

[vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” text_align=”left” css_animation=””][vc_column][vc_column_text]It is impossible to explain blockchain without introducing Bitcoin.  This post is designed as an introduction to Satoshi’s whitepaper which, in 2009, introduced Bitcoin to the world.  Anyone attempting to understand blockchain applications in a meaningful way should be familiar with this publication, which is why we are featuring it in the first in a series of posts highlighting some of our favorite and most influential blockchain resources.  Please note that we are attempting to summarize the Satoshi whitepaper, a technical document, in plain English that the common person can understand.

 


 

Until recently, banks have played the role of brokering trust between participants of financial transactions who do not know or trust each other.  Naturally, as a result, the financial system developed a critical dependence on banks.  Bitcoin, as introduced by Satoshi Nakamoto in 2009, is a new version of electronic cash where no central third party (i.e., a bank) is needed to create trust in the system.  The trust is in the distributed network and handled through cryptographic proof, rather than by a bank or a middleman.  A peer-to-peer network and digital signatures are the key instruments in solving the “double spend” problem that, until now, banks have been in place to solve.

 

How does the network operate? It’s remarkably simple. In fact, the genius of Satoshi’s design is this “unstructured simplicity” which adds to the security and robustness. It works as follows:

  1. New transactions are distributed to the network of nodes.
  2. Nodes collect transactions in a block.
  3. Each node works on solving an energy-intensive Proof of Work (PoW) problem.
  4. The winning node broadcasts the solution to nodes.
  5. Nodes accept solution if all transactions are valid and coin is not already spent.
  6. Nodes express acceptance by working on next block using hash of previous block.

 

All the transactions in a block are shared amongst all the network nodes through the PoW consensus algorithm.  This method of hashing and publicly announcing all transactions in a block gives the Bitcoin blockchain its transparency.  No one can argue that a transaction did not happen as long as it has been recorded on the growing, shared, and transparent blockchain.

 

The nodes on the network are rewarded for competing because they receive new Bitcoin when they solve a block, winning a competition every 10 minutes.  These “miners” are mining new bitcoin through the effort and energy they expend solving the PoW problem.  The energy output required for PoW consensus is a key feature because it makes the blockchain less vulnerable to attack.  The system is protected against fraud because transactions in the system are too computationally expensive to reverse.  Hacking the system is not practical, because it would require too much energy to take control of the network.

 

Hashed Commentary:

The Bitcoin blockchain is an open protocol (the GitHub repository can be found here).  Any developer in the world can review and use the code as they wish.  In the real world, Bitcoin is a program that provides a user with a wallet, allowing the user to send and receive bitcoins.

 

The system is now being used by people and businesses around the world.  It’s no longer a “fringe” phenomenon.  As of July 11 2017, one Bitcoin equals $2284.53 and the Bitcoin market cap is $37.3B.  16M Bitcoin are in circulation with more Bitcoin being mined every day (until the 21M cap is reached).  The number of blocks now exceeds 475,000.  More money flows through the Bitcoin blockchain than through Western Union.  Bitcoin will never stop so long as miners continue to operate.  No government or central bank can shut it off.

 

You may have heard about Bitcoin hacks in the past.  In reality, the Bitcoin blockchain has never been hacked.  It is by far the most battle-tested of all the blockchain protocols.  Successful hacks have been at the “wallet” level, affecting software that 3rd parties have written on top of Bitcoin.[/vc_column_text][vc_empty_space height=”20px”][/vc_column][/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” text_align=”left” css_animation=””][vc_column width=”1/4″][/vc_column][vc_column width=”1/4″][vc_single_image image=”1430″ img_size=”full” alignment=”center” qode_css_animation=””][/vc_column][vc_column width=”1/4″][vc_single_image image=”1431″ img_size=”full” alignment=”center” qode_css_animation=””][/vc_column][vc_column width=”1/4″][/vc_column][/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” text_align=”left” css_animation=””][vc_column width=”1/4″][/vc_column][vc_column width=”1/2″][vc_column_text]

Images: https://bitcoin.org/en/faq#who-created-bitcoin

[/vc_column_text][vc_empty_space height=”25px”][/vc_column][vc_column width=”1/4″][/vc_column][/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” text_align=”left” css_animation=””][vc_column][vc_column_text]The Bitcoin blockchain is the genesis of Ethereum and each of the other sixty or so protocols that have emerged since.  Each of these new protocols has tweaked the Bitcoin Blockchain in an attempt to optimize the blockchain for some purpose other than what Bitcoin was designed to do. Bitcoin is slow and energy-intensive, but it is these very characteristics that Satoshi Nakamoto intentionally designed that make it so secure and successful.[/vc_column_text][/vc_column][/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” text_align=”center” css_animation=””][vc_column][vc_empty_space height=”40px”][vc_column_text][qbutton size=”medium” target=”self” font_style=”normal” font_weight=”600″ text=”VIEW RESOURCES” link=”https://hashedhealth.com/resources/” hover_color=”#214d68″ background_color=”#214d68″ border_color=”#214d68″ hover_border_color=”#214d68″ color=”#ffffff” hover_background_color=”rgba(255,255,255,0.01)” font_size=”18″][/vc_column_text][/vc_column][/vc_row]

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  2. […] Satoshi Nakamoto’s Bitcoin Whitepaper is often credited as a catalyst to the current blockchain revolution, the Ethereum Whitepaper was a […]

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