How many hashes create one Bitcoin?


Conversion from ECDSA public key to Bitcoin Address

This article may be too technical for some users. The more basic article on Bitcoin Addresses may be more appropriate.

A Bitcoin address is a 160-bit hash of the public portion of a public/private ECDSA keypair. Using public-key cryptography, you can "sign" data with your private key and anyone who knows your public key can verify that the signature is valid.

A new keypair is generated for each receiving address (with newer HD wallets, this is done deterministically). The public key and their associated private keys (or the seed needed to generate them) are stored in the wallet data file. This is the only file users should need to backup. A "send" transaction to a specific Bitcoin address requires that the corresponding wallet knows the private key implementing it. This has the implication that if you create an address and receive coins to that address, then restore the wallet from an earlier backup, before...

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Table of contents

What is Bitcoin mining?

Mining is the process of spending computing power to process transactions, secure the network, and keeps everyone in the system synchronized together. It can be perceived like the Bitcoin data center except that it has been designed to be fully decentralized with miners operating in all countries and no individual having control over the network.

This process is referred to as "mining" as an analogy to gold mining because it is also a temporary mechanism used to issue new bitcoins. Unlike gold mining, however, Bitcoin mining provides a reward in exchange for useful services required to operate a secure payment network. Mining will still be required after the last bitcoin is issued.

How does Bitcoin mining work?

Anybody can become a Bitcoin miner by running Bitcoin mining software and Bitcoin mining modules with specialized Bitcoin mining hardware. Mining software listens for transaction broadcasts...

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Anyone with an interest in bitcoin will have heard the phrase 'cryptographic hash function' at some time or other. But what exactly does it mean, and how is it connected to cryptocurrency?

Hash functions are an essential part of, not only of the bitcoin protocol, but of information security as a whole.

In the following article we'll take a look at some simple examples of how they work, with a simple demonstration, too.

What's a hash function?

In the abstract, a hash function is a mathematical process that takes input data of any size, performs an operation on it, and returns output data of a fixed size.

In a more concrete example, this can be used to take a sequence of letters of any length as input – what we call a string – and return a sequence of letters of a fixed length. Whether the input string is a single letter, a word, a sentence, or an entire novel, the output – called the digest – will always be the same length.

A common use of...

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That the block chain cannot be easily forked represents one of the central security mechanisms of Bitcoin. Given the choice between two block chains, a Bitcoin miner always chooses the longer one - that is to say, the one with the more complex hash. Thusly, it ensures that each user can only spend their bitcoins once, and that no user gets ripped off.

As a consequence of the block chain structure, there may at any time be many different sub-branches, and the possibility always exists of a transaction being over-written by the longest branch, if it has been recorded in a shorter one. The older a transaction is though, the lower its chances of being over-written, and the higher of becoming permanent. Although the block chain prevents one from spending more Bitcoins than one has, it means that transactions can be accidentally nullified.

A new block chain would leave the network...

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A great question and it was asked on the Bitcointalk forum today.

Here is the response I provided, which I think about sums it up:

It depends on where the difficulty is.

Today’s Total Network hash rate is : about 25 TH/s
Difficulty is: 3,249,550

So about 7 GH/s would net you about 1 BTC per day.

However, once ASIC’s are delivered in a week or three, the hash rate will go up.

If Avalon delivers next week they will be adding about 30 TH, some of the GPU will fall off. So lets assume the total Network has rate doubles, then the difficulty will also double. That means it will take double the hashing power. So it will take 14 GH/s to make 1 BTC.

Butterfly labs is estimated to be delivering about 300 TH to the network. So if you figure 300 for BFL and 30 for Avalon and then figure many more ASIC orders will pour in, a safe next estimate will be at 500 TH. since that’s 20 times...

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Dirk Merkel continues his introduction to Bitcoin with a look at the Bitcoin network as a system. He briefly explains the mechanics of transactions, blocks, and the block chain, as well as the Bitcoin wallet. He also discusses double-spending and Bitcoin mining, two controversial aspects of Bitcoin.

Having seen how Bitcoin is used (in Part 1) we're ready to look at some of its underlying concepts as a technology and network. This article introduces the mechanics of Bitcoin's core components: transactions, blocks, and the block chain. I also demystify controversial aspects of Bitcoin such as encryption (added in v0.4 of the standard client), the problem of double-spending, and how and why Bitcoin mining happens. Finally, I use Bitcoin Block Explorer to extract some data that I then use to gauge the overall health of the Bitcoin economy today.

To get started, consider Figure 1, which illustrates the relationship between the block chain, individual blocks, and...

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This document provides a fast-paced interactive introduction to basic Bitcoin concepts. The purpose is to give you enough knowledge of the Bitcoin protocol to write micropayments-capable apps and demos. Let’s dive in!

How to learn (enough) Bitcoin in one week

Bitcoin is a very highly interconnected subject and it can be tricky to explain one piece without assuming some knowledge of other pieces (or prerequisites). The approach we recommend you take is as follows:

Step 1: First, go and read the original paper by Satoshi Nakamoto (bitcoin.pdf)

Step 2: Next, set up your development environment using the instructions below.

Step 3: Now go through the Introduction to Bitcoin section and read through the questions to get a high level overview of Bitcoin

Step 4: Next, do the Interactive Introduction section and type in the commands. You won’t understand everything, but will learn by doing - kind of like immersion in a foreign language.

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Recently over dinner, I was asked to explain bitcoin mining, and I struggled as it is entangled with a number of other concepts. Here’s my attempt at breaking it down into bite-sized pieces.

What is bitcoin mining?

Mining is the process of writing pages (blocks) of bitcoin transactions into the bitcoin ledger, called ‘The Bitcoin Blockchain’, and getting rewarded with newly created bitcoins.

To understand this in more detail, the rest of the post describes:

How do bitcoin transactions work? Why is mining needed in bitcoin? Why do miners mine? What is this ‘computationally expensive’ guessing game? Why pay rewards in BTC instead of USD? Who mines? What can and can’t miscreants do?

If you are new to bitcoin, it might be worth having a quick read of “A gentle introduction to bitcoin”.

How do bitcoin transactions work?

The process is:

Make a payment (a bitcoin transaction) Wait for it to be mined in a block (average 10 mins) Wait for more...
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In the early days of Bitcoin, mining used to be done using the CPU on your computer. Nowadays though as the amount of people mining has increased the difficulty of Bitcoin mining has also increased too. This high difficulty and hash rate has mostly been fueled by the introduction of ASIC mining chips. Bitcoin uses SHA-256 cryptographic hash function to secure the blocks and create the hash for each block. This encryption is what protects the transactions in the block from being altered.

Application-Specific Integrated Circuit

ASICs allow miners to use hardware made specifically for Bitcoin or other SHA-256 algo coins. An ASIC has benefits over CPU, GPU and FPGAs due to being designed for one specific task. They are able to mine Bitcoin at a higher hash rate (speed of processing transactions) than CPUs, GPUs and FPGAs. Several manufacturers produce their own ASIC chips and miners. For this part of the Bitcoin mining guide we will use the current top miner on the...

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Hobby Bitcoin mining can still be fun and even profitable if you have cheap electricity, an efficient bitcoin mining machine and get the best Bitcoin mining hardware.

It’s important to remember that Bitcoin mining is competitive. Today it is not smart for the average person to mine since China’s cheap electricity has allowed it to dominate the mining market. If you want bitcoins then you are better off buying bitcoins.

Bitcoin Mining Hardware Comparison

What is an ASIC Bitcoin Miner?

Since it’s now impossible to profitably mine Bitcoin with your computer, you’ll need specialized hardware called ASICs.

Originally, Satoshi intended for Bitcoin to be mined on computer CPUs. However, Bitcoin miners discovered they could get more hashing power from graphic cards. Graphic cards were then surpassed by ASICs (Application Specific Integrated Circuits).

Nowadays all serious Bitcoin mining is performed on dedicated Bitcoin mining hardware ASICs,...

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I have the same problem. Very simple scenario - customer load funds from my site then admin void it from merchant area.

I get 2 responses when I create md5 hash for auth_capture response smth like

$response['x_trans_id'] = '123'

$response['x_amount'] = '20.00'

md5('myownmd5hash' . 'LoginID' . '123' . '20.00')

everything is ok, hashes are equal.

but when I do the same for void request

md5('myownmd5hash' . LoginID . '123' .'0.00')

hashes do not match.

I created a ticket in AN support center, but they said

Here in support, we can provide assistance with the Authorize.Net payment gateway account Merchant Interface. Unfortunately, we are not trained or certified developers and cannot provide scripting or coding support. However, we do offer an Integration Center with developer tools, troubleshooting suggestions, sample codes and even a developer's directory. We also provide a developer community forum for...

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This is part 3 of my series of blog posts on the topic cryptocurrencies. The first, introductory part can be found here. The second part on mining can be found here.

Recap – Bitcoin = direct electronic transactions without intermediary

To recap, I explained the main idea behind the Bitcoin protocol, which allows electronic peer-to-peer transactions without an intermediary. In brief, the process works as follows:

I own a certain amount of Bitcoin. This can be publicly verified, because every Bitcoin transaction since the very first one is entered into a public ledger called the block chain. So I can’t pretend to have more money than I have. I can send a certain amount of Bitcoin to a recipient, and I can’t cheat while doing that, because the transaction is publicly broadcast to all nodes in the network. I could simultaneously send out more Bitcoins than I have, but the network decides through a process that is a bit like voting (and in reality involves solving a...
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