Let me start off by saying that I am completely new to Bitcoin and really want to understand it well before I invest anything in it. That being said I can see the potential this currency has to change the world and really want to be a part of that.
I have been reading up on the technology side of Bitcoin and have a few questions.
My first question is about how Bitcoin prevents a very specific type of counterfeiting. If I understand correctly, when a new block is created the person creating it calculates what the current reward is and includes a transaction to himself for that amount. If this block creator tries to give himself more coins then the rest of the network will reject his block and he will receive nothing. A limit of approximately 21 million Bitcoins is enforced by agreement across the network on the reward for completing a block, which is based on the total number of blocks.
How am I, the individual, protected if even the entire rest of the network decides on a different reward scheme, specifically one that increases the total number of possible Bitcoins? Put another way, how much of the network would need to agree in order to increase the total number of possible Bitcoins? As a reference, there is a note in one of the sections on the Weaknesses wiki article, specifically:
I would ask the question why not to the statement made in that article.
And this bring me to my second concern, Bitcoin loss. If I understand correctly no Bitcoins can ever be destroyed, the only thing that can be lost is the access to them, meaning the private key needed to sign the transaction transferring them. I also understand that Bitcoins are divisible up to eight decimal places, allowing for many more than 21 million transferable units. The problem I have here is the longevity of this currency even if people lose small amounts at a time. In my mind the eventual goal is to replace other currencies, such as USD, and if this happens lets assume we have 300 million Americans using Bitcoin. After enough loses the value of even the smallest transferable unit would be enough to buy a house or boat or other equivalently high value item, leaving lesser items, such as bread, milk, etc..., basically un-purchasable. Basically how are Bitcoin holders protected against the carelessness of others, or even someone maliciously (although admittedly to his financial detriment) "destroying" Bitcoins?
I did look around the forums and the Wiki before posting here, so if I missed the answers to these questions elsewhere then links would be appreciated. Also, sorry for the text wall, couldn't really think of a way to shorten it and still get my point across.
(EDIT: remembered how to link things using BBCode.
)
I have been reading up on the technology side of Bitcoin and have a few questions.
My first question is about how Bitcoin prevents a very specific type of counterfeiting. If I understand correctly, when a new block is created the person creating it calculates what the current reward is and includes a transaction to himself for that amount. If this block creator tries to give himself more coins then the rest of the network will reject his block and he will receive nothing. A limit of approximately 21 million Bitcoins is enforced by agreement across the network on the reward for completing a block, which is based on the total number of blocks.
How am I, the individual, protected if even the entire rest of the network decides on a different reward scheme, specifically one that increases the total number of possible Bitcoins? Put another way, how much of the network would need to agree in order to increase the total number of possible Bitcoins? As a reference, there is a note in one of the sections on the Weaknesses wiki article, specifically:
Quote
The attacker can't:
- ...
- Create coins out of thin air
- ...
I would ask the question why not to the statement made in that article.
And this bring me to my second concern, Bitcoin loss. If I understand correctly no Bitcoins can ever be destroyed, the only thing that can be lost is the access to them, meaning the private key needed to sign the transaction transferring them. I also understand that Bitcoins are divisible up to eight decimal places, allowing for many more than 21 million transferable units. The problem I have here is the longevity of this currency even if people lose small amounts at a time. In my mind the eventual goal is to replace other currencies, such as USD, and if this happens lets assume we have 300 million Americans using Bitcoin. After enough loses the value of even the smallest transferable unit would be enough to buy a house or boat or other equivalently high value item, leaving lesser items, such as bread, milk, etc..., basically un-purchasable. Basically how are Bitcoin holders protected against the carelessness of others, or even someone maliciously (although admittedly to his financial detriment) "destroying" Bitcoins?
I did look around the forums and the Wiki before posting here, so if I missed the answers to these questions elsewhere then links would be appreciated. Also, sorry for the text wall, couldn't really think of a way to shorten it and still get my point across.
(EDIT: remembered how to link things using BBCode.
)