Bitcoin, Crypto currency, Blockchain

Crypto-understand currencies: the Hashrate and Double Spending

In this series of articles we will you step to deliver the basic information for a solid crypto Knowledge.

What the Hashrate is, and what it is used?

Hashrate

A hash function is, roughly speaking, a mathematical function, which can only be in one direction easily solved, in the other direction, but so far not yet solved.

It basically does nothing, as an input value an output value (usually with a defined length).
Clearly the whole thing is on a picture:

The hash function assigns each input to a fixed output.
Here is a number with a of length 3.

In this picture you can see that each entry (no matter how long the word is) is assigned a value, with a predefined length, here is a three-digit number. It is important to understand that while it is relatively easy not is to calculate the output from a certain input, but this is Vice versa. So far, there is no reverse function in the “123” could enter and what are the “crypto-Ticker” as the output. In the case of crypto-currencies such as Bitcoin, so-called “cryptographic hash functions”, assume that each input will accept only a specific output value. A collision, as in the following image, in which two different inputs to obtain the same output has not been found in the case of cryptographic (crypto-graphic) hash functions, although huge effort has been produce by this collision to be aware of. **

A Kollison should be in the case of cryptographic hash functions is not possible

A hash function should calculate both collision-proof, relatively easy to use and in one direction only to be executable.
Bitcoin and other “Proof-of-Work”-crypto currencies are taking advantage of hash functions, by the so-called Mining is always a certain hash value must be found, which is smaller than a predetermined value (Mining Difficulty). Who first finds a valid hash value, it is allowed to finally hang a new Block on the Blockchain. Since the function is a one-way function, and can therefore not be expected to assume a smaller value as the output to back the miners did nothing more than constantly new inputs in the hash function, to feed in hope, that it is a valid issue, a valid so-called hash value that comes out of it. This must of course not be done manually, the testing the various inputs is, of course, the Computer, or specifically produced Hardware called ASIC s. The number of hash values, the Computer or ASIC are checked is called the Hashrate.

** Strictly it is taken at an infinite number of allowed Input parameters, and a finite number of Output ways, theoretically, to an infinite number of collisions. But since it is managed, as yet, no one to create conscious of even a single collision in the hash functions are considered to be “good enough”. More information for crypto nerds can be found here.

What is Double-Spending?

Double-Spending

Double-Spending is basically just a fraudulent process in a digital money system. German Double-Spending means as much as “Double Spend“. It is issued in a specific currency double. In the traditional hard-money Double-Spending is impractical, because first of all: today’s banknotes are protected with security features such as watermarks, etc., against illegal copying, and secondly, spend a bill or a piece of Money in two different Places. Because a piece of Money is used in a supermarket checkout to Pay, you can also use it in the same Moment at a different supermarket checkout to Pay.

In the case of digital currencies the Whole thing looks different, in the case of Bank transfers or similar payment instruments, there are Central bodies, such as the Bank, not paying attention to the fact that you spend your account balance several times.

But how the world looks at cryptocurrencies?

Since the majority of Cryptocurrencies are decentralized, there is no more these control instances, such as banks. Even if you can’t copy Coins, send it in decentralized systems, in principle, possible Coins twice. Let’s assume I have a Bitcoin on my Wallet, to launch a Double-Spend attempt, I would have to sign with this Bitcoin time equal to at least two transactions and different Bitcoin addresses to send. I have the transaction sent to a different node points (Nodes) on the Bitcoin network, verify this, and my two transactions in the Mempool (Pool of Nodes to be verified, but as yet unconfirmed transactions) to the Miner to validate my transactions into a Block of packaging.

A Miner but do not know if another Miner is currently processing my transaction. A transaction to insert into a Block, you must check the Miner several times on its correctness, each of these Checks will be referred to as Confirmations (confirmations). If the Miner check my different transactions at the same time, it may happen that the first Checks will not be noticed, I will try a Bitcoin double-spend, and both transactions confirmed. The probability that this event a time same Review, so the validation of both transactions takes place more than six Times, is 0.1%.

Therefore, payment recipients, it is recommended to wait at least six Confirmations, to provide for performance. How often a transaction has been confirmed, each of the transaction ID (often TXID abbreviated), on the various Blockchain Explorer websites live. So it may come that the payee is awaiting just one or two confirmations to me of the authenticity to accept my payment. And then only in the case of the failure of the next Confirmation beat to remember that he was a victim of my Double-Spending Attack, and he will not get my Coins.

51% Double-Spend attack on Bitcoin-Gold

As an example, for a actually happened Double-Spend attack, you can take the 51% on Bitcoin Gold. A 51% means that an attacker has more than 51% of the mining power and thus the Blockchain can be manipulated. As in the case of technologies such as the Bitcoin new blocks to the longest chain of blocks will be appended to, he can try with the help of his superior Hashpower, in the Hidden it is the longest chain, the new block will be attached to his Chain. So Blocks can undo or Blocks from other miners as a void, the block reward self-collect.

In the case of 51% attack on Bitcoin it was Gold so that the attacker has sold a ton of Bitcoin Gold on various Exchanges, in order to explain these transactions to the successful sale as invalid, and thus a Double-Spend could perform. He managed it because he created then a Version of the Bitcoin Gold Blockchain, the transactions to the exchanges never took place. Thus, he Received the proceeds of the Bitcoin Gold sales of the stock exchanges and kept but at the same time, also its Bitcoin Gold. The damage of this 51% attack and Double spending was rumored to about 18 million dollars.

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