Bitcoin mining nodes and full nodes incur costs for the resources used to support the bitcoin network and the blockchain. As the scale of bitcoin increases, so does the cost of resources (CPU, network bandwidth, disk space, memory). Miners are compensated for these costs through fees that are proportional to the size (in bytes) of each transaction. Non-mining full nodes are not compensated, so they incur these costs because they have a need to run an authoritative fully-validating full-index node, perhaps because they use the node to operate a bitcoin business.

Without transaction fees, the growth in bitcoin data would…

First published in October 2014

Thank you, chair and committee members. I appreciate this opportunity to contribute to these proceedings about digital currency.

My experience is primarily in information security and network architecture. I have a Master’s degree in networks and distributed systems and have worked in this field since 1992. I spent 20 years working on networks and data centers for financial services companies, before I found bitcoin in late 2011. I have been working full time in the bitcoin space for the past 2 years and written a book on bitcoin for software developers.

Today, I welcome the…

First published February 2014, in O’Reilly Radar

If a crook gets access to the credit card or wire transfer networks, it’s a disaster. That’s because, as I explained in my recent article about security models, these traditional financial networks achieve trust by excluding bad actors through access control. Effective access control requires exclusivity and strict vetting, only a small carefully vetted group of “trusted actors” are granted control.

Bitcoin and other crypto-currencies based on the blockchain invention are different. Trust is based on computation, not access control. On the bitcoin network you trust math so everyone can have access. That…

First published February 2014 in O’Reilly Radar

Bitcoin is a distributed consensus network that maintains a secure and trusted distributed ledger through a process called “proof-of-work.”

Bitcoin fundamentally inverts the trust mechanism of a distributed system. Traditionally, as we see in payment and banking systems, trust is achieved through access control, by carefully vetting participants and excluding bad actors. This method of trust requires encryption, firewalls, strong authentication and careful vetting. The network requires investing trust in those gaining access.

The result is that such systems tend to be closed and small networks by necessity. By contrast, bitcoin implements a…

First published in FEE, in March 2015.

In computer and communications networks, decentralization leads to faster innovation, greater openness, and lower cost. Decentralization creates the conditions for competition and diversity in the services the network provides.

But how can you tell if a network is decentralized, and what makes it more likely to be decentralized? Network “intelligence” is the characteristic that differentiates centralized from decentralized networks — but in a way that is surprising and counterintuitive.

Some networks are “smart.” They offer sophisticated services that can be delivered to very simple end-user devices on the “edge” of the network. Other…

First published in March 2014, in the immediate wake of the failure of Japan-based bitcoin exchange Mt.Gox

In the free market, failure is always an option. The United States has one of the world’s most vibrant entrepreneurial cultures, where millions of people start small businesses, create new products and invent new technology. Part of the startup culture is the idea of failing fast, failing cheap and failing towards success by learning the lessons taught by failure. …

Andreas M. Antonopoulos

Bitcoin, security, entrepreneur, coder, hacker, pundit, humanist, pacifist. Working on crypto-currencies, wrote Mastering Bitcoin http://bitcoinbook.info

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