Mining is Game Theory and The origin of blockchain

Bitcoin inherits both its strengths and weaknesses, so Matsuo explains that understanding each technology is important for the development of Bitcoin and blockchain. Of these, let him introduce Mr. Matsuo’s story about game theory and encryption theory.

Game theory turns the attacker into a miner. Bitcoin has a mechanism called mining. This is a mechanism in which each node (PC) that approves a Bitcoin transaction solves a calculation problem when generating a new block that records a transaction, and rewards the one that solves it earlier. The coin is obtained by calculation, so it is called as an analogy for mining ore.

Mechanism-based on game theory

Around 1993, there was research on cryptographic puzzles, says Matsuo. This is a technology to prevent spam attacks, attacks that stop the target PC by sending a large number of packets, which was a problem at the time. The idea is to increase the sending cost by preventing the sender from solving a “problem” when sending an email and to prevent mass sending.

The sender of the mail will not be able to send the mail unless he/she solves the difficult problem that the destination server sends. Then, the cost of sending one email will increase, so attacks such as mass transmission will not be possible.

Bitcoin mining is said to come from this idea. In other words, the cost of the attack is high, and the mining calculation is rewarded so that the mining is more cost-effective than the attack.

Cryptography inherited by Bitcoin and its problems. He also said, the basic idea of blockchain, the core technology of Bitcoin, was established in 1990. As a means to add a timestamp file existence time and proof of non-tampering to a document, they wrote a paper that wrote a method of depositing a hashed document in a server and connecting it in a chain in chronological order and saving it. Bell core now Telcordia Technologies of the United States was released in 1990.

In 2002, the University and others jointly announced technology for chaining a digital document hash value with an electronic signature.

  Bellcore’s method of concatenating documents in a chain (1990, left), the University’s technology for chaining documents by adding a digital signature

The paper which is the basis of bitcoin and blockchain was published in 2008. Although Bell core and the University are prior art required a central server, unlike the Bitcoin blockchain, there was a cryptographic technology similar to a blockchain that connects digital documents in a chain. Matsuo points out that.

So, is it not necessarily the case that Bitcoin is safe because it is protected by such cryptographic technology? Matsuo continues to explain the “problems” of cryptography.

When to use

Then, he will explain how to use FX trading. For example, let’s say you decide to make a 20% return in a week. Assuming that you invest in Bitcoin, the price range of Bitcoin is about 2% a day. In other words, even if you move the same price range in the same direction for 7 consecutive days, it will move only 14%, so even if you hold the virtual currency in kind, it will be an unachievable return. The bitcoin Aussie system is the best app for bitcoin trading and transaction.

Therefore, in such cases, it can be judged that the leverage effect should be used in FX trading.

If the leverage is tripled, the rate of change in assets that would occur when moving 2% a day would be 6%, which is 2% x 3. In other words, if you move in the same direction for 4 out of 7 days, you can achieve a 20% fluctuation. Of course, it may move up and down, so you are not sure if it will result in this kind of result, but please keep in mind that leverage is used while checking this rate of change and target return.

Do you actually pay?

The first point is Do you settle after the sale is completed. As its name implies, in-kind trading involves the purchase and sale of in-kind products, which results in the delivery of virtual currency. 

Disclaimer: This is a paid post and should not be considered as news/advice.