Peer to Peer
Peer-to-peer is a version electronics that allows for payment to be transferred from one individual to another directly without the need of passing through financial institutions. Some of the solutions are provided by Digital signatures, though the whole reward might be lost if a double spending is required of a reliable 3rd party. A solution is proffered to double spending obstacles by making use of peer to peer network. A timestamp transaction function is performed by the network through hashing on a continuous chain of hash-based-work-proof that forms an unchanged status which cannot be uttered with starting over again. The long chain majorly serves the benefits of proof of sequence to keep records, but reveals that it erodes from the big pool power of CPU. The network would not be attacked as long as the major CPU power is geared by nodes; it will lead to long chain being generated and prevents hackers. Though small structure is required by the network, the messages are announced while the nodes can connect or break from the network willingly.
Trading on the internet relies solely on financial transactions operating as an intermediary for the processing of electronic payments. And the system has been good for most transactions; it lacks the trust based structure. Disputes are always mediated by these financial disputes, so they do not perform non reversible transactions. As a result of this, the transactions charges rises, causing a limit on the minimum transaction capacity elimination small transactions with wide option of making a broad cost in the ability to substitute non reversible payment with reversible services. Physical currency is just a way to avoid the cost and inconveniency in person, but you can only make payment with communicating with a third party. The trust you need is and electronic payment system operating mainly on cryptographic, it gives room for two individuals to transact without a third party directly. The sellers would be protected from in a non reversed transaction, while escrow method can be used by the buyers. The system is protected as long as the CPU power is controlled by nodes and greater than any other joint workers of hacker nodes.
Electronic coin is defined as a chain of digital signatures. The coins can be transferred by the owner from one to the other through digital signing of hash of the past records of transaction while the public key of the owner with showing at the end of the coin. The signature can be verified by the payee to confirm the chain of ownership. It might be really being difficult to confirm if the coin is not double spending. Mint or central authority can help in this situation, and it will be introduced to check the statuses of the transaction if double spend. The coins has to be sent back to the mint after the completion of every transaction to generate another new coin, the coins that mints issued are ensured to not be double spend. The only obstacle in this method is that the money’s fate is rest solely on the company that runs the mint; they have to see through all transactions just like any other financial institutions.
A time server is a proposed solution that operates by time stamping the hash of block and to be published, just like a newspaper or post. This shows that the record has been in existence during that time, just to have the hash. It comprises of recent timestamps in the chain’s structure and hash plus a timestamp to take hold of the pre-existing ones.
PROOF OF WORK
A proof of work system is used to ensure a spread timestamp server on a peer to peer basis just like Adam Back Hash cash, which are different from other post like newspapers. The proof of work scans the hash value, and begins the hash with zero number of bits. After the effort of CPU is extended to complete the proof of work, the block becomes unchanged unless you want to start all over again.
Here are the steps included to run the network:
1. Latest transactions are announced to every node
2. New transactions are collected by the nodes and entered into one block
3. Blocks are broadcast to every nodes when the nodes detects the proof of work
4. Block can only be accepted by nodes of the transactions are valid and are not double spend.
5. The nodes continues to work by building the next block in the chain
The longest chain is considered by the nodes as the correct one and maintains its extension. When the nodes announce separate versions of the next block at the same time, it may be received by some nodes. So basically the operation on first received, and keeps the other to extend it. The arrangement might be cancelled when the next proof of work is detected and a part extends, the nodes operating on other part turns to the extended part.