Most Important Concepts to Remember:

• Why?
  • Cost of mediation increases transaction costs.
  • No ability to make non-reversible payments for non-reversible services. Causing need for trust, causing merchants to hassle customers for more information than they would otherwise need.
  • Transactions that are non-reversible protect sellers from fraud, and routine escrow services could be implemented to protect buyers.
• Majority CPU power is key. System will work as long as majority CPU power is honest.
• Incentives in place make it more profitable for someone controlling a majority of CPU power to stay honest.

How Can I Use this Information:

Chapter Recap:

1 - Introduction

• Cost of mediation increases transaction costs.
• No ability to make non-reversible payments for non-reversible services. Causing need for trust, causing merchants to hassle customers for more information than they would otherwise need.
• Transactions that are non-reversible protect sellers from fraud, and routine escrow services could be implemented to protect buyers.

2 - Transactions

• To avoid double spending, we need to be aware of all previous transactions. To accomplish this without a trusted party, transactions must be publicly announced, and we need a system for participants to agree on a single history of the order in which they were received.

3 - Timestamp Server

• The timestamp proves that the data must have existed at the time. And each timestamp includes the previous timestamp in its hash, forming a chain.

4 - Proof-of-Work

• The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it.
• If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains.

5 - Network

6 - Incentive