Principles of Bitcoin

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Revision as of 12:41, 16 July 2017 by Belcher (talk | contribs) (added a discussion about low trust requirement)
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Principles of Bitcoin

All changes and upgrades to the protocol should strive to maintain and reinforce these Principles of Bitcoin

  • 21 million coins.
  • No censorship: Nobody should be able to prevent valid txs from being confirmed.
  • Open-Source: Bitcoin source code should always be open for anyone to read, modify, copy, share.
  • Permissionless: No arbitrary gatekeepers should ever prevent anybody from being part of the network (user, node, miner, etc).
  • Pseudonymous: No ID should be required to own, use Bitcoin.
  • Fungible: All coins are equal and should be equally spendable.
  • Irreversible Transactions: Confirmed blocks should be set in stone. Blockchain History should be immutable.

Low trust

Bitcoin is P2P electronic cash that is valuable over legacy systems because of the monetary autonomy it brings to its users through decentralization. Bitcoin seeks to address the root problem with conventional currency: all the trust that's required to make it work -- Not that justified trust is a bad thing, but trust makes systems brittle, opaque, and costly to operate. Trust failures result in systemic collapses, trust curation creates inequality and monopoly lock-in, and naturally arising trust choke-points can be abused to deny access to due process. Through the use of cryptographic proof and decentralized networks Bitcoin minimizes and replaces these trust costs.

Having a low requirement for trust is a major fundamental property that makes all these other principles happen. These principles can be understood as coming from and working towards a low-trust aim. Open source is required so that the developers do not need to be trusted, any programmer can read the source code for themselves.

Other electronic systems prevent double-spending by having a master authoritative source to check for them. If there is theft, fraud or error this centralized authority is morally and legally obliged to undo the transaction, which means centralized electronic cash transactions cannot be irreversible. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need such as real life ID, credit check and so on. Bitcoin's decentralized mining provides the possibility for Irreversible Transactions. This finality means no real life ID is required to use bitcoin, it is Pseudonymous. Nor can anybody arbitrarily stop anyone else using or transferring bitcoin, so it is Permissionless and Censorship-resistant.

Most of the bitcoin economy validates the rules of bitcoin for themselves instead of trusting others. This means that invalid bitcoin transactions won't be generally accepted which enforces the 21 million coins limit as well as other rules.

See Also