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9. Combining and Splitting Value. Combining transaction amounts will result in more efficient transfers as opposed to creating a separate transaction for every cent involved. In other words, it’d be simpler and more efficient to send three Bitcoins in a single transaction rather than create three transactions of one Bitcoin each, assuming the coins are sent to the same recipient. To allow transaction values (amounts) to be split or combined, transactions can contain multiple inputs and outputs. There can be single or multiple inputs. But there can only be a maximum of two outputs: one for the payment, and one returning the change, if any, back to the sender. This process enables payments with specific amounts. A sender can send Bitcoin payment to another party and get back his/her change, if needed. 10. Privacy. With traditional payments, users attain privacy when banks limit information available to the parties involved as well as the third party. With the peer-to-peer network, privacy can still be achieved even though transactions are announced. This is accomplished by keeping public keys anonymous. The network may be able to see payment amounts being sent and received, but transactions are not linked to identities.
Additionally, Nakamoto proposes that a new private key should be used for each transaction to avoid payments being linked to a common owner. To maintain privacy, Nakamoto says it’s important for public keys to keep a user’s identity anonymous. While everyone may be able to see transactions, no identifiable information is distributed. 11. Calculations. It’s highly unlikely for an attacker to create an alternate chain faster than an honest chain. Nodes won’t accept an invalid transaction or blocks containing them. Moreover, an attacker is limited in what he can attempt to do: He can only try to change one of his own transactions to retrieve coins he recently spent. The probability that an attacker succeeds drops exponentially the more valid blocks are added to the chain. Nakamoto says that an attacker would have to get lucky early on to have a remote chance. Moreover, a receiver creates a new public key and gives it to a sender shortly before signing. This makes it difficult for an attacker to execute a fraudulent transaction through a parallel chain. There’s a higher probability that an honest node will find a block faster than an attacker. It’d be extremely difficult for an attacker to solve several proof-of-work puzzles in a row faster than the rest of the honest nodes.
Every 10 minutes, there are new puzzles being solved by nodes in the network. 12. Conclusion. The peer-to-peer system for electronic payments relies on a distributed network of honest nodes to validate transactions. Validation replaces the need to trust expensive third parties such as banks. The electronic coins are made from digital signatures, and proof-of-work that form the blockchain prevent double-spending. The system stays secure so long as honest nodes control more CPU power than an attacker. Moreover, the nodes accept longer blocks as valid and work on extending them. This protocol rejects invalid blocks, and potential fraud, in the process. Rules and incentives can be enforced using a voting system. In the final section, Nakamoto says that “The network is robust in its unstructured simplicity.” Yes indeed. Next Steps. Thanks for reading the Bitcoin Whitepaper. Bitcoin.com has other guides at https://www.bitcoin.com/guides to help you use Bitcoin at https://www.bitcoin.com/getting-started right now. Be sure to download our free and awesome Bitcoin.com Wallet at https://www.bitcoin.com/choose-your-wallet/bitcoin-com-wallet to take your Bitcoin experience to the next level.
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