Changpeng Zhao, co-founder of Binance, predicts Bitcoin could be on the verge of breaking free from the four-year market cycle that has historically defined its price movements. Zhao shared this view during an appearance on CNBC’s Squawk Box.
Shiba Inu hints at a possible recovery after holding key support, potentially targeting the upper range of a price channel. Shiba Inu (SHIB) ended the week poorly with its 4% decline on Sunday.
While Ripple and its executives have sold over 58 billion worth of XRP since 2012, the XRP price has surged more than 31,000% within the same period. Notably, many believe this reality invalidates the consistent narrative that Ripple's XRP sales have contributed to XRP's underperformance during periods of stifled price growth.
A severe Arctic blast sweeping across the United States has forced Bitcoin miners to take more than 110 exahashes per second of computing power offline, temporarily slowing block production to 12 minutes as operators curtail operations to ease strain on regional power grids, according to The Miner Mag.
The widespread shutdowns mark one of the largest coordinated mining curtailments since the 2021 Texas grid crisis, with FoundryUSA’s hashrate dropping nearly 60% since Friday.
Real-time data from Mining Pool Stats shows FoundryUSA’s hashrate fell from approximately 340 EH/s to roughly 242 EH/s over the weekend, while Luxor recorded a similar decline from about 45 EH/s to around 26 EH/s.
Smaller reductions appeared across Antpool and Binance Pool, though these pools serve less U.S.-concentrated operations, suggesting total curtailments may exceed the initial 110 EH/s estimate, The Miner Mag reported.
UPDATE: #Bitcoin hashrate on FoundryUSA is down by nearly 200 EH/s, or 60%, since Friday amid continued curtailment. Temporary block production slows down to 12 minutes
— TheMinerMag (@TheMinerMag_) January 25, 2026https://t.co/e51LyWoxjs pic.twitter.com/uIrCD5JudD
The hashrate pullback coincided with a severe Arctic air mass pushing subfreezing temperatures, snow, and ice deep into the central and eastern United States.
Grid operators across multiple states issued conservation alerts as heating demand surged, yet Texas’s grid operator ERCOT reported on Friday that conditions remained stable despite the cold weather.
The stability contrasts sharply with February 2021, when Winter Storm Uri triggered widespread outages and prolonged blackouts across the state.
Since that crisis, Texas has added substantial large-load capacity, much of it tied to Bitcoin mining and data center operations.
Unlike traditional industrial loads, many Bitcoin miners participate in demand response programs, allowing them to rapidly curtail consumption during periods of grid stress.
As noted by The Miner Mag, this flexible-load model represents a dynamic shift from the 2021 scenario, when such infrastructure did not exist to support grid balancing during extreme weather events.
— TheMinerMag (@TheMinerMag_) January 23, 2026
The U.S. #AI compute boom is running into a familiar problem.
Local communities aren’t buying it.
If this sounds familiar to #bitcoin miners, that’s because it is.
Singapore-based miner Bitdeer, which operates over 293,000 rigs globally, including facilities in Texas, said in a statement that it does not anticipate major disruptions from the storm.
A company spokesperson explained that the Electric Reliability Council of Texas considers Bitcoin miners “large flexible loads,” meaning they can curtail electricity usage on request, unlike other industrial users with firm electrical demands.
“Bitdeer stands ready to fully support the grid should supply constraints occur,” the spokesperson added.
The curtailments come as Bitcoin’s seven-day average network hashrate had already declined to about 992 EH/s, down roughly 13.7% from the all-time high of above 1.15 ZH/s reached in October, according to data reported by The Miner Mag last week.
The moderation follows Bitcoin’s market price falling nearly 30% from its October peak, prolonging pressure on mining economics by keeping competition for block rewards elevated even as revenues per unit of computing power fell.
The massive winter storm extends for 1,800 miles from far west Texas to the mid-Atlantic coast, threatening to affect upwards of 60 million people across more than a dozen states, according to AccuWeather.
AccuWeather Senior Vice President Evan Myers warned that the combination of snow, ice, and bitter cold across such a large area would “stall daily life for days,” with some power outages lasting through extended periods as Arctic air charges in behind the storm.
About 60 million people will experience icing conditions, with potentially 1 million people without power for an extended period, AccuWeather estimated.
AccuWeather Chief Meteorologist Jon Porter noted that many areas hit hard by Hurricane Helene in September 2024 still have temporary power lines that “may come down more easily than permanent lines,” potentially stretching recovery resources and personnel to the limit across North Carolina and other affected states.
The storm’s intensity has already prompted thousands of flight cancellations across the region as airlines deal with displaced aircraft and crews.
AccuWeather Storm Warning Meteorologist William Clark cautioned that “entire supply chains may break down from prolonged days of extensive interstate closures,” warning that critical supplies, including pharmaceuticals and basic necessities, may become scarce in the hardest-hit areas.
The United States controls nearly 38% of the global Bitcoin hashrate according to estimates from Hashrate Index, making American mining operations critical to network security.
The post Massive US Storm Forces Bitcoin Miners Offline – What Does That Mean for Bitcoin Holders? appeared first on Cryptonews.
Ethereum co-founder Vitalik Buterin has publicly walked back a position he held for nearly a decade, showing Ethereum’s renewed stance about self-sovereignty, verification, and the future role of cryptography.
In a recent post on X, Buterin said he no longer agrees with a 2017 statement in which he dismissed the idea of users fully validating blockchains themselves as a “weird mountain man fantasy,” arguing that both technology and real-world experience have reshaped his view.
The idea of average users personally validating the entire history of the system is a weird mountain man fantasy. There, I said it.
— vitalik.eth (@VitalikButerin) June 9, 2017
The comment revisits a long-running debate in blockchain design that dates back to Ethereum’s early years.
In 2017, Buterin sparred publicly with blockchain theorist Ian Grigg over whether blockchains should store full state, such as account balances and smart contract data, directly on-chain.
Grigg argued that chains only needed to record transaction ordering, with state reconstructed locally and discarded.
Buterin was a vehement opponent of such a design at the time, citing that such a design would require users to constantly rerun the whole transaction history or utilize third-party RPC services to get the current state.
At the time, Buterin claimed that Ethereum was better compromised with the design where state roots are pegged to block headers.
Using Merkle proofs and an honest majority assumption for proof-of-work or proof-of-stake, users would be able to check a certain value without going through a single intermediary.
— Cryptonews.com (@cryptonews) February 19, 2024
Vitalik Buterin: Verkle Trees Implementation to Benefit Ethereum Stakers and Network Nodes
Ethereum co-founder @VitalikButerin has highlighted the advantages of implementing Verkle Trees within Ethereum’s staking protocol.#CryptoNews #newshttps://t.co/Ep7l0NaPr9
Making the entire chain completely self-validating, he said, was in theory attractive but computationally impractical to ordinary users, unless the network grossly constrained its capacity.
The difference, as explained by Buterin, is the maturation of zero-knowledge cryptography, specifically zk-SNARKs.
These cryptographic evidences enable a user to prove that a group of calculations has been done right without re-running all the processes or showing the data behind the scenes.
To him, it is like finding an inexpensive, one-size-fits-all solution after years of trade-off disputes. He claimed that with zk-SNARKs, Ethereum could obtain the security of full verification without necessarily subjecting users to prohibitive costs.
I no longer agree with this previous tweet of mine – since 2017, I have become a much more willing connoisseur of mountains. It's worth explaining why.https://t.co/SRvRtuFKQu
— vitalik.eth (@VitalikButerin) January 26, 2026
First, the original context. That tweet was in a debate with Ian Grigg, who argued that blockchains…
Buterin said this advance allows Ethereum to revisit trade-offs that were once accepted reluctantly, especially around scalability, decentralization, and verification. He also acknowledged that his earlier thinking relied too heavily on idealized assumptions.
In practice, he noted, networks experience outages, latency spikes, service shutdowns, and regulatory or social pressure that can push intermediaries to censor applications or users. In those moments, reliance on third parties or developer intervention can become a single point of failure.
That perspective underpins his renewed support for what he described metaphorically as the “mountain man’s cabin,” a fallback option that allows users to directly interact with the chain when everything else breaks.
There has been a growing focus on Zk-SNARKs in the roadmap of Ethereum, especially in the form of zero-knowledge rollups.
These layer-2 networks reduce fees significantly by offloading thousands of transactions and making a single cryptographic proof to Ethereum.
Even projects like zkSync, StarkNet, Scroll, and others are already based on these methods, but with various trade-offs in the size of the proof, transparency, and the cost of calculation.
Mid-2025 community proposals stated that off-chain personal data and using cryptographic proofs might be a solution to align Ethereum with European rules on data protection.
— Cryptonews.com (@cryptonews) June 9, 2025
Ethereum community member Eugenio Reggianini has proposed a technical framework to align Ethereum with EU GDPR rules.#eth #eu #ethereumhttps://t.co/zDmQpFh647
ZK-SNARKs were mentioned as a method of enabling validators to verify that data is correct without access to it, minimizing on-chain access.
On the protocol layer, Buterin has additionally admitted that there are certain remnants of legacy design that now pose a bottleneck to Ethereum’s ambitions to go zero-knowledge.
In late 2025, he proposed removing the modular exponentiation precompile, a feature he originally introduced, after it proved to be a major bottleneck for generating zk proofs.
The post Ethereum Founder Vitalik Buterin Reverses Stance: Why ZK-SNARKs Are Now Ethereum’s ‘Magic Pill’ appeared first on Cryptonews.
Japan appears to be going all in on XRP, as new reports reveal that the country is working toward reclassifying the cryptocurrency. An XRP advocate and expert known on X as ‘SonOfaRichard’ has exposed what’s going on behind the scenes, noting that Japan is now transforming XRP into a real financial infrastructure, formally integrating it into the country’s capital markets.
For many countries, particularly the US and South Korea, XRP has primarily been viewed as a digital asset for payments and trading, subject to both bullish and bearish price action. However, Japan has recently taken a step further, moving beyond the speculative bubble and aiming to reclassify the altcoin and integrate it into the country’s financial infrastructure.
In his post on X, SonOfaRichard delved deep into this ongoing development, highlighting the significance and implications of Japan’s involvement in XRP. He said that Japan is not merely expressing bullish sentiment on XRP, as many countries, traders, and analysts do. Instead, it is changing how the cryptocurrency is classified domestically by placing it under the Financial Instruments and Exchange Act (FIEA). This move represents a significant regulatory shift rather than a market-driven endorsement.
According to the expert, assets under the FIEA are not designed to fuel speculative market pumps. By moving XRP under this new regulatory framework, Japan would effectively position it alongside traditional financial products, such as bonds, funds, and derivatives. This shift removes primary focus on short-term price movements and prioritizes structure and oversight as a pathway toward long-term market development and maturation.
SonOfaRichard has said that Japan’s reclassification of XRP will introduce insider trading controls, custody audits, disclosure standards, and clearer rules for institutional balance sheets. He explained that once the process is complete, it will not be treated as an experiment but as a full infrastructure normalization. He added that institutions that have been waiting for clear regulatory approval may soon receive it, as Japan moves closer to granting final authorization.
In his post, SonOfaRichard clarified the timeline of Japan’s reclassification of XRP. He explained that it would not be an immediate change, as the process follows Japan’s fiscal-year logic, not the US calendar. Legislative submission is expected in 2026, with full implementation aligned with Japan’s formal fiscal rails and taking effect only after official approval.
The XRP expert noted that Japan’s regulatory system runs on a fiscal year from April to March, and new rules typically come into effect at the start of the fiscal cycle rather than mid-year. This means XRP’s reclassification will likely occur sometime in Q2 2026.
SonOfaRichard also emphasized that the reclassification will focus on institutional treatment, custody, disclosure, and compliance standards. He added that the process represents a massive structural shift and will therefore unfold slowly and deliberately to ensure proper alignment with Japan’s established regulatory frameworks.
Matcha Meta urged users to revoke one-time approvals for SwapNet’s router contract after a smart-contract vulnerability saw as much as $16.8 million stolen on the Base blockchain.
South Korean crypto exchange Coinone has reportedly begun selling major shareholder stakes, with Coinbase rumored to be eyeing a strategic entry.
Jake Claver, CEO of Digital Ascension Group, has resurfaced a long-running question in the XRP community: how much XRP do holders really need to own? Specifically, he has laid out a simple financial scenario centered on holding 20,000 XRP.
A long-inactive Ethereum whale has resurfaced after nearly a decade, moving a substantial amount of ETH. The renewed activity, uncovered through blockchain tracking, comes as cryptocurrency prices decline and liquidations accelerate.
Leading Cardano-based DeFi ecosystem, FluidTokens, has confirmed that the first-ever BTC-ADA bridge is launching soon. According to the announcement, the bridge has entered its final development phase.
Blockchain investigator ZachXBT has alleged that the person responsible for a multimillion-dollar theft of cryptocurrency from US government-controlled wallets is the son of the chief executive of a firm contracted to safeguard seized digital assets.
Key Takeaways:
In a series of posts detailing his findings, ZachXBT claimed that an individual known online as “Lick,” whose real name he identified as John Daghita, siphoned tens of millions of dollars in crypto from wallets linked to the US government.
He further alleged that Daghita is the son of Dean Daghita, president and chief executive of Command Services & Support (CMDSS), a company contracted by the US Marshals Service to handle certain seized cryptocurrencies.
Public records show that CMDSS, based in Haymarket, Virginia, was awarded a contract in October 2024 to assist the Marshals Service with the custody and disposal of so-called “Class 2–4” digital assets.
These include tokens that are not supported by major centralized exchanges and often require bespoke handling.
The allegations have not been tested in court, and no criminal charges have been announced. CMDSS did not respond to requests for comment at the time of publication.
ZachXBT’s claims expand on an investigation he published on Jan. 23, which linked the same online persona to more than $90 million in suspected illicit crypto activity.
That probe traced funds back to a U.S. government wallet associated with assets seized from the 2016 Bitfinex hack.
The investigation gained traction after a recorded dispute in a Telegram group chat between “Lick” and another individual.
Update: The CMDSS company X account, website, & LinkedIn were all just deactivated pic.twitter.com/nvN6u5XMPq
— ZachXBT (@zachxbt) January 25, 2026
The exchange, described as a “band-for-band” argument, involved both parties attempting to demonstrate control over large crypto balances.
During the exchange, “Lick” screen-shared an Exodus wallet displaying a Tron address holding roughly $2.3 million, followed by a live transfer of about $6.7 million in ether.
By the end of the session, approximately $23 million had been consolidated into a single wallet.
By tracing transactions backward, ZachXBT linked that wallet to an address that received $24.9 million from a US government-controlled wallet in March 2024.
The government address was tied to funds seized in the Bitfinex case. ZachXBT had previously flagged unusual activity in October 2024, when around $20 million was drained from similar government wallets.
Most of those funds were returned within 24 hours, though roughly $700,000 routed through instant exchanges was not recovered.
CMDSS’s role as a government contractor has drawn scrutiny before.
After losing the Marshals Service contract, Wave Digital Assets filed a protest with the Government Accountability Office, arguing that CMDSS lacked proper regulatory registrations and raising concerns over potential conflicts of interest involving a former Marshals Service official.
The GAO ultimately denied the protest.
Questions around crypto custody have also been raised more broadly. A February 2025 CoinDesk report said the Marshals Service struggled to account for its digital asset holdings, citing weak inventory controls and an inability to estimate its bitcoin reserves.
As reported, illicit cryptocurrency addresses received a record $154 billion in 2025, a sharp increase from the year before.
The post ZachXBT Alleges Son of US Government Crypto Custodian CEO Behind Wallet Theft appeared first on Cryptonews.
How to hack Bitcoin? How does the blockchain calculate time? How does mining difficulty change? What happens if two miners mine a block simultaneously? Where are transactions stored before confirmation, how are fees calculated, and is it possible to send a transaction with zero fee? What types of nodes exist in the blockchain, and how do they differ? When can you use mining rewards?
Here I provide deeper answers to these questions because popular materials about Bitcoin either don’t explain these things at all or do so very superficially. To understand this article, you need a minimal understanding of how blockchain works, which you can get here: https://vas3k.com/blog/blockchain/
Bitcoin is an alternative financial system that does not require user trust. When using traditional banks, we must trust them not to steal or lose our money, and if that happens, we must trust the state to be able to return it. We also have to hope that money won’t be blocked at the whim of authorities or bank employees.
The point of Bitcoin is the opposite: everything is tied to strict mathematics that removes the probability of all these potential problems (or drastically reduces), provided you store Bitcoin in a personal non-custodial wallet.
Non-custodial wallet: A wallet controlled only by whoever has the private key; essentially just a small file/program that stores keys and signs transactions.
Custodial wallet: An account on an exchange that controls your assets and stores your funds in its own non-custodial wallets. This allows the exchange to block or seize your funds if you violate its rules or national laws, though the exchange offers more convenient and expanded functionality in return.
Interesting fact: A Bitcoin wallet is not an object inside the blockchain, but a program that stores keys and signs transactions.
The blockchain stores UTXOs (Unspent Transaction Outputs). Each UTXO is “locked” by a condition (program), usually tied to an address (practically, a hash of a public key).
To spend a UTXO, the wallet creates a transaction referencing that UTXO as an input and adds a signature. Network nodes verify the signature and the script’s execution. As a result, the old UTXO becomes spent, and the transaction creates new outputs — new UTXOs for the recipients.
A private key is a number. A public key can be calculated if you have the private key, but the reverse is practically impossible (how that’s attacked is discussed later in the “attacks” section). Using a private key, you can sign data, but this signature cannot be forged with a public key. Meanwhile, the public key can verify that the signature was produced by the corresponding private key.
In early versions, the wallet address was the public key. But later, addresses derived as a hash/encoding of the key or script began to be used. This is a crucial point for the section on quantum computer attacks.
Once a transaction is signed, it must be embedded in a block. First, it goes into a general pool of unconfirmed transactions (mempool), where any miner can take it to create a block.
But a transaction can exist only once in the blockchain, so the network can’t allow every miner to create their own block with the same set of transactions and have them all accepted.
Each block has a header containing version data, the previous block’s hash, the merkle root (hash of all transactions in the current block), time, bits (mining difficulty), and a nonce.
Here’s an example (block 900K)
• version: 0x20aba000
• previous block hash: 0000000000000000000196400396be46d0816dc462df4c3450972f589f4d7d24
• merkle root: 0cfb54e522b07bd1a381adc774ec1851590ef4c3add83958135106534569f970
• time (unix): 1749188499 _(2025–06–06 06:41:39 UTC)_
• bits (nBits): 0x17023774
• nonce: 0x925fd07a
All of these fields are combined and then hashed via SHA-256.
SHA-256 is a hashing technology: take some data and turn it into a different set of numbers that you can’t convert back into the original data if you only know the hash. But you _can_ verify it, because for a fixed input X the result is always the same output Y. So knowing X gives you Y; knowing Y does not practically give you X back — even with a quantum computer.
You can try hashing any data here.
SHA-256 is also one of the core tools in the HTTPS connections we use every day, and it plays a key role in hundreds of internet protocols.
The nonce is needed to find out whose block to record. Miners change the nonce so the header’s hash is less than the target. In our example, the hash has 19 zeros.
Finding such a hash is hard. It takes roughly ~10 minutes of the entire Bitcoin network’s mining power. Blocks should appear roughly every 10 minutes — that’s how Satoshi Nakamoto designed it.
It’s not actually about the zeros, but about the **target**. The target determines mining difficulty: the smaller the target, the higher the difficulty. A valid block header hash must be ≤ the target. Because small target numbers in hexadecimal start with zeros, hashes often appear with many leading zeros (e.g., ~19 or more). The smaller the target, the rarer it is for a random hash to land below it, so mining becomes harder.
Difficulty Calculation Hack: If the difficulty increases by 16 times, the required threshold becomes 16 times lower— often resulting in one additional leading hex-zero.
Difficulty adjustments (retarget) occur every 2016 blocks (roughly 2 weeks, 1 block ~10 minutes). The blockchain uses a simple formula:
Target_new= target_old*T_act/T_exp, 4Texp
Target_new = new target (new difficulty)
Target_old = old target
T_act = actual time it took to mine the last 2016 blocks
T_exp = expected time for 2016 blocks: 2016*600 seconds (10 min = 600 sec)
4T_exp= The change is limited: difficulty can’t shift more than 4× either way.
If, since the last difficulty retarget, the network’s total hash rate (the combined power of all miners) has increased over the past 2,016 blocks, then with near-certainty the average time to mine a block will decrease. That means the actual time to produce those 2,016 blocks T_act will be less than the expected time T_exp, so T_act/T_exp < 1. As a result, the new target Target_new will go down: and the lower the target, the higher the difficulty and the harder it is to mine.
That happens,and there’s a safety mechanism for it.
In theory, they can make practically identical blocks if the same transactions in the same order fall into each block. But blocks still won’t be identical because the first transaction in every block is the coinbase (the miner reward), and it pays to the miner’s address — so two miners can’t have the exact same block because their addresses differ.
But it is possible that two miners almost simultaneously mine different blocks. If the delay between the creation of a block and its distribution among nodes is 2 seconds, then this means that after the creation of the first block, there is a two-second gap in which a second block can be created. The longer this time, the higher the probability, but with each year this time is reduced. The probability of creating three blocks is almost negligible, but the protection system is the same.
If two blocks are created, they are saved in nodes, and these two chains are passed further. Miners then choose which block to build on — usually the one they saw first. And when they find the next block for one of the chains, it is distributed further and the nodes agree with it, and the shorter version is forgotten. This is the rule of the longer chain. Even if 2, 3, or more blocks in a row are formed in two chains, sooner or later one branch outpaces the other.
Transactions have 3 probable paths:
1. Fall into the chain that wins, then they remain in the blockchain.
2. Fall into both chains, then only the version in the winning chain remains relevant.
3. Fall into the chain that loses, then they go again into the pools of unconfirmed transactions (more on this below).
A few numbers:
That’s why exchanges don’t credit your deposit after 1 confirmation. Typically they wait for 6 confirmations — ~1 hour on average (6 blocks × 10 minutes).
There is no limit to the length of the second/third chain because they disappear quickly. Not counting these two cases:
And there is also the possibility of an attack through a second chain, but about this at the very end.
From this follows the next question:
Simple: a miner can spend the reward only after 100 blocks.
If you are a miner and mined block № 1000, you will be able to use the reward for this block only starting from block №1100. This looks like a time-lock transaction, but technically it is not one. I will write about the time-lock technology next time, this is already turning into too much text.
Miners add transactions to the blockchain, receiving a fee for this. And from this follow a few more questions:
The fee in Bitcoin depends not on the number of tokens sent in the transaction, but on the size of the transaction and the occupancy of the network at the given moment. After sending your transaction from a non-custodial wallet, it goes to the nearest node(s), these nodes decide based on several characteristics whether to accept your transaction or not:
1. Does it comply with the rules and did you not assign yourself non-existent tokens or something else?
2. Is the specified transaction fee sufficient?
If the answer to one of these questions is no, the node will not take the transaction and it will not fall into the blockchain, and your balance will not change. It turns out that a zero fee, in most cases, will not pass into the blockchain, although theoretically a miner can include such a transaction in a block, it is extremely unlikely.
How does a node assign a fee?
The node has a certain amount of memory where it stores such unconfirmed transactions after receiving them, but until the moment they are recorded in the blockchain.
By default, it is limited to 300 MiB of RAM memory and 336 hours of storage. However, if the blocksonly setting is enabled in Bitcoin-Core 25.0, the RAM memory will be reduced to 5 MiB; this is often done for validating the blockchain.
All these data can be changed when setting up the node, but this is often not done, as for most it would be a simple waste of extra resources.
And what will happen if you send a transaction with the minimum allowable fee?
If the node does not throw it out after adoption due to overflow, and if miners will not take this transaction due of small fee, it will be deleted after 336 hours = 2 weeks.
After the transaction is accepted, nodes distribute it to other nodes, and miners insert transactions with the highest fees into the block.
Considering the limits on transaction size of 400,000 weight units ≈ 100KB (but it could be more with SegWit, but those are already too small details). A maximum of 10 such large transactions can fit into 1 block, and ≈ 10,000 of the smallest. But on average it comes out to 2500 transactions per 1 block.
The fee itself is calculated by the formula: fee (sat) = vsize (vB) * feerate (sat/vB)
Your wallet can find out the minimum feerate from the nodes, but this is the lower boundary of whether the transaction will be distributed, not a guarantee of its confirmation. To estimate how much you need to pay now, wallets use mempool statistics and confirmation history.
An average transaction weighs 150vB; if at the given moment the average sat/vB = 2, then the transaction will cost 300 sat. And it will cost $0.27.
The highest sat/vB was in April 2024 during the halving and was from 1795 to 2751 sat/vB (source). On that day, an average transaction would have already cost from $160 to $245, depending on how quickly it needed to be processed.
The busier the network, the higher sat/vB. If you want your transaction to get confirmed faster, you set sat/vB above the current average.
Nodes define the fee as: fee = sum(inputs) — sum(outputs), then they look at the transaction size to check if it fits their internal policies.
Don’t forget about UTXO: if over time you received 10 separate incoming transactions, and now you want to send the entire balance in one transaction, the blockchain sees that as 10 inputs — meaning the transaction is larger and therefore more expensive.
To save on fees in the future, it is useful to sometimes do “consolidation” — sending yourself all small remnants in one transaction when the network is calm and sat/vB is minimal.
Returning to the first topic and the block header, the following question may arise:
The blockchain receives information about the time from miners and nodes (nodes that store information but do not mine) in UTC format.
Miners write the time in the block header. Nodes have their own clocks and verify the median time received from other nodes.
Bitcoin is a closed system, so the blockchain cannot connect to ntp.org to check if the miners are writing the truth in the block header and the nodes or not.
How can the blockchain check if the nodes and especially the miners aren’t lying?
For this, there is MTP — Median Time Past.
Not the average, but precisely the median.
It is calculated from the last 11 blocks arranged in order. For example:
18, 2, 12000 (liar), 14, 6, 20, 10, 4, 16, 12, 8
If we take the average value, then we need to sum all these numbers and divide by 11, we get 1100. Because of the liar who put 12000, everything has changed a lot.
But if we take the median, then first we arrange them in order:
2, 4, 6, 8, 10, 12, 14, 16, 18, 20, 12000 (liar)
And we take the value from the middle, that is, 12. This is how MTP is calculated.
The time of a new block is always greater than the MTP; otherwise, the block will not be accepted by other miners/nodes and will not be inserted into the blockchain.
But if someone wants to go to the future, at what time gap should blocks be rejected?
In the past Bitcoin used NAT — Network Adjusted Time (time adjusted by the network), which compared median time from peers. Later NAT was removed as a consensus component.
Now nodes use their own system UTC time to check how far “into the future” a new block is. If a block’s timestamp is more than 2 hours ahead of a node’s local time, that node rejects it.
If some node’s time differs significantly from other nodes, then NAT warns about it — that’s basically the only remaining use.
Miners and other nodes, how do they differ and why are they needed?
There are 3 main types of nodes in Bitcoin: a full node with two variations (archival and pruned), a light node, and a miner.
The other nodes are superstructures on top of these three pillars of the blockchain.
If you need a non-custodial wallet on a PC, then perhaps a full pruned node for this would be the best option. You can choose the one you need here: bitcoin.org/en/choose-your-wallet?step=1
There are many possible attack vectors. If I described all of them, the article would be longer than it already is. But someday I will write. For now, let’s briefly look at two hack variants that are often talked about.
A quantum computer could derive a private key from a public key — but there’s already partial protection. If you’ve never spent from your address, your wallet is protected because outsiders see only the hash of your public key, not the public key itself.
Even with a quantum computer, it is practically impossible to brute-force the hash of a public key. But after the first outgoing transaction, the public key becomes visible to everyone. Therefore, to protect against quantum attacks, you should use addresses once.
However, there’s still a possible “interception” scenario: if a quantum computer could, after you broadcast a transaction but before it’s confirmed, derive your private key from your revealed public key — it would have very little time, but that’s the idea.
But there are wallets (outputs) of old formats, where the public key is visible immediately, and such wallets can be hacked even if there was not a single transaction from them.
And there are also many “lost” wallets; transactions were made from some, but that was many years ago. And with the help of quantum computers, coins from these wallets will probably fall back into circulation and possibly crash the Bitcoin price. But let’s leave these speculations to analysts who were perfectly described by one satirical channel:
”Last week’s target for Bitcoin at 34 thousand dollars has been revised and now stands at 240 thousand.”
So, a quantum computer will not destroy Bitcoin in this way.
But they are already thinking about creating a reusable quantum-protected wallet. This will require a soft-fork (change of rules), which has been done more than once.
A couple of texts on this topic: BIP 0347 and BIP 360.
If 1 person has more than 51% of the mining power, it will be easy for him to create a second chain of blocks as he wants. In this case, he will be able to cancel transactions and rewrite the history of his spending.
But even in this case, he will not be able in any way to steal someone else’s coins that were never on his wallet. The older the transactions that need to be rewritten, the longer and harder it will be, and there is no 100% guarantee that it will work and he will be able to make his chain longer and faster than the other 49%.
Such an attack is possible even with 30% and 40%, but the probability is much lower.
How much money will be needed for such an attack?
If we attack from scratch, then we essentially have to have a power 0.5% more than the entire power of Bitcoin miners. The hashrate today is approximately 1 ZH/s = 1,000,000,000,000,000,000,000 SHA-256 hash findings per second.
Modern ASICs (mining devices) have a power of approximately 200 TH/s, meaning 5,000,000 of them will be needed. Their efficiency is ≈ 17–20 J/TH. Multiply by 10⁹ and you get 17–20 GW. A bit less than the power of the largest hydroelectric dam in the world.
To this, we add the prices for the ASICs themselves, which comes out to ≈ $7.5 billion. Not counting extra infrastructure which will also be very expensive.
Even all these costs will lead at most to double spending of own coins in the blockchain and censorship of transactions. And even then, it will be visible to everyone and the price will probably crash and the game will not be worth the candle.
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