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Transactions are also chained together. Skycoin wallet software gives the impression that coins are sent from and to wallets, but they really move from transaction to transaction. Each transaction spends the coins previously received in one or more earlier transactions, so the input of one transaction is the output of a previous transaction.
A single transaction can create multiple outputs, as would be the case when sending to multiple addresses, but each output of a particular transaction can only be used as an input once in the block chain.
Any subsequent reference is a forbidden double spend—an attempt to spend the same coins twice. For a payment to be valid, it must only use UTXOs as inputs. After thoughtful research of the state of the art in cryptocurrency technologies and analysis of results of simulations, the underlying principles of Skycoin are based on the following pilars.
The objective of the Skycoin is to run an optimal set of rules for each node to follow during consensus trials, so that the final agreement between nodes can be reached fast, and would require minimal network traffic.
The network should be operational even after a large-scale coordinated attack by a well-organized network of malicious nodes. The algorithm is a scalable and computationally-inexpensive alternative to proof of work , therefore both the consensus algorithm and block-making can run on a budget hardware that have low price and low energy consumption. Satoshi originally intended the Bitcoin network to be decentralized, over hundreds of thousands of computers.
Today, the Bitcoin network is completely controlled by three mining pools. Bitcoin is no longer decentralized. Many blockchains implement both the control logic and the data storage plane at the blockchain level.
We believe that not using blockchains for data storage is necessary for scalability and keeping complex logic outside of blockchains is important for both security and scalability. Nodes on the network should not be required to compute complex untrusted programs just to stay synced with the network. Each node is able to form its own independent opinion e. The node is able to receive raw data e.
The block chain is collaboratively maintained by anonymous peers on the network. Skycoin requires that each block resulted expensive enough for a node to create it and include it into the blockchain in consensus to others. Skycoin consensus relies on the generic mechanism of proof of burn combined with statistical opinion dynamics framework. Coins are burned as blocks are included in the blockchain. Chaining blocks together makes it impossible to modify transactions included in any block without modifying all following blocks.
As a result, the cost to modify a particular block increases with every new block added to the block chain, magnifying the effect of the proof. In Skycoin there is no notion of mining. No new coins are created as blocks are included in the blockchain. Skycoin consensus relies on the generic mechanism of proof of burn combined with statistical opinion dynamics framework. Coins are burned as blocks are included in the blockchain. Chaining blocks together makes it impossible to modify transactions included in any block without modifying all following blocks.
As a result, the cost to modify a particular block increases with every new block added to the block chain, magnifying the effect of the proof.
In Skycoin there is no notion of mining. No new coins are created as blocks are included in the blockchain. There are no rewards. There are no fees or other incentives awarded to network nodes. This was split to addresses , 1M each. Therefore there is no generation transaction in blocks. The proof of burn used in Skycoin consists in the impossibility of spending transaction fees. Fees are paid in coin hours. A transaction must spend at least one coin hour to be valid, and half rounded up of the coin hours being spent must be destroyed.
Every block must include one or more transactions. All transactions are encoded into blocks in binary rawtransaction format. If there are an odd number of txids, the txid without a partner is hashed with a copy of itself.
The resulting hashes themselves are each paired with one other hash and hashed together. Any hash without a partner is hashed with itself.
The process repeats until only one hash remains, the merkle root. For example, if transactions were merely joined not hashed , a five-transaction merkle tree would look like the following text diagram:.
As discussed in the Simplified Payment Verification SPV subsection, the merkle tree allows clients to verify for themselves that a transaction was included in a block by obtaining the merkle root from a block header and a list of the intermediate hashes from a full peer. The full peer does not need to be trusted: If the five transactions in this block were all at the maximum size, downloading the entire block would require bytes—but downloading three hashes plus the block header requires only bytes.
If identical txids are found within the same block, there is a possibility that the merkle tree may collide with a block with some or all duplicates removed due to how unbalanced merkle trees are implemented duplicating the lone hash.
Since it is impractical to have separate transactions with identical txids, this does not impose a burden on honest software, but must be checked if the invalid status of a block is to be cached; otherwise, a valid block with the duplicates eliminated could have the same merkle root and block hash, but be rejected by the cached invalid outcome, resulting in security bugs such as CVE Edit History Report issue Discuss.