Sunday, January 5, 2014

Fun With Bitcoin For Beginners: Part Six: The Blockchain

Bitcoin (BTC) continues to gather more attention, having had a nice bounce back up in price off its lows.  In this article, I wanted to discuss the blockchain, a vital piece of infrastructure in the BTC Ecosystem.  The blockchain serves as a public ledger for all BTC transactions, from birth of each Bitcoin (currently 25 BTC are created approximately every 10 minutes), including the original Bitcoin (by still little known Satoshi Nakamoto) to each transaction up to the present.

An excellent place to start learning about the blockchain is to go visit the service  I first encountered after making a few BTC transactions with my Multibit client software.  My excellent source "Bitcoin Insider" ("B.I.") encouraged me to track my transactions via a link at to see how it is recorded, by whom, etc.

Here is a screen shot of's home page (*click* on any image to see it better):

Like so many other pages dedicated to BTC, the page is "information dense", a lot going on.  Note that the above screenshot does not capture the whole home page (see scroll bar on the right), there are little gems "underneath", so of which I will discuss below.  The two most obvious things to look at are the latest mining results (top), dominated by two large "mining pools": BTC Guild and GHash.IO.  These two large pools currently mine a bit over 50% of brand new BTC:

Those of us who have concerns about ANY GROUP mining over 50% current BTC really hope that these two groups dislike each other...

My understanding of is that it is NOT the blockchain itself, nor a supervisor nor overseer.  They are a SERVICE.  The service provides easy to use information on the blockchain itself.  "Bitcoin Insider" (B.I.) comments as to's location:

[...]My weak hacking skills locate them in Europe and Costa Rica with corporate registry in Hong Kong. This looks like an intentional set up to avoid US jurisdiction.[...]

I have just recently received some information about the blockchain and it is not the same as, I have another BTC expert who is known as "spartacus", here he comments on my question of vs. the blockchain itself, he also mentions as another service that can be used to explore transactions on the blockchain:

[...]it sounds like or  Both of these are what I've referred to as 2nd layer services.  They have a copy of the block chain (like everybody else does) and they connect it to the web in a more user-friendly manner and add extra services.  Nuke 'em from orbit and their services die, but the core BTC system won't bat an eyelash.[...]

Note that spartacus specifically notes that the, and the blockchain itself are all independent...

There are apparently 3,000,000 separate copies of the whole blockchain worldwide, just at alone you can see there are about 500 - 1000 nodes online at anytime (I do not know what the difference is between a "node" and an active BTC miner/transaction processor would be).  

In other words, the blockchain itself looks to be pretty secure against attacks.


I asked both B.I and spartacus about getting a more secure way to disguise transactions.  Both of them suggested that the "mixing services" (that could also include BTC gambling sites -- Hey!  Would that be one of the MAIN REASONS the gambling sites even exist, for washing BTC transactions...?).  As a general rule you would send all such sites some BTC, you would either gamble some of it or pay the "mixing service" their fee, and then have them send whatever BTC remain to a new wallet that you open anonymously...

In other words, "do-able", but not easy.

spartacus also had this nice little thing to say re privacy and security that is really more general advice about ANY physical asset you want to hold quietly:

Always remember the existence of "rubber-hose" cryptanalysis.  Guido don't know nuthin' 'bout all that cryptoshit, but he's going to beat your ass until you remember where the boat sank.  [...]  And this is nothing to rush into anyway.


One item of interest to me is worldwide access to any BTC that I might have.  Whether I have my laptop or not...  Well, apparently has that problem already solved.  That service allows you to open a wallet right there on the blockchain through them!

From their home page (first image above), click on the "wallet" tab at the top, and you will get the below.  You just follow the instructions and easily create a wallet.  This appears to allow you worldwide access to your BTC in that wallet, anywhere there is internet service.  Then all you need to do, when overseas for example, is to find a way to monetize or spend your BTC.

B.I. told me that the risk is "low but not zero" that a wallet up there on the blockchain would be compromised (by bad security of theft).  Perhaps the smart way to use a blockchain wallet like this is not to keep all of your BTC there...


Here are some images from various of the pages.  It is an interesting site, and well worth exploring!  The service monitors all (most?) BTC transactions in near-real-time.  The home page has a tab to view recent LARGE BTC transactions.  Here is a BIG transaction that they had, so I took the screen shot (again, *click* the image to see!):

The bottom transaction is for a total of 25,000 BTC ($20 million dollars...)  Note that ANYONE can get this information, so spartacus' advice above (re "Guido") is appropriate...

This next image comes from looking at the "Bitcoin Nodes Globe" link under the "Other Bicoin Links" on their home page:

Note Lima, Peru has a node (at about Seven "o'Clock", blue pin sticking out approx to the SW into the Pacific).  You are allowed to "turn" the globe around, you can then see that the very long red spike appears to be coming from Russia...

Here is an image of information transmission about a recent transaction on the blockchain.  Note that I backed-out part of the security hash:

I do not have that map all figured out, but I think that the yellow spots are locations where there are various nodes that checked out the transaction OK, blue would be locations with fewer nodes.  Note the interesting high number of nodes located at 0 degrees latitude and 0 degrees longitude at the yellow node in the "Bight of Africa"...


There still a number of questions I have on the blockchain.  This article is just an introduction!  Both of my contacts provided me more information than I could properly understand (quickly) on BTC as well as the blockchain.

But at least it appears that the blockchain is secure.  There may indeed be "scalability" issues with BTC and/or the blockchain (how will future fast growth affect the BTC Ecosystem), but for the moment we are OK.  We, the brave (the foolish?), the explorers of Bitcoin.


I would like to pass my sincere gratitude to my two knowledgeable advisers "Bitcoin Insider" (yet again) as well as "spartacus" for helping me to learn more about the whole BTC Ecosystem, and in particular about the blockchain for this article.

Thank you very much guys!


  1. Robert did a great job, let me just add a few more things- The Blockchain is secure till about 2040 when the last block is delivered. But the Blockchain offers us a placeholder of time itself. I and other are developing services to use the blockchain and it's ability to keep us sync-in time to events and web object. The other side of the coin is all transactions are public and do you really want your mother -in-law knowing how many Bitcoins you have.

    Look to a BIP32 wallets (coming soon) to give you the sub structure to allow you to not hide per say, but yes hide-delute your transactions with sub- and sub wallets. We also need to hide our wallets from hackers and they find you via - look up your transactions like Robert did - how about your IP address -

    If you use a thin client like Electrum, MultiBit or Armory they have a server between you and the p2p Bitcoin network - Who owns those servers - -- You tell me - if you trust them-

    If you use a Bitcoin-QT wallet now I know your IP address and Cox cable will give your home address and a hacker will try and use your IP to track you down.. I use Tor with my BTC transactions - new IP every Exit-relay- just saying Bitcoin Paranoid geek -

    The blockchain is your friend and your brothers keeper - it's transparency is what gives Bitcoins transactions it's value. What transparency do you have with your Visa or Paypal transactions - how many people got your information during those transactions. To me the blockchain and it's transparency is what gives value of to a Bitcoins.

    Last 2 cents - A paper Wallet with BIP38 is the safest Wallet around

    Great Job Robert as alway

  2. Robert nice post.
    @Buster 2040 won't be the last block, just the last mined Bitcoins. They won't be called miners then, but transactors. The incentive at that point will be transaction fees that are added to most transactions. If or when bitcoin becomes ubiquitous individuals and corporations will have a vested interest in continuing to hash. It might even become an additional infrastructure necessity that people pay providers for, like electricity, gas, and cable.
    @Robert The most exciting thing in bitcoin right now is the multiple UIs coming out soon, that will interface with, and run on top of the blockchain. I look at it like this: the blockchain is the legal code if you will, for this new space. As long as you obey and stay within the law, you can build almost any kind of product. Bitcoins are only the first product, be it the most important, money, which will enable all others.

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