This report outlines the bitcoin protocol and analysis ways to mine it.

1. Bitcoin
A decentralized, fierce internet currency & how to earn it
Shivek Khurana {khuranashivek@gmail.com}
Cluster Innovation Centre
University of Delhi
Report submitted in partial fulfillment of the requirements for the Degree of
Bachelor of Technology : Mathematics and IT

2. Abstract
Bitcoin is a peer to peer, decentralized crypto-currency. Bitcoin design and prototype was published by
Satoshi Nakamoto1 in 2008 and since then, the protocol has been on a rollercoaster ride. The current
value of the bitcoin ecosystem is $ 4,072,936,5002 (at $380/BTC) and is rising exponentially. Unlike
traditional currencies, there are no banks or other forms of regulators. All transactions are entries into a
public ledger called the blockchain. The system is regulated by volunteers called miners (or a voluntary
group called mining pool). The money supply is a algorithmically regulated. The maximum numbers of
bitcoins that can be generated is 20,999,999.9769. New bitcoins are generated as a reward in the mining
process. The difficulty of mining process is exponential to bitcoins generated. In this paper, I have
studied the bitcoin protocol and implemented a basic CPU based bitcoin miner that runs on the getwork3
protocol.
Keywords
bitcoin, litecoin, bitcoin protocol, mining, mining pool, proof of work in bitcoin, getwork
1
Satoshi Nakamoto is the pseudonymous person or group of people who designed and created the original Bitcoin software,
https://en.bitcoin.it/wiki/Satoshi_Nakamoto
2
As of November 12, 2013, http://bitcoinwatch.com/
3
JSON RemoteProcedure Call https://en.bitcoin.it/wiki/Getwork

3. Index
1.
2.
3.
4.
5.
6.
Index
Index of Figures
Index of Tables
Intended audience
Introduction
Bitcoin Protocol
a. Cryptographic Hashes
b. Properties of a good cryptographic hash function :
c. Digital Signatures
d. Pseudonymous Transactions
e. Transactions
f. Blocks and Block Chain
g. Proof Of Work
h. Mining Network
i. Money Supply
j. Double Spending
k. Mining Pool
l. Json RPC Getwork
m. Real World Example (from slush pool knowledge base#)
i.
Miner connects the server
ii.
Authorize workers
iii.
Description of every field of the notification in the particular order:
iv.
How to build coinbase transaction ?
v.
How to build block header?
vi.
How to submit share?
7. Jinter : A web based bitcoin miner
8. Future Work
9. Conclusion
1

4. Index of Figures
Fig 1 : Schematic Representation of Digital Signature Scheme
Fig 2 : Real Life vs Pseudo Identity of a transacting party
Fig 3 : Structure of a Transaction Block
Fig 4 : Making a transaction using a bitcoin wallet client
Fig 5a : Unmined transactions
Fig 5b : Each miner has her own copy of unmined transactions
Fig 6 : Miner’s block and attaching it to the block chain
Fig 7 : Cumulative network hashrate from Jan 2013 to Jan 2014
Index of Tables
Table 1 : No. of bitcoins in circulation (estimated)
Table 2 : Blocks mined by various pools. Data for last 2016 block as on January 9 2014,
Intended audience
This paper was written as a result of a project “Mining Bitcoins”. It includes the functional aspects of
bitcoins and how the community goes about mining it. I briefly touch the difference between solo mining
and pooled mining. The vision here is to give a technical overview of the Bitcoin protocol and empower
the reader to get involved into it. For the economic effects of bitcoins and how it can possibly disrupt
existing bank systems, see “Economic Effects of Bitcoins [4]”
Introduction
Bitcoin is an anonymous crypto-currency, regulated by a group of volunteers called miners. Bitcoin
transactions are not like physical transactions where value is directly transferred from one party to
another as a currency note. A bitcoin transaction is a ledger item. A party (say Alice) can transfer bitcoins
to another party (say Bob) by creating a ledger item that credits ‘A’ bitcoins to Bob. For this, the presence
of one or more ledger items that credited ‘A’ or more bitcoins to Alice is mandatory. In simple words,
Alice cannot spend the bitcoins she doesn’t have. This transaction is broadcasted to the network of
bitcoin miners where the above mentioned validation takes place. There are other validations , about
which I’ll talk in subsequent sections. The miner collects all transactions and forms a block. If a single
transaction was a ledger entry, then the block is a ledger page. Each miner has different blocks that
include same transactions. The miner’s task now is to get his block accepted to the block chain (i.e the
ledger itself). For this, he needs to come up with a proof of work acceptable by the entire network. The
protocol estimates that the entire ecosystem should come up with a valid proof every 10 minutes. To
ensure this, the difficulty is calibrated every 14 days. Once a miner has a valid proof, the block gets
attached to the block chain and all miners then start validating the next set of transactions. As a reward for
coming up with a proof, the miner is awarded with 50 bitcoins. This reward is halved every 210,000
2

5. blocks and currently is 25 bitcoins. Along with this reward, the miner also gets to collect the transaction
fee. All transactions are alphanumeric hashes. Bitcoins can be exchanged for real currencies on exchanges
like Mt. Gox1 .
The mining process is hardware intensive. Mining software have evolved2 extensively, starting from
simple CPU based miners, to GPU based miners and special ASIC chips now. After studying all available
technologies, I concluded that hosted mining solution3 are best to keep up with continuously increasing
difficulty. Another approach could be desktop clusters, where the miner runs in the background. This
might not be as good as an ASIC chip or a hosted solution, the volume of bitcoins generated can be
increased by simply adding more desktops. This approach is suitable only for casual miners with abundant
desktop availability (like a university student who has access to all labs or an office person). The web
browser can also be used as a miner. This approach, although unethical, is interesting because it converts
a websites entire traffic into an army of bitcoin miners.
I have worked on an existing get work based solution written as a webapp and modified and updated it to
fit the getwork standard. An average rate of 50 khash is obtained per computer in contrast with upto 5
ghash on dedicated ASICs.
Bitcoin Protocol
The protocol specified by Nakamoto is a mechanical replica of existing banking systems. The sharp
contrast is : providing the validation power to users rather than the banks. In fiat banking system, the
issuing authority mints currency(as per the statistically measured economic status of that country) and
circulates it in the territory. For example, The Reserve Bank of India issues notes and is then circulated
across entire continent. Now when a purchase is made against this note, it’s RBI’s responsibility to
authorize it. It does the same by promising to pay the bearer a sum of one thousand rupees. This promise
ensures that whoever exchanged a good or service against that note can further exchange a good or
service against the note he has.
In bitcoin, the RBI does not exist, and the currency is minted by miners. Just like RBI, a government
institution earns seigniorage, the miner earns bitcoins for each transaction block she validates, i.e.
mathematically guarantee to be legit. This reward for mining is called coinbase. The coinbase keeps the
miner indulged into mining. The authenticity of a bitcoin transaction depends on :
1. Does the person owns bitcoins he is spending ?
2. Has he spend the same bitcoins before (double spending) ?
Such validations are not required in fiat systems because the physical nature of the currency. You can
1
https://www.mtgox.com/
Alec Liu, “A Guide to Bitcoin Mining: Why Someone Bought a $1,500 Bitcoin Miner on eBay for $20,600”,
http://motherboard.vice.com/blog/a-guide-to-bitcoin-mining-why-someone-bought-a-1500-bitcoin-miner-on-ebay-for-2
0600
3
http://www.butterflylabs.com/landing/slanding.php
2
3

6. never spend a rupee that you don’t have, but because bitcoins are basically electrical voltages in a
distributed computer network, validations are necessary.
Cryptographic Hashes
A cryptographic hash is a mathematical function which converts a given input (and optional operation
parameters) into an encoded output, hiding almost all features of the input. For example, consider a linear
mathematical function :
Equation 1
Suppose I pass an input argument x = 4 to the function, the output(also referred to as digest or hash) will
be 11. 11 has no properties of 4, is mathematically different and cannot be related to 4 in anyway (except
that both are integers). The same principle is applied to hide important information and messages using
cryptographic hash functions which make it almost impossible to relate the output back to input.
As evident from Equation 1, if function f(x) is known, the input argument can easily be concluded if output
is known, i.e. we can get back to 4 if 11 and f(x) is known, but this defies the purpose of securing
information, hence Equation 1 is not a good cryptographic hash function.
Properties of a good cryptographic hash function :
1. Computationally efficient : Should have a low time/ memory complexity4
2. Collision resistance : It should be hard to find two inputs which have same digest or no two
inputs should have the same digest. The first definition is more apt because we know that set of
inputs is infinite and this infinite set is mapped to a finite set (all literals of length 256 in case of
SHA 256) so we cannot guarantee that the hashes will always be different.
3. Hide input characteristics : The hash should be such that no property of the original input can be
inferred
4. Well distributed : The hash should appear random
The Bitcoin protocol can work with any hash function which satisfies the above requirements. Currently,
two major hash functions are being used. (The mechanism of usage is explained in later sections)
1. SHA2565 (used by bitcoin)
2. Scrypt6 (used by litecoin)
Digital Signatures
A digital signature is an electronic equivalent of a physical signature. Consider two parties Alice and
4
Complexity of Algorithms, IISc Banglore, http://lcm.csa.iisc.ernet.in/dsa/node4.html
http://www-ma2.upc.es/~cripto/Q2-06-07/SHA256english.pdf
6
Colin Percival, STRONGER KEY DERIVATION VIA SEQUENTIAL
MEMORY-HARD FUNCTIONS, http://www.tarsnap.com/scrypt/scrypt.pdf
5
4

7. Bob. If Alice wants to transfer some important information (a transaction initiation in bitcoin’s case) to
Bob, and Bob on the other hand wants to ensure that the information he received was sent by Alice, a
digital signature scheme can be used.
Fig 1 : Schematic Representation of Digital Signature Scheme
A digital signature scheme is applied between two parties , each of which have a private and a public key
(fundamentally these keys are long random alphanumeric text). When Alice wants to transfer Message M to
Bob, Alice will encrypt M with her private key SKA using a (generally oneway7) cryptographic hash
function to obtain output M*. The receiving party Bob will have a copy of Alice’s public key VKA. This
public key will be used to verify the authenticity of M* by using an inverse hash functions which yields a
boolean true or false value. The bitcoin protocol uses ECDSA8 for processing signatures.
Pseudonymous Transactions
Physical world transactions have the identities of involved parties attached. For example, if I write a
cheque to pay my university fee, the government can always trace the transaction parties simply by
verifying against the cheque number of the issuing bank. But bitcoin has no issuing authority, so the parties
cannot be traced back(theoretically), given a particular transaction. In the bitcoin ecosystem, each member
is defined by a public private key pair. Suppose Alice and Bob are the real world identities of two
parties, then in the bitcoin ecosystem, Alice will be identified as her public key and her real world
identity will be hidden. Same will be true for Bob. This helps in digital signature verification as the
senders name is the public key and the hashed message can be validated against the sender itself.
In fact, the verification key is the address of a party’s bitcoin wallet. The number 32… in Fig 2 is a real life
example of a bitcoin address. One party may have one or more bitcoin wallets. Transactions occur
7
8
http://en.wikipedia.org/wiki/One-way_function
http://en.wikipedia.org/wiki/Elliptic_Curve_DSA
5

8. between two wallets. A bitcoin wallet9 is an online or offline software that stores a party’s transactions.
Fig 2 : Real Life vs Pseudo Identity of a transacting party
Transactions
Bitcoin transactions are not like physical transactions. These transactions involve a fair amount of
processing and validation. Bitcoin system can be visualized as a global and open ledger, where money can
be credited to any member of the network, provided her pseudonymous identity(i.e. wallet address) is
known. The best way to learn how a transaction work is by taking an example. Suppose Alice wants to
transfer 0.05 BTC to Bob. Alice and Bob, both must have a bitcoin wallet and Alice should know the
address of Bob’s wallet (it’s like sending an email with bitcoins attached). Furthermore it is mandatory for
Alice to have 0.05 or more BTC at that instant of time. Because each transaction is a ledger entry, the
former condition can also be interpreted as, the global ledger (blockchain) should have one or more
entries crediting Alice with 0.05 BTC or more and Alice must have at least 0.05 BTC still available to her
as credits if she spent the remaining.
Each ledger entry to the global ledger is called a transaction. Just like physical transactions in the ledger
entry have a tabular structure, a bitcoin transaction also has a structure and unlike physical world ledgers,
where the structure varies from one individual to another, the bitcoin transaction structure is
programmatically generated and uniform throughout the system.
A transaction consists of two parts : input and output. Input part is a reference to all the transactions
which credited bitcoins to Alice’s(sender’s) address. The output part consist of an amount being credited
to Bob, the remaining amount that needs to be returned back to Alice and a small fee(optional). The number
of bitcoins referenced by input and output should be equal. For the sake of our example, let us assume the
Caroll and Dave credited 3 and 0.02 BTC to Alice at some point of time before she wanted to send 0.05
BTC to Bob. Figure 3 shows the structure of the transaction.
The hash of transactions between Carroll and Alice and Dave and Alice are hashed. The left part of
Figure 3 represents receipt of bitcoins from Carroll's and Dave’s wallet address. These two transaction
ids are passed in as the inputs to the new transaction block and then the output of transaction block is
defined. The packing is done by the wallet software.The hence packed information is signed using Alice’s
private key and then broadcasted to the network of miners for validation. Real example10 of a transactions
9
10
https://en.bitcoin.it/wiki/Wallet
http://blockchain.info/tx/49a7a8e93efeeea1584fbe9fc16957cd05bbb315340a02ff28ec49cffdb14768?show_adv=true
6

9. can be found on blockchain.
Fig 3 : Structure of a Transaction Block
Figure 4 depicts how the end user will make a transaction using a wallet. Only the receiver's address and
the amount to be transferred needs to be entered. An optional message can also be added. The visual
design of the wallet may vary from client to client but fundamentally all wallets are same.
A transaction is complete only after a miner mines it. It should take about 10 minutes for the transaction to
be completed, but time may vary if a large percentage of the network faces a technical issue i.e. the
computation power of the network is less.
Fig 4 : Making a transaction using a bitcoin wallet client. Source : Coinbase11
11
http://coinbase.com
7

10. Blocks and Block Chain
Once a transaction is broadcasted to the network, all miners start hashing the unmined transactions and
form a block. A block is a set of all transactions that are not validated yet. In the ledger analogy, if a
transaction is a ledger entry, a block is a ledger page. A block is formed by pairwise hashing of unmined
transactions, i.e. if there are 4 unmined transactions in the network, the miner will hash the first 2 and then
the next two and finally the two digests obtained from former hashing to finally obtain a 256 bit
alphanumeric string, which uniformly incorporates the information of all transactions. Every miner on the
network has slightly different copies of the current block, except for miners who mine in pools, where
all members of the pool work on the same copy of the block. Theoretically a new block should be
attached to the blockchain every ten minutes.
Fig 5a : Unmined transactions
Fig 5b : Each miner has her own copy of unmined transactions
The blockchain is the global bitcoin ledger. It is an open record of all transactions in the bitcoin network
and freely available on the internet at blockchain.info. All transactions in the blockchain are final and
validated. A miner’s job is to attach his copy of the latest block on the blockchain. By doing this, he is
rewarded with a coinbase transaction. The attachment process is a hardware intensive mathematical
puzzle, i.e needs a certain number of CPU clock cycles to be solved.
Each miner spends her hardware capability on mining in hope that she might solve the puzzle and be
rewarded with a coinbase. This puzzle is called the proof of work. Once a miner on the network is able
to solve the puzzle, it is broadcasted on the network to accept. After the solution is accepted and attached
to the blockchain, all miners drop the current versions of their blocks, and start mining new transactions.
Proof Of Work
A proof of work is a piece of data which is costly(in terms of computation cycles) and takes time to
produce so as to satisfy a certain requirement. Producing a proof of work is a brute force12 process with
uniform probability distribution, so that a lot of trial and error is required (on average) before a valid
12
Similar to brute force attach but with legit intentions http://en.wikipedia.org/wiki/Brute-force_attack
8

11. proof is generated. Bitcoin uses the hashcash13 proof of work.
Proof of work is based on the principle that given a good hash function, y = H(x), it is easy to calculate y
given and x, but difficult to calculate x if y is given.
For Example (quoted from bitcoin wiki14 )
Let's say the base string that we are going to do work on is "Hello, world!". Our target is to find a
variation of it that SHA-256 hashes to a value beginning with '000'. We vary the string by adding an
integer value to the end called a nonce and incrementing it each time. Finding a match for "Hello, world!"
takes us 4251 tries (but happens to have zeroes in the first four digits):
"Hello, world!0" => 1312af178c253f84028d480a6adc1e25e81caa44c749ec81976192e2ec934c64
"Hello, world!1" => e9afc424b79e4f6ab42d99c81156d3a17228d6e1eef4139be78e948a9332a7d8
"Hello, world!2" => ae37343a357a8297591625e7134cbea22f5928be8ca2a32aa475cf05fd4266b7
...
"Hello, world!4248" => 6e110d98b388e77e9c6f042ac6b497cec46660deef75a55ebc7cfdf65cc0b965
"Hello, world!4249" => c004190b822f1669cac8dc37e761cb73652e7832fb814565702245cf26ebb9e6
"Hello, world!4250" => 0000c3af42fc31103f1fdc0151fa747ff87349a4714df7cc52ea464e12dcd4e9
Fig 6 : Miner’s block and attaching it to the block chain
In the bitcoin system , the proof is to come up with a string such that SHA256 hash of the given challenge
string and proof concatenated should have certain number of leading elements equal to zero. All miners
are encouraged to start with a random nonce, so that different nodes generate different hashes and
13
14
https://en.bitcoin.it/wiki/Hashcash
https://en.bitcoin.it/wiki/Proof_of_work
9

12. repetitive hashes are avoided(to a certain extent). The protocol aims on having 1 proof every ten minutes,
so that it takes only ten minutes for a transaction to be validated. If the network is taking less than ten
minutes to come up with a block, the difficulty is calibrated i.e. the number of preceding zeros required
will be reduced and conversely, the number of preceding zeros required will be increased. A miner is
awarded with a coinbase only if she could present a proof of work and bitcoin transactions are validated
in the process. The difficulty is calibrated every 2 weeks. Ideally 2016 blocks should be generated every
2 weeks (10 minutes per block - 6 blocks per hour - 144 blocks per day - 2016 blocks every two weeks)
Once a proof is obtained, it is broadcasted to be verified by the network, and is then attached to the block
chain. See dotted line in Fig 6. After this, the entire network drop their copies of block and start working
on the new transaction block. The first block of the block chain is called the genesis block15 .
Mining Network
Mining network is the network of computers connected over the internet and collectively indulged in the
process of mining. The strength of the network is calculated in Ghash/ sec i.e. no. of hashes, all the nodes
of the network can collectively generate per second. The current hash rate of the network is
12,903,895.95 GH/s 16.
With continuous acceptance of bitcoin, the hash rate has increased exponentially. Fig 7 shows the burst in
computation strength of the bitcoin network from January 2013 to January 2014.
Fig 7 : Cumulative network hashrate from Jan 2013 to Jan 2014. Source blockchain.info
15
Details
of
transactions
in
the
http://blockchain.info/address/1ArFAXhvMbwJuub4ujnVbLFszqX3McuzsX
16
source : http://blockchain.info/stats as of January 7 2014
10
genesis
block
:

13. Money Supply
Notes minted by an institution is the liquid equivalent of all goods and services produced by that territory.
In fiat banking systems, the government can manipulate the minting. This causes the economy drop globally,
but preserves local economic structure i.e. West Indies as a country will be poor, but the rich of West
Indies will continue to be rich. These manipulations are almost impossible in the case of bitcoins.
New coins are generated when a miner successfully comes up with a proof of work against which he is
allowed to perform a coinbase transaction, where a predefined reward is transferred to miner’s wallet.
This reward is halved every 210,000 blocks. For bitcoin, it was initially 50 BTC, as of now it is 25 BTC.
Block
Reward BTC/block
Era
Year
Start BTC
BTC Added
End BTC
BTC
End BTC
Increase % of Limit
0
1
50.00
2009
0
2625000
2625000
infinite
12.500%
52500
1
50.00
2010
2625000
2625000
5250000
100.00% 25.000%
105000
1
50.00
2011
5250000
2625000
7875000
50.00%
37.500%
157500
1
50.00
2012
7875000
2625000
10500000
33.33%
50.000%
210000
2
25.00
2013
10500000
1312500
11812500
12.50%
56.250%
262500
2
25.00
2014
11812500
1312500
13125000
11.11%
62.500%
315000
2
25.00
2015
13125000
1312500
14437500
10.00%
68.750%
367500
2
25.00
2016
14437500
1312500
15750000
9.09%
75.000%
420000
3
12.50
2017
15750000
656250
16406250
4.17%
78.125%
472500
3
12.50
2018
16406250
656250
17062500
4.00%
81.250%
525000
3
12.50
2019
17062500
656250
17718750
3.85%
84.375%
577500
3
12.50
2020
17718750
656250
18375000
3.70%
87.500%
630000
4
6.25
2021
18375000
328125
18703125
1.79%
89.063%
682500
4
6.25
2022
18703125
328125
19031250
1.75%
90.625%
735000
4
6.25
2023
19031250
328125
19359375
1.72%
92.188%
787500
4
6.25
2024
19359375
328125
19687500
1.69%
93.750%
Table 1 : No. of bitcoins in circulation (estimated). Source : Bitcoin Wiki 17
The estimates make it clear that the number of bitcoins in circulation will saturate around 2030. After that
period, the miner will have smaller revenues, in the form of transactions fee. The bitcoin community
believes that by 2030, bitcoin will be a mainstream currency, so the transaction fee generated will be
enough to keep miners indulged in mining.
17
https://en.bitcoin.it/wiki/Controlled_Currency_Supply
11

14. Double Spending
Suppose Alice tries to double spend her money. She transfers the 5 BTC to Bob and after the transaction
block including the former transaction with Bob has been validated and appended to longest chain, i.e the
chain whose combined difficulty level is maximum, she sends the same 5 BTC to Ethan.
To trick the system, she needs to append it on a fork of the main chain. Now the main chain has to openings.
Aice can trick the system if she can prove that the forked chain is the longest chain, which can happen only
if Alice has the computational power greater than that of the entire ecosystem(because the honest chain,
by now, have added more blocks). Even if she does have that power, it will be more apt if she actually
starts legit mining rather than tricking the system. Hence bitcoin protocol morally secures itself to a great
extent.
Mining Pool
As bitcoin gained popularity, miners realized that their probability of earning more coinbase transactions
will increase if they mine in pools, and split the reward in ratio of computation power one supplies to the
pool. This idea was an instant hit. As of January 9, 2014, it is almost impossible for a solo miner to mine
bitcoins. The bitcoin based pools use the getwork JSON RPC to distribute work to members while the
litecoin use the stratum protocol.
Pool
Found blocks
BTC Guild
513 (25.45%)
GHash.IO
346 (17.16%)
Eligius
240 (11.90%)
slush - mining.bitcoin.cz
123 (6.10%)
Discus Fish
108 (5.36%)
Bitminer
69 (3.42%)
Eclipse Mining pool
42 (2.08%)
p2pool
32 (1.59%)
Polmine
11 (0.55%)
ASICMiner
5 (0.25%)
Bitparking Merged Mining Pool
3 (0.15%)
ozcoin
2 (0.10%)
Horrible Horrendous Terrible Tremendous
Mining Pool
1 (0.05%)
12

15. Triplemining
1 (0.05%)
Table 2 : Blocks mined by various pools. Data for last 2016 block as on January 9 2014, source :
blockorigin18
Json RPC Getwork
Json RPC (Javascript Object Notation : Remote Procedure Call) is a protocol to manage distributed
computing networks. In the case of bitcoins, the pool server is the manager and all members of the pool
are a node in the distributed computing network. The job is to hash the challenge string iterating over
random nonce as supplied by the pool server and send back the result if a proof of work is obtained. The
protocol specification19 is simple and the implementation is fairly easy.
Real World Example (from slush pool knowledge base20 )
This example contains real log of miner-pool communication which solved testnet3 block
000000002076870fe65a2b6eeed84fa892c0db924f1482243a6247d931dcab32
Miner connects the server
On the beginning of the session, client subscribes current connection for receiving mining jobs:
{"id": 1, "method": "mining.subscribe", "params": []}n
{"id": 1, "result": [[["mining.set_difficulty", "b4b6693b72a50c7116db18d6497cac52"], ["mining.notify",
"ae6812eb4cd7735a302a8a9dd95cf71f"]], "08000002", 4], "error": null}n
The newline character n is a part of the message and must be added to the end of every JSON message.
Server may wait to this magic character to start processing the message. This is the most common mistake
which people implementing line-based clients do!
The result contains three items:
○ Subscriptions details - 2-tuple with name of subscribed notification and subscription ID.
Theoretically it may be used for unsubscribing, but obviously miners won't use it.
○ Extranonce1 - Hex-encoded, per-connection unique string which will be used for coinbase
serialization later.
○ Extranonce2_size - Represents expected length of extranonce2 which will be generated by the
miner.
Authorize workers
18
http://blockorigin.pfoe.be/top.php
http://json-rpc.org/wiki/specification
20
http://mining.bitcoin.cz/stratum-mining
19
13

16. You can authorize as many workers as you wish and at any time during the session. In this way, you can
handle big basement of independent mining rigs just by one Stratum connection.
{"params": ["slush.miner1", "password"], "id": 2, "method": "mining.authorize"}n
{"error": null, "id": 2, "result": true}n
Server start sending notifications with mining jobs. Server sends one job almost instantly after the
subscription.
{"params": ["bf", "4d16b6f85af6e2198f44ae2a6de67f78487ae5611b77c6c0440b921e00000000",
"01000000010000000000000000000000000000000000000000000000000000000000000000ffffffff
20020862062f503253482f04b8864e5008",
"072f736c7573682f000000000100f2052a010000001976a914d23fcdf86f7e756a64a7a9688ef9903327048e
d988ac00000000", [],
"00000002", "1c2ac4af", "504e86b9", false], "id": null, "method": "mining.notify"}
Description of every field of the notification in the particular order:
○
○
○
○
○
○
○
○
○
job_id - ID of the job. Use this ID while submitting share generated from this job.
prevhash - Hash of previous block.
coinb1 - Initial part of coinbase transaction.
coinb2 - Final part of coinbase transaction.
merkle_branch - List of hashes, will be used for calculation of merkle root. This is not a list of all
transactions, it only contains prepared hashes of steps of merkle tree algorithm.
version - Bitcoin block version.
nbits - Encoded current network difficulty
ntime - Current ntime/
clean_jobs - When true, server indicates that submitting shares from previous jobs don't have a
sense and such shares will be rejected. When this flag is set, miner should also drop all previous
jobs, so job_ids can be eventually rotated.
How to build coinbase transaction ?
Now miner received all data required to serialize coinbase transaction: Coinb1, Extranonce1,
Extranonce2_size and Coinb2. Firstly we need to generate Extranonce2 (must be unique for given
job_id!). Extranonce2_size tell us expected length of binary structure. Just be absolutely sure that your
extranonce2 generator always produces extranonce2 with correct length! For example my pool
implementation sets extranonce2_size=4, which mean this is valid Extranonce2 (in hex): 00000000. To
produce coinbase, we just concatenate Coinb1 + Extranonce1 + Extranonce2 + Coinb2 together.
How to build block header?
Now we're almost done! We have to put all together to produce block header for hashing:
version + prevhash + merkle_root + ntime + nbits + '00000000' +
'00000080000000000000000000000000000000000000000000000000000000000000000000000
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17. 0000000000080020000'
First zeroes are blank nonce, the rest is padding to uint512 and it is always the same. Note that merkle_root
must be in reversed byte order. If you're a miner developer, you already have util methods there for doing
it. For some example in Python see Stratum mining proxy source codes. Server can occasionally ask miner
to change share difficulty. Default share difficulty is 1 (big-endian target for difficulty 1 is
0x00000000ffff0000000000000000000000000000000000000000000000000000), but server can
ask you anytime during the session to change it:
{ "id": null, "method": "mining.set_difficulty", "params": [2]}
This means that difficulty 2 will be applied to every next job received from the server.
How to submit share?
When miner find the job which meets requested difficulty, it can submit share to the server:
{"params": ["slush.miner1", "bf", "00000001", "504e86ed", "b2957c02"], "id": 4, "method": "mining.submit"}
{"error": null, "id": 4, "result": true}
Values in particular order: worker_name (previously authorized!), job_id, extranonce2, ntime, nonce.
Jinter : A web based bitcoin miner
Jinter is a javascript miner that runs on the above defined protocol. It is a pooled mining software and is
designed for pools that mine using getwork over SHA256 algorithm (bitcoin and alikes). This miner
connects to the pool api and mines using the capacity of the browser. The code is open sourced21 . Jinter
uses the jquery22 library for sending HTTP request. All other algorithms are implemented without
libraries. A video demonstration of jinter is available on youtube at .
Future Work
The javascript miner achieves 50 khash/second. This is negligible compared to ASIC chips that mine at 5
ghash/second. A better implementation of the SHA256 hash and usage of webgl can improve the
performance of the system. I also wish to extend this system to allow Scrypt based mining as well.
Another step can be removing server dependence and creating a full featured frontend mining solution.
Conclusion
In this paper, we studied the bitcoin protocol specification, it’s vulnerabilities and measures adopted by
the system to control them. We also studied and implemented the JSON remote procedure call and actually
mined bitcoins. Bitcoin has potential to become a mainstream currency.
21
22
http://github.com/shivekkhurana/jinter
http://jquery.com/
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18. References
[1]
Khan Academy, “Bitcoin”,
https://www.khanacademy.org/economics-finance-domain/core-finance/money-and-banking/b
itcoin
[2]
Satoshi Nakomoto, “Bitcoin: A Peer-to-Peer Electronic Cash System”,
http://bitcoin.org/bitcoin.pdf, 2008
[3]
W. Dai, "b-money," http://www.weidai.com/bmoney.txt, 1998
[4]
Shivek Khurana, “Economic Aspects of bitcoins”,
http://www.slideshare.net/shivekkhurana/economic-aspects-of-bitcoins-report
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