Blockchain solutions generally come in two forms:
- Proof-of-work systems which allow participants to join or leave at will without any sort of registration process. I call these “public”.
- Proof-of-stake systems which are restricted to certain members who are invited to participate. O call these “private”.
Bitcoin (and the alt-coins which are derived from it are “public”. My work has been with the specific altcoin which is named “dogecoin” because it is relatively stable, seems to have an interesting user base, and is very inexpensive.
I will thus be speaking about dogecoin specifically, but the main topic (obviously unspendable addresses) applies to many similar currencies (including bitcoin).
When someone downloads a cryptocurrency “wallet” to their phone or computer, a few addresses are created and assigned to them. By sharing these addresses with others, the currency can come to life with immediate person-to-person transactions. No bank, mint, or intermediary is a part of this transaction (although some core dogecoin server will “win” the right to craft the transaction into the next block of the chain. This server will be rewarded with some newly created currency and some mining fees. These servers, like all of the users, are not part of any organization other than perhaps mining pools. This is all necessary to keep from having to have a central authority put in place to act as a gate-keeper.
One of the most striking oddities of this system is that the addresses which are used don’t have readable names and are calculated from secret keys which can be generated in a trivial way.
Here are some examples of what these addresses look like in dogecoin:
Notice that although each address starts with the letter “D”, the rest appears to be a random mixture of letters and numbers. Each of the addresses above has a private key which the owner’s wallet keeps as a secret.
It is possible to short-circuit the address creation process and create an address that is quite readable, but has no known private key. Examples are:
Any currency sent to these addresses will be lost, and can actually be considered to be “burned” or destroyed. This is the foundation of a process known as proof-of-burn. These addresses are also called “obviously unspendable” because it is mathematically improbability that they were calculated in the way that normal “spendable” addresses would be.
These addresses create the cornerstone for the communication system that I promote and can be created with the python script: