Blockchain Microtransaction System and Method Study Guide

Blockchain Microtransaction System and Method Study Guide

Quiz

What challenges does the advertising revenue model face? How do users and developers address these challenges?

How does blockchain technology solve the trust and security issues in traditional online transactions?

What is the role of asymmetric encryption in blockchain transaction verification?

Explain what a "double-spend attack" is and how blockchains prevent it.

Compare and contrast the "proof of work" and "proof of stake" blockchain consensus mechanisms.

What is a "fork"? Why are forks usually resolved in blockchain networks?

Describe the role of "smart contracts" on blockchains and give examples of their applications.

Explain the use of "gas" in computing blockchains (such as Ethereum).

How do the systems and methods proposed in this article solve the cost problem of traditional blockchain microtransactions?

What is the role of the "shadow ledger" in this system? What are its advantages?

Answer

The advertising revenue model faces challenges such as users' growing ad blocking behavior, ad saturation that reduces ad effectiveness, and user privacy concerns. Developers respond by increasing the number of ads and using more intrusive ad formats, while users choose to block ads using ad blockers.

Blockchain solves the trust and security issues in traditional online transactions by using decentralized distributed ledger technology. Each transaction is verified by multiple nodes in the network, and cryptography ensures the authenticity and immutability of the transaction, eliminating the need for centralized institutions.

Asymmetric encryption enables users to verify the source of transactions without revealing their private keys. Transactions are signed with the user's private key, and anyone can use the user's public key to verify the validity of the signature, ensuring that the transaction is indeed from the user who claims to send the transaction.

A "double-spending attack" refers to the behavior of an attacker trying to spend the same digital currency multiple times. Blockchain prevents such attacks by requiring that each new transaction block contains a reference to the previous block. This linking mechanism ensures that once a transaction is added to the blockchain, it cannot be tampered with or revoked.

"Proof of Work" and "Proof of Stake" are both blockchain consensus mechanisms used to verify transactions and add them to the blockchain. Proof of Work relies on miners to solve complex computational puzzles to verify transactions, while Proof of Stake selects validators based on the proportion of stake held by users in the network. Proof of Stake is generally more energy-efficient than Proof of Work.

"Fork" refers to the situation in which two or more valid chains with different transaction histories appear in a blockchain network. A fork occurs when multiple nodes generate new blocks at the same time. Most of the time, forks are automatically resolved by selecting the longest chain or the one with the most cumulative proof of work.

"Smart contracts" are self-executing contracts stored on a blockchain. They execute automatically when predefined conditions are met, without the need for any middleman. For example, smart contracts can be used to create decentralized trading platforms, supply chain management systems, or digital identity verification systems.

In computing blockchains, "gas" refers to the unit of measurement of computing resources required to execute smart contracts or conduct other transactions. Users pay gas fees to compensate miners for the computational costs of processing and verifying transactions. Gas prices are usually expressed in the blockchain's native cryptocurrency.

The system reduces the cost of traditional blockchain microtransactions by using a centralized authority to pre-verify transactions and submit multiple transactions to the blockchain in batches. This approach reduces the number of interactions with the blockchain, significantly reducing transaction fees.

"Shadow ledgers" are local ledgers stored on centralized servers that record transactions that have been verified but not yet submitted to the blockchain. The use of shadow ledgers allows for batching of transactions, which reduces transaction costs. In addition, it allows for instant verification of transactions because there is no need to wait for blockchain confirmation.

Suggested Paper Topic

Analyze the advantages and disadvantages of the proposed micro-transaction system and compare it with traditional credit card and cryptocurrency payment systems.

Discuss the feasibility and limitations of the system in different application scenarios, such as online content payment, IoT micropayment, etc.

Analyze the impact of the system on user privacy and how to protect user privacy through technical means or policies and regulations.

Evaluate the security of the system and explore potential security risks and countermeasures, such as double-spending attacks, smart contract vulnerabilities, etc.

Discuss the impact of the system on the future Internet economic model and how it promotes the development of decentralized applications and services.

Key Glossary

Term Definitions Blockchain A decentralized distributed database for recording transaction information. Smart Contracts Self-executing contracts stored on the blockchain. Asymmetric encryption A cryptographic method that uses public and private keys for encryption and decryption. Proof of Work A blockchain consensus mechanism in which miners verify transactions by solving complex computational puzzles. Proof of Stake A blockchain consensus mechanism in which validators are selected based on the proportion of stake held by users in the network. Fork A situation in which two or more valid chains with different transaction histories appear in a blockchain network. Gas Calculation A unit of measurement for computing resources required in a blockchain to execute smart contracts or conduct other transactions. Shadow ledgers are local ledgers stored on centralized servers and are used to record transactions that have been verified but not yet submitted to the blockchain. Microtransactions refer to transactions with very small amounts, usually only a few cents or less. Virtual currency is a digital currency used within a specific system or platform, usually used to purchase virtual goods or services.