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fix some typos #5

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12 changes: 6 additions & 6 deletions README.md
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### Abstract
The Ethereum Network has proven itself as the world’s first ecosystem for permissionless, transparent and immutable software applications. These software applications, typically taking the form of Smart Contracts, can all seamlessly interact with each other. To facilitate this process, various standard protocols have been developed such as the ERC20 standard for a common ‘token’ format so that these Smart Contracts can pass scarce, owned, and transferable data between one another without a centralized mediator. Up until 2018, every ERC20 token has been distributed in a matter that is generally known to align with ‘securities.’ The tokens are sold to ‘investors’ by the ‘creator’ under the pretenses that the ‘creator’ will perform some action to make the tokens more valuable. It should be clarified that Bitcoin is distributed via ‘bitcoin mining’ and therefore aligns itself as a ‘commodity’ and not a ‘security.’ This whitepaper will describe the first ERC20 token that aligns itself as a ‘commodity’ since it is distributed only using ‘Proof of Work Mining’ identical to the Bitcoin model. This token is also transferred on a blockchain in a method very similar to Bitcoin and so therefore interfaces with other software and with the world in a manner which is effectively identical to Bitcoin. This token has several advances that set it apart from Bitcoin such as the ability to directly interact with Ethereum Smart Contracts and the rest of the Ethereum Ecosytem in a permissionless way.
The Ethereum Network has proven itself as the world’s first ecosystem for permissionless, transparent and immutable software applications. These software applications, typically taking the form of Smart Contracts, can all seamlessly interact with each other. To facilitate this process, various standard protocols have been developed such as the ERC20 standard for a common ‘token’ format so that these Smart Contracts can pass scarce, owned, and transferable data between one another without a centralized mediator. Up until 2018, every ERC20 token has been distributed in a matter that is generally known to align with ‘securities.’ The tokens are sold to ‘investors’ by the ‘creator’ under the pretenses that the ‘creator’ will perform some action to make the tokens more valuable. It should be clarified that Bitcoin is distributed via ‘bitcoin mining’ and therefore aligns itself as a ‘commodity’ and not a ‘security.’ This whitepaper will describe the first ERC20 token that aligns itself as a ‘commodity’ since it is distributed only using ‘Proof of Work Mining’ identical to the Bitcoin model. This token is also transferred on a blockchain in a method very similar to Bitcoin and so therefore interfaces with other software and with the world in a manner which is effectively identical to Bitcoin. This token has several advances that set it apart from Bitcoin such as the ability to directly interact with Ethereum Smart Contracts and the rest of the Ethereum Ecosystem in a permissionless way.

### Background
0xBitcoin is the implementation of Bitcoin in Solidity and is the first decentralized ERC20 token for Ethereum. It is an open source community project, not led by an official team or corporation, and therefore does not have ICO capital or other vast amounts of currency/capital that a centralized token project would have. We believe as a community that decentralization is the true flavor of the blockchain and that is the architecture that provides open and transparent trust for users. We also believe that Ethereum and ERC20 tokens are a significant segment of the future of blockchain technology.
Expand All @@ -24,15 +24,15 @@ The Ethereum blockchain in its current state exists as a thriving permissionless
As of 2017, all Ethereum token distribution methods were flawed and able to be Sybil attacked. A Sybil attack is a form of computer security attack in which one human pretends to be many humans with multiple computer accounts in order to manipulate a system in a malicious way. ICOs and airdrops are highly susceptible to Sybil Attacks and since there is no way to verify that all ERC20 tokens distributed by the deployer distributed fairly or unfairly. 0xBitcoin, with its unique Proof of Work distribution method, is resistant to Sybil attacks. This means that 0xBitcoin is the first trustless Ethereum token in the world. It can be argued that the distribution of 0xbitcoin is fair since it was only distributed by mathematical hashing and not by a human.

### Current and Proposed Use Cases
As an implementation of the original Bitcoin software as an Ethereum Smart Contract, 0xBitcoin (or 0xBTC) combines advantages from both Bitcoin and Ethereum. The asset is decentralized, permissionless, mined and scarce just like Bitcoin which means it shares all of Bitcoin’s usecases and properties as a transparent and permanent digital record of value. However, above Bitcoin, 0xBitcoin has the speed and scalability of the Ethereum network and is compatible with all ERC20 token services. This means it can be stored in any Ethereum wallet, is as secure as Ethereum, and can act as ‘the bitcoin’ for the Ethereum ecosystem. This is important because Bitcoin is not able to communicate with or interact with the Ethereum smart contract ecosystem. With 0xBitcoin, the Ethereum network is now effectively upgraded with the ability to interface with a commodity which shares all of the same properties as Bitcoin. Now, all Ethereum smart contracts can hold, transfer, and trade bitcoin-like tokens permissionlessly and can do so based on immutable rules set forth using their own computer code.
As an implementation of the original Bitcoin software as an Ethereum Smart Contract, 0xBitcoin (or 0xBTC) combines advantages from both Bitcoin and Ethereum. The asset is decentralized, permissionless, mined and scarce just like Bitcoin which means it shares all of Bitcoin’s use cases and properties as a transparent and permanent digital record of value. However, above Bitcoin, 0xBitcoin has the speed and scalability of the Ethereum network and is compatible with all ERC20 token services. This means it can be stored in any Ethereum wallet, is as secure as Ethereum, and can act as ‘the bitcoin’ for the Ethereum ecosystem. This is important because Bitcoin is not able to communicate with or interact with the Ethereum smart contract ecosystem. With 0xBitcoin, the Ethereum network is now effectively upgraded with the ability to interface with a commodity which shares all of the same properties as Bitcoin. Now, all Ethereum smart contracts can hold, transfer, and trade bitcoin-like tokens permissionlessly and can do so based on immutable rules set forth using their own computer code.

To elaborate, the commodity Ether is being used for many purposes within the Ethereum network. The ultimate usability of Ether as a decentralized store of value is unknown. This is because Ether is designed as a medium for securing the Ethereum network and not only as a form of ‘bitcoin’ for Ethereum. For example, if Proof of Stake is implemented for Ethereum, Ether will no longer be mined using Proof of Work. This will likely leave 0xBitcoin as the only mined asset on Ethereum. In this way and others, Ether may be transformed in such a manner as to make it best for securing the network and not as a good medium of exchange. This message has already been implied by the Ethereum development team in 2017. 0xBitcoin intends to help fulfill a role that Ether currently plays in the Ethereum network. 0xBitcoin intends to be the primary medium of exchange and store of value for the Ethereum network. This will allow Ether to fulfill its original intended function to secure the network at scale and to be the lifeblood of the Ethereum network.

### The Decentralized Token

Since 0xBitcoin is mined like Bitcoin, it acts just like a commodity. The difficulty of ‘mining’ this commodity automatically adjusts to the total computational power used to mine it. The current state of the Ethereum ICO market with its demonstrable failure rate leaves investors vulnerable to holding pseudo-value backed only by speculation. 0xBitcoin mitigates this problem by providing the Ethereum network with a decentralized bitcoin-like asset which is able to fill the role of a multitude of centralized tokens in a more invulnerable and trustless format.

This powerful mechanism frees individuals from having to use a third party exchange, susceptible to security holes and wallet compromise, and third party escrows. The movement away from centralization is a core tenant of what Satoshi Nakamoto originally intended with classic Bitcoin (Nakamoto, 2009). 0xBitcoin has the facilities to help keep the Ethereum ecosystem open, accountable, trustless and decentralized at every step in the value transfer process. Unlike Bitcoin, 0xBitcoin can interact decentralzied exchanges such as EtherDelta and ForkDelta since it is compatible with Ethereum smart contracts. This means that while Bitcoin can only be traded using centralized means, 0xBitcoin can be traded permissionlessly within immutable permanent smart contracts which are not able to be censored or restricted by central entities. This is another clear advantage and is closer to fulfilling Satoshi’s complete vision.
This powerful mechanism frees individuals from having to use a third party exchange, susceptible to security holes and wallet compromise, and third party escrows. The movement away from centralization is a core tenant of what Satoshi Nakamoto originally intended with classic Bitcoin (Nakamoto, 2009). 0xBitcoin has the facilities to help keep the Ethereum ecosystem open, accountable, trustless and decentralized at every step in the value transfer process. Unlike Bitcoin, 0xBitcoin can interact decentralized exchanges such as EtherDelta and ForkDelta since it is compatible with Ethereum smart contracts. This means that while Bitcoin can only be traded using centralized means, 0xBitcoin can be traded permissionlessly within immutable permanent smart contracts which are not able to be censored or restricted by central entities. This is another clear advantage and is closer to fulfilling Satoshi’s complete vision.

### Account System

Expand All @@ -48,11 +48,11 @@ There have been mintable or mined tokens proposed for Ethereum in the past but n
keccak256(nonce, minerEthAddress, challengeNumber) < difficultyTarget
```

The nonce is a random number selected by the mining software. The mining software mines to try to find a valid nonce. If the above statement evalutates to true, then the nonce is a valid solution to the proof of work. The challengeNumber is just a recent Ethereum block hash. Every round, the challengeNumber updates to the most recent Ethereum block hash so future works cannot be mined in the past. The miner's Ethereum Address is part of the hashed solution so that when a nonce solution is found, it is only valid for that particular miner and man in the middle attacks cannot occur. This also enables pool mining. The difficulty target becomes smaller and smaller automatically as more hashpower is added to the network.
The nonce is a random number selected by the mining software. The mining software mines to try to find a valid nonce. If the above statement evaluates to true, then the nonce is a valid solution to the proof of work. The challengeNumber is just a recent Ethereum block hash. Every round, the challengeNumber updates to the most recent Ethereum block hash so future works cannot be mined in the past. The miner's Ethereum Address is part of the hashed solution so that when a nonce solution is found, it is only valid for that particular miner and man in the middle attacks cannot occur. This also enables pool mining. The difficulty target becomes smaller and smaller automatically as more hashpower is added to the network.

## Pool Mining

When mining 0xBitcoin, whenever a miner submits a solution, the miner must pay a small gas fee in order to execute the Ethereum smart contract code for the mint() function. If the gas fee is too low, the solution will take too long to be mined and if difficulty is not at equillibrium then another mint() solution from another miner will likely be mined first. This renders the original miners solution invalid and the transaction will revert(). To alleviate gas fees for miners, they can instead mine into a pool. This way, the pool will then submit the solutions to the smart contract and pay a gas fee. Then the pool will typically take a small percent of the rewards and give the rest to the miner for providing the PoW solution.
When mining 0xBitcoin, whenever a miner submits a solution, the miner must pay a small gas fee in order to execute the Ethereum smart contract code for the mint() function. If the gas fee is too low, the solution will take too long to be mined and if difficulty is not at equilibrium then another mint() solution from another miner will likely be mined first. This renders the original miners solution invalid and the transaction will revert(). To alleviate gas fees for miners, they can instead mine into a pool. This way, the pool will then submit the solutions to the smart contract and pay a gas fee. Then the pool will typically take a small percent of the rewards and give the rest to the miner for providing the PoW solution.

Since the miner's ethereum address is included in the proof of work, pools require that miners mine using the pool's ethereum address. This way, the miner cannot submit full solutions to the contract while only giving partial solutions to the pool. If the miner is mining on behalf of the pool (using the pools address in the PoW algorithm) then it will not be able to submit any of those solutions to the smart contract without a revert(). This allows pools to operate without being cheated by the miners.

Expand Down Expand Up @@ -283,7 +283,7 @@ As long as cryptocurrencies exists, mining will always exist. Even though minin

Satoshi Nakamoto. Bitcoin: A Peer-to-Peer Electronic Cash System, 2009. http://www.bitcoin.org/bitcoin.pdf.

Logelin J and 0xBitcoin communitiy members. ERC 541 - Mineable Token Standard Draft, 2018. https://github.com/ethereum/EIPs/pull/918
Logelin J and 0xBitcoin community members. ERC 541 - Mineable Token Standard Draft, 2018. https://github.com/ethereum/EIPs/pull/918

Fabian Vogelsteller and Vitalik Buterin. ERC-20 Token Standard, 2015. URL https://github.com/ethereum/EIPs/blob/master/EIPS/eip-20-token-standard.md.

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