Bitcoin: A Peer-to-Peer Electronic Cash System¶

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The incentive can also be funded with transaction fees. If the output value of a transaction is less than its input value, the difference is a transaction fee that is added to the incentive value of the block containing the transaction. Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free.

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If we suppose blocks are generated every 10 minutes, 80 bytes * 6 * 24 * 365 = 4.2MB per year. With computer systems typically selling with 2GB of RAM as of 2008, and Moore's Law predicting current growth of 1.2GB per year, storage should not be a problem even if the block headers must be kept in memory.

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This theory didn't scale well. But the issue with storage becoming too large because of node size is resolved by trimming the Merkle tree, as described in the section "Simplifying Payment Transactions."

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One strategy to protect against this would be to accept alerts from network nodes when they detect an invalid block, prompting the user's software to download the full block and alerted transactions to confirm the inconsistency. Businesses that receive frequent payments will probably still want to run their own nodes for more independent security and quicker verification.

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This method is pretty amazing. Businesses being able to run their own nodes for verification purposes is a great way to protect the integrity of internal tools like points or rewards systems and internal or personal documentation.