“Bitcoin”  has been a successful implementation of the concept of p2p electronic cash. Both
professionals and the general public have come to appreciate the convenient combination of
public transactions and proof-of-work as a trust model. Today, the user base of electronic cash
is growing at a steady pace; customers are attracted to low fees and the anonymity provided
by electronic cash and merchants value its predicted and decentralized emission. Bitcoin has
effectively proved that electronic cash can be as simple as paper money and as convenient as
Unfortunately, Bitcoin suffers from several deficiencies. For example, the system’s distributed
nature is inflexible, preventing the implementation of new features until almost all of the network users update their clients. Some critical flaws that cannot be fixed rapidly deter Bitcoin’s
widespread propagation. In such inflexible models, it is more efficient to roll-out a new project
rather than perpetually fix the original project.
In this paper, we study and propose solutions to the main deficiencies of Bitcoin. We believe
that a system taking into account the solutions we propose will lead to a healthy competition
among different electronic cash systems. We also propose our own electronic cash, “CryptoNote”,
a name emphasizing the next breakthrough in electronic cash.