Discussion
foxbody-87 said:
I don’t understand the whole mining thing. Is it comparable to mining a finite material like gold? And how does one actually ‘mine’ a Bitcoin
A Bitcoin is simply a 64 digit equation. And each one takes a huge amount of actual energy to obtain. And there is a finite amount of them.foxbody-87 said:
I don’t understand the whole mining thing. Is it comparable to mining a finite material like gold? And how does one actually ‘mine’ a Bitcoin
Mining is just a stupid name for a computer that processes the transactions. If no-one "mined" then no-one would be able to send or receive cryptocurrency as there needs to be a "central" ledger of all the transactions to make sure they're legit and there are no duplicates. In the cryptocurrency world this task is performed by people "mining" and they get a small amount of the coin currency as a reward for doing so.foxbody-87 said:
I don’t understand the whole mining thing. Is it comparable to mining a finite material like gold? And how does one actually ‘mine’ a Bitcoin
New Bitcoin transaction blocks are generated every 10 minutes. In order for a block to be written to the blockchain, somebody must solve a mathematical puzzle in that time frame. So the miners compete furiously against each other, making currently around 14 quintillion guesses a second at this puzzle. Eventually, one miner gets lucky and is given a reward of 12.5 BTC (~£165k). Thousands of Bitcoin nodes then act like teachers marking homework and verify the block was correctly generated. And then whole process starts again and the next block is mined.This process has been working without failure for 8 years now with 100% uptime and ZERO mistakes or hacks in the mining process. Other financial institutions could only dream of such a robust system. No wonder the banking dinosaurs are trying to spread fear about Bitcoin. They know it’s a threat.
Trolleys Thank You said:
New Bitcoin transaction blocks are generated every 10 minutes. In order for a block to be written to the blockchain, somebody must solve a mathematical puzzle in that time frame. So the miners compete furiously against each other, making currently around 14 quintillion guesses a second at this puzzle. Eventually, one miner gets lucky and is given a reward of 12.5 BTC (~£165k). Thousands of Bitcoin nodes then act like teachers marking homework and verify the block was correctly generated. And then whole process starts again and the next block is mined.
This process has been working without failure for 8 years now with 100% uptime and ZERO mistakes or hacks in the mining process. Other financial institutions could only dream of such a robust system. No wonder the banking dinosaurs are trying to spread fear about Bitcoin. They know it’s a threat.
Brilliant explanation. Thank you. What would one of these mathematical puzzles look like? This process has been working without failure for 8 years now with 100% uptime and ZERO mistakes or hacks in the mining process. Other financial institutions could only dream of such a robust system. No wonder the banking dinosaurs are trying to spread fear about Bitcoin. They know it’s a threat.
Luke. said:
Trolleys Thank You said:
New Bitcoin transaction blocks are generated every 10 minutes. In order for a block to be written to the blockchain, somebody must solve a mathematical puzzle in that time frame. So the miners compete furiously against each other, making currently around 14 quintillion guesses a second at this puzzle. Eventually, one miner gets lucky and is given a reward of 12.5 BTC (~£165k). Thousands of Bitcoin nodes then act like teachers marking homework and verify the block was correctly generated. And then whole process starts again and the next block is mined.
This process has been working without failure for 8 years now with 100% uptime and ZERO mistakes or hacks in the mining process. Other financial institutions could only dream of such a robust system. No wonder the banking dinosaurs are trying to spread fear about Bitcoin. They know it’s a threat.
Brilliant explanation. Thank you. What would one of these mathematical puzzles look like? This process has been working without failure for 8 years now with 100% uptime and ZERO mistakes or hacks in the mining process. Other financial institutions could only dream of such a robust system. No wonder the banking dinosaurs are trying to spread fear about Bitcoin. They know it’s a threat.
Ted2 said:
Mining is just a stupid name for a computer that processes the transactions. If no-one "mined" then no-one would be able to send or receive cryptocurrency as there needs to be a "central" ledger of all the transactions to make sure they're legit and there are no duplicates. In the cryptocurrency world this task is performed by people "mining" and they get a small amount of the coin currency as a reward for doing so.
That's not how it was explained to me. I was of the impression that a new coin could be created from scratch by doing some infinitely long winded mathematical calculations. these get harder and more long winded with other iteration... thus the term 'mining'.
Luke. said:
Trolleys Thank You said:
New Bitcoin transaction blocks are generated every 10 minutes. In order for a block to be written to the blockchain, somebody must solve a mathematical puzzle in that time frame. So the miners compete furiously against each other, making currently around 14 quintillion guesses a second at this puzzle. Eventually, one miner gets lucky and is given a reward of 12.5 BTC (~£165k). Thousands of Bitcoin nodes then act like teachers marking homework and verify the block was correctly generated. And then whole process starts again and the next block is mined.
This process has been working without failure for 8 years now with 100% uptime and ZERO mistakes or hacks in the mining process. Other financial institutions could only dream of such a robust system. No wonder the banking dinosaurs are trying to spread fear about Bitcoin. They know it’s a threat.
Brilliant explanation. Thank you. What would one of these mathematical puzzles look like? This process has been working without failure for 8 years now with 100% uptime and ZERO mistakes or hacks in the mining process. Other financial institutions could only dream of such a robust system. No wonder the banking dinosaurs are trying to spread fear about Bitcoin. They know it’s a threat.
Luke. said:
Brilliant explanation. Thank you. What would one of these mathematical puzzles look like?
Bitcoin uses the SHA-256 hashing algorithm. This takes the contents of the block and runs a hash against it to generate a unique 256 bit identifier.For example, a block with "AAA" as its contents will always produce this hash. cb1ad2119d8fafb69566510ee712661f9f14b83385006ef92aec47f523a38358
That's easy. What's not easy is following Bitcoins fluctuating difficulty rules which states there must be a certain number of leading zeros in the hash for it to be accepted. To do this, miners run the hashing algorithm with a random value added in the block until they get the desired hash. So they'll try, "AAA 1", then "AAA 2" then "AAA 3" and so on trillions and trillions of times until they find a hash like the one below with a sufficient number of leading zeros.
0000000000000000e067a478024addfecdc93628978aa52d91fabd4292982a50
Then they are given the reward.
The Spruce goose said:
I not sure nodes are the teachers, they just are the network nodes, carrying traffic, for no rewards.
Nodes verify the blocks generated by the miners. They don't earn rewards but they are extremely vital parts of the network. If they weren't there, malicious miners could inflate Bitcoin beyond 21 million, funds could be double spent or spent by people who don't own the funds.p1stonhead said:
Maybe a silly question, but where are they generated from? are they in a bitcoin wallet which releases them?
Bitcoin is a ledger system. So the network as a whole simply agrees on who owns what. There is nothing actually generated as such or sent anywhere. When you spend money on Bitcoin, the blockchain is updated to say you now own less than the amount you sent and the receiver owns what they had plus what you sent them. The same works with mining new blocks. The network agrees, "Ok, that miner solved this block, we all agree he now owns an extra 12.5 BTC which didn't exist previously". Edited by Trolleys Thank You on Wednesday 20th December 11:58
Co-founder of Bitcoin.com has sold off all his bitcoins citing risks and moved into Bitcoin Cash (BCH).
https://business.inquirer.net/242768/bitcoin-com-c...
https://nordic.businessinsider.com/the-swedish-fou...
https://business.inquirer.net/242768/bitcoin-com-c...
https://nordic.businessinsider.com/the-swedish-fou...
TTmonkey said:
Ted2 said:
Mining is just a stupid name for a computer that processes the transactions. If no-one "mined" then no-one would be able to send or receive cryptocurrency as there needs to be a "central" ledger of all the transactions to make sure they're legit and there are no duplicates. In the cryptocurrency world this task is performed by people "mining" and they get a small amount of the coin currency as a reward for doing so.
That's not how it was explained to me. I was of the impression that a new coin could be created from scratch by doing some infinitely long winded mathematical calculations. these get harder and more long winded with other iteration... thus the term 'mining'.
FourWheelDrift said:
Co-founder of Bitcoin.com has sold off all his bitcoins citing risks and moved into Bitcoin Cash (BCH).
https://business.inquirer.net/242768/bitcoin-com-c...
https://nordic.businessinsider.com/the-swedish-fou...
The guy is a lunatic. He created Bitcoin Cash with the intention of increasing the size of blocks from 1mb to several gigabytes. The problem with this is that with bigger blocks it becomes increasingly harder for people to run nodes. Not many peoples PCs can afford to lose gigabytes of data every 10 minutes. So with fewer nodes, Bitcoin Cash becomes more centralised and easier to hack or be shutdown by governments and organisations.https://business.inquirer.net/242768/bitcoin-com-c...
https://nordic.businessinsider.com/the-swedish-fou...
The original Bitcoin Dev team are working on some very impressive new technologies solutions such as Schnorr Signatures and the Lightning Network which will reduce the need for increasing the size of blocks in BTC. BCH has no future.
Edited by Trolleys Thank You on Wednesday 20th December 12:37
Trolleys Thank You said:
FourWheelDrift said:
Co-founder of Bitcoin.com has sold off all his bitcoins citing risks and moved into Bitcoin Cash (BCH).
https://business.inquirer.net/242768/bitcoin-com-c...
https://nordic.businessinsider.com/the-swedish-fou...
The guy is a lunatic. He created Bitcoin Cash with the intention of increasing the size of blocks from 1mb to several gigabytes. The problem with this is that with bigger blocks it becomes increasingly harder for people to run nodes. Not many peoples PCs can afford to lose gigabytes of data every 10 minutes. So with fewer nodes, Bitcoin Cash becomes more centralised and easier to hack or be shutdown by governments and organisations.https://business.inquirer.net/242768/bitcoin-com-c...
https://nordic.businessinsider.com/the-swedish-fou...
The original Bitcoin Dev team are working on some very impressive new technologies solutions such as Schnorr Signatures and the Lightning Network which will reduce the need for increasing the size of blocks. BCH has no future.
In the end I think the thing that will handicap Bitcoin will be high transaction fees.
Transactions need to be added to a block by a miner to become part of the blockchain. Transactions take a certain number of bytes of data. And there is only so many bytes in a block. Given that blocks are produced at a certain rate, and there is now a lot of demand for Bitcoin transactions, the transaction cost has shot up.
When you make a transaction you choose a transaction fee. Miners naturally choose to include those that will pay the highest fees.
There is a situation where if you paid a low fee, your transaction may never get paid because there will always be a higher fee to pick. Currently I believe there are 700 million dollars of transactions that won't ever complete!!!
So the Bitcoin will become pointless for low value transactions where the fee is larger or at least a large proportion of the transaction cost. If you are moving millions internationally transaction fees of hundreds would not be a concern though.
This is where etherium, litecoin will eventually be better... faster, so will have lower transaction fees AND you can distribute applications/contracts on the blockchain.
(Please correct me if I got anything wrong)
I am just trying to figure out if cloudmining is viable or if the increasing difficulty offsets anything you earn.
You can buy 1 year contracts. For example 1 terrahash / second costs 220usd, and will mine maybe $2.50 worth of Bitcoin a day at current difficulty and exchange rate. But as more mining capacity comes online, the difficulty will increase, and you are at the mercy of exchange rates and transaction fees.
Exchanges and miners are currently creaming off the top of this surge in popularity.
It's fascinating!
Transactions need to be added to a block by a miner to become part of the blockchain. Transactions take a certain number of bytes of data. And there is only so many bytes in a block. Given that blocks are produced at a certain rate, and there is now a lot of demand for Bitcoin transactions, the transaction cost has shot up.
When you make a transaction you choose a transaction fee. Miners naturally choose to include those that will pay the highest fees.
There is a situation where if you paid a low fee, your transaction may never get paid because there will always be a higher fee to pick. Currently I believe there are 700 million dollars of transactions that won't ever complete!!!
So the Bitcoin will become pointless for low value transactions where the fee is larger or at least a large proportion of the transaction cost. If you are moving millions internationally transaction fees of hundreds would not be a concern though.
This is where etherium, litecoin will eventually be better... faster, so will have lower transaction fees AND you can distribute applications/contracts on the blockchain.
(Please correct me if I got anything wrong)
I am just trying to figure out if cloudmining is viable or if the increasing difficulty offsets anything you earn.
You can buy 1 year contracts. For example 1 terrahash / second costs 220usd, and will mine maybe $2.50 worth of Bitcoin a day at current difficulty and exchange rate. But as more mining capacity comes online, the difficulty will increase, and you are at the mercy of exchange rates and transaction fees.
Exchanges and miners are currently creaming off the top of this surge in popularity.
It's fascinating!
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