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demiu5
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trying to understand bitcoin mining
#23506270 - 08/03/16 04:06 PM (7 years, 5 months ago) |
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i've been reading a ton about this lately, and still don't understand what's going on. the mining process itself makes sense, from the front-end, but what i don't understand is the purpose behind it.
this is how i'm understanding it. there is a set of transactions that form a block. the block becomes full, is sealed, and then authenticated. WHY does processing the algorithms equate to a percentage of coin? where did the initial block of transactions originate from?
folding@home makes significantly more sense than mining. folding takes processing power and allows a group of researchers to use that power to run their own formulas/algorithms which go on to aid in medical advances.
what is actually accomplished with the processing power of bitcoin mining, beyond a cyclical sealing/authenticating of "transaction" blocks?
i've no interest in participating in bitcoin, but i am fascinated with the process and want to understand it better. nothing i've read touches on what is ACTUALLY happening outside of the cycle mentioned above
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Yrat
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Re: trying to understand bitcoin mining [Re: demiu5]
#23524492 - 08/09/16 10:16 AM (7 years, 5 months ago) |
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Quote:
demiu5 said:
what is actually accomplished with the processing power of bitcoin mining, beyond a cyclical sealing/authenticating of "transaction" blocks?
bitcoins are being "mined," or discovered/claimed out of a finite total number of rewardable coins. think of mining as a race to win a portion of a limited number of remaining un-mined coins.
the set limit of bitcoins that will ever be in existence is 21 million. i think the current supply of mined bitcoins is around 15 million. that means that there are about 6 million more bitcoins up for grabs, obtainable by mining. http://bitcoin.stackexchange.com/questions/161/how-many-bitcoins-will-there-eventually-be
the race to obtain these rewarded coins is through attempting to find a specific hash function input that leads to a specific output. the more processing power you have, the more hashes per second you can perform and the more likely it is that you will stumble across the correct hash input first. if you find the correct input, which represents a correct list of all of the most recent transactions on the blockchain, that input is then broadcast to the network. if the network verifies the input as correct, it is sealed as the next block in the chain, and the miner is rewarded coins for being the first to discover the input that finalized the latest block.
https://www.quora.com/What-does-Bitcoin-hash-rate-mean
this will continue until all bitcoins are mined, but the reward for each block is halved every so often. the latest halvening just occurred a few weeks ago.
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demiu5
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Re: trying to understand bitcoin mining [Re: Yrat]
#23524523 - 08/09/16 10:31 AM (7 years, 5 months ago) |
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thanks for the reply.
i understand everything you mentioned. i'm asking...what is actually gained, besides the end-user obtaining bitcoins? why all this computing power to simply process/authenticate/seal ---> repeat blocks of data that only pertain to this process or transactions involving the coins? the whole mining process is cyclical and only relates to the process itself, with no other real-world results.
like i compared it to folding@home. the output power has a TANGIBLE result, that is, the computing power translates into algorithms being processed for scientific research.
i understand that all currencies are inherently worthless, and the only thing that gives them value is the people using X-currency and agreeing on the value (essentially, not taking into consideration the backers' interest rates, etc...)
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Yrat
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Re: trying to understand bitcoin mining [Re: demiu5]
#23524651 - 08/09/16 11:26 AM (7 years, 5 months ago) |
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i see what you are asking.
in the end, think of the bitcoin as representing the electrical energy that was consumed by the entire network trying to mine that bitcoin.
sort of like how the inherent value of gold represents the energy expended to discover, mine and refine it from the earth's crust.
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viktor
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Re: trying to understand bitcoin mining [Re: Yrat]
#23527736 - 08/10/16 09:38 AM (7 years, 5 months ago) |
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> the inherent value of gold represents the energy expended to discover, mine and refine it from the earth's crust.
no
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Yrat
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Re: trying to understand bitcoin mining [Re: viktor]
#23528201 - 08/10/16 01:09 PM (7 years, 5 months ago) |
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try harder.
if you disagree, explain why you think thousands of years of free markets throughout countless human civilizations determined gold to be the best form of money.
or do you just think humans like shiny rocks?
-------------------- "There are a thousand hacking at the branches of evil to one who is striking at the root." -Henry David Thoreau Strike The Root
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viktor
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Re: trying to understand bitcoin mining [Re: Yrat]
#23529983 - 08/11/16 12:26 AM (7 years, 5 months ago) |
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Okay, consider this.
There is a currency called a "Shitcoin".
The only way to earn a Shitcoin is to manually get a shovel and dig a hole equalling one cubic metre in size, then to fill it back in again.
Every time you dig a one cubic metre hole and then fill it in again, you get one Shitcoin.
What is the value of a Shitcoin, considering the energy expended in digging a hole and then filling it in again?
-------------------- "They consider me insane but I know that I am a hero living under the eyes of the gods."
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Yrat
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Re: trying to understand bitcoin mining [Re: viktor]
#23530494 - 08/11/16 07:32 AM (7 years, 5 months ago) |
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the value is exactly what the market determines it should be according to the energy you expended. if no one wants your shitcoin, the value is zero. if there is demand, it is greater than zero. obviously gold and bitcoin have value as determined by markets, since the time and energy expended in producing them has been determined to be valuable.
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Maroon
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Re: trying to understand bitcoin mining [Re: Yrat]
#23530736 - 08/11/16 08:49 AM (7 years, 5 months ago) |
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I've always thought the draw of Bitcoin was that the federal reserve and modern money policies have become so unregulated and I falter that they're worthless my
I thought the mere fact they set a finite amount of bitcoins is what made it inherently valuable. A sort of made up gold standard insuring bankers can't just make new dollars to keep from giving to the 99%
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Yrat
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Re: trying to understand bitcoin mining [Re: Maroon]
#23530747 - 08/11/16 08:52 AM (7 years, 5 months ago) |
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right. it is comparable to a digital gold standard. a finite supply that can't be inflated by the whims of bankers. this is what people like about it. the downside is that it only works for as long as the internet exists.
-------------------- "There are a thousand hacking at the branches of evil to one who is striking at the root." -Henry David Thoreau Strike The Root
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howsyournaggerdoin
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Re: trying to understand bitcoin mining [Re: Yrat]
#23530768 - 08/11/16 09:00 AM (7 years, 5 months ago) |
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Bitcoin mining isnt worth it atm unless you have insane computing power. I used to do it a few years ago when it was easy and actually made a lot of money this way. Now youll probably only make a few cents.
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geokills
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Re: trying to understand bitcoin mining [Re: demiu5]
#23538501 - 08/13/16 05:05 PM (7 years, 5 months ago) |
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Quote:
demiu5 said: i understand everything you mentioned. i'm asking...what is actually gained, besides the end-user obtaining bitcoins? why all this computing power to simply process/authenticate/seal ---> repeat blocks of data that only pertain to this process or transactions involving the coins? the whole mining process is cyclical and only relates to the process itself, with no other real-world results.
like i compared it to folding@home. the output power has a TANGIBLE result, that is, the computing power translates into algorithms being processed for scientific research
The tangible result of the mining process is a self sustaining decentralized peer reviewed network which is required in order to achieve a tamper-free currency product. The mining reward incentivizes participants to provide active computing power which supports the network, thus making the network practically operable. If there were no value incentive to support the network, few would bother to verify transaction blocks, and transaction processing would slow to insufferable standards, thus the whole system would fall apart. No buyer or seller wants to use a currency that takes days to process. For the currency to be practically feasible, the delay in confirming a transaction (i.e. making a buyer's currency available to the seller) must be kept to a minimum.
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Yrat
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Re: trying to understand bitcoin mining [Re: geokills]
#23538835 - 08/13/16 07:43 PM (7 years, 5 months ago) |
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geo has done his homework
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demiu5
humans, lol


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Re: trying to understand bitcoin mining [Re: geokills]
#23539062 - 08/13/16 09:34 PM (7 years, 5 months ago) |
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Quote:
geokills said:
Quote:
demiu5 said: i understand everything you mentioned. i'm asking...what is actually gained, besides the end-user obtaining bitcoins? why all this computing power to simply process/authenticate/seal ---> repeat blocks of data that only pertain to this process or transactions involving the coins? the whole mining process is cyclical and only relates to the process itself, with no other real-world results.
like i compared it to folding@home. the output power has a TANGIBLE result, that is, the computing power translates into algorithms being processed for scientific research
The tangible result of the mining process is a self sustaining decentralized peer reviewed network which is required in order to achieve a tamper-free currency product. The mining reward incentivizes participants to provide active computing power which supports the network, thus making the network practically operable. If there were no value incentive to support the network, few would bother to verify transaction blocks, and transaction processing would slow to insufferable standards, thus the whole system would fall apart. No buyer or seller wants to use a currency that takes days to process. For the currency to be practically feasible, the delay in confirming a transaction (i.e. making a buyer's currency available to the seller) must be kept to a minimum.
that makes much more sense.
thanks
-------------------- channel your inner Larry David
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