Bitcoin Forum

Imagine I am an alien that just landed here.

I learn a bit about Bicoins, and I ask: What is the computational power of the GPU used for while he is mining?

The product of such computational power put into work has a functional (or usable) product?

OR are these just "made up" or "blank" calculations that solely require work?

Thanks

Simple answer: It secures the network.

In a way, these are made up blank calculations that solely require work.

As rezin777 explains, requiring that miners do some sisyphean labor before they can submit a block secures the network.

It's not doing any sort of "useful" distributed computing or anything like that, if that's what you're asking.  Nobody's using Bitcoin to do desired computations; the computations are just for the purpose of, as the others have said, securing the network by making it really hard to fake transactions.

I'm going to piggyback on benyben's question here.

I understand that by doing this, we secure the network, however, here's my question: WHY are we being "paid"? Is it because we are securing this network? To me, payment comes from doing work, but since we're not actually using Bitcoin's power to do computations or solve complex algorithms, it seems odd that we're being awarded to, in my view, do nothing.

The only reason I could think of is using it as an incentive to help push it into the online community.

Am I missing something here?

In a way, yes.  But mostly because any monetary system has to have the initial distribution somehow, and distributing the currency based on the contributions towards blockchain security is about the most equitable as can be devised for an anonymous, digital currency.  Eventually that initial distribution cycle will taper to zero, and then miners will be "paid" to process transactions, but the method of processing transactions also contributes to the ongoing security of the blockchain in like manner.

If there were a way to secure the network while also contributing to useful computational projects, we would likely do that.  But there isn't any way to do this.  The compuations can either be useful for some altruistic project or be useful for blockchain security; but not both.

Payment comes from providing value. Securing the Bitcoin network is valuable.

If there was no incentive to mine, people wouldn't mine and the network would be easily destroyed.

It uses your hardware to perform cryptographic one-way hash functions (which are essentially possible to fake) to solve what amounts to a puzzle where there is one solution for each block.  The prize for solving the puzzle is 50 BTC. 

The work itself doesn't result in useful data if that is what you are asking.