Do I understand proof-of-work correctly?

[Alonzo Ewing]

It seems like the consensus boils down to the fact that miners want to make money. 

In other words, no miner wants their work to be for naught, so they want to choose the same version of the blockchain they think everyone else will choose.  If they did choose the wrong version of the blockchain, their mining rewards would be rendered worthless. 

This results in a "lots of versions of the blockchain" being an unstable state, and "single blockchain" being a stable state.  Consensus is achieved.

It's all because of the incentive to make money.

Is this correct?

[Alonzo Ewing]

Anyone?

[t1000]

Forks of the block chain win by length. Bitcoin is democratic. By mining on top on a given fork, you are "voting" on the fork you agree with.

Usually there is only one block chain that everyone agrees to. Sometimes there are conflicts, e.g. if 2 miners in different parts of the world submitting a block at the same time.

From one end of the world, the block chain looks like:

Last block -> Miner A's block -> ?

From the other end of the world, the block chain looks like:

Last block -> Miner B's block -> ?

All over the world, miners will see these two blocks in different orders, and will decide to mine on top of one chain or the other depending on the order the blocks arrived at them.

Obviously Miner A will mine on Last block -> Miner A's block -> ? and Miner B will mine on Last block -> Miner B's block -> ?

Eventually one fork gets longer more quickly and wins, the other fork gets orphaned.

Sometimes you hear people mentioning 51% attacks. This is when a miner, say Miner A, has enough hashing power to ignore seeing

Last block -> Miner B's block -> ?

and produce

Last block -> Miner A's block -> Miner A's block -> ?

fast enough to WIN.

[Alonzo Ewing]

Thanks.

But what incentivizes miners to mine on the longest fork?

[DeathAndTaxes]

Thanks.

But what incentivizes miners to mine on the longest fork?

The longest* fork has the greatest chance of remaining the longest fork.  All other forks will be orphaned and any generated coins on orphaned forks are worthless.  It is in a miners self interest to avoid worthless coins and that means always building off the longest fork.  Thus when miners learn that another block has been found which extends the primary chain they will switch and build off of that.  Doing anything else means a reduction in income.


* Longest technically means the most work not necessarily the most blocks as Bitcoin selects as the primary chain the one with the highest collective difficulty.

[Alonzo Ewing]

OK cool, that's basically what I was trying to say in my first post.  There's a financial incentive toward a single fork (the longest fork).  Consensus for the "correct" blockchain is achieved via financial incentive.