The lottery analogy doesn't sit right with me

[dadj]

Hi.
I was listening to a podcast the other day and they were talking about how mining bitcoins was similar to purchasing lottery tickets. I think this is a bad way to explain bitcoin mining to someone because the design of the analogy is to demonstrate difficulty in the mining process.

Now in a lotto draw that most people are familiar with there are a fixed amount of numbers that you need to guess. There is a mathematical calculation to do with combinations or permutations to work out the probability. As more people enter the lottery, there is no variation on the probability of winning for any one individual.

Where this analogy does work is if it is explained as one individual buying multiple lotto tickets, but unfortunately it never seems to be explained in this way.

I propose that instead of relying on the lottery analogy that we concentrate on a raffle ticket analogy, where it is crystal clear that the more tickets someone gets the higher chance they have of winning compared to someone who just buys one.

[FreeMoney]

Someone wins a raffle every time the dude pulls a ticket from the bin, bitcoin mining isn't like that.

Every time you increase your nonce and make a hash you have a fixed chance of winning (finding a valid block) regardless of whether everyone else just turned their miners off or if 1000 ASICs just came online. Later (every 2016 blocks) the requirement for a winner will change, but it is always an individual thing in the moment.

I think it is usually assumed that every miner is getting tons of these tickets in proportion to their mining speed, maybe it should be made explicit.

[BkkCoins]

I propose that instead of relying on the lottery analogy that we concentrate on a raffle ticket analogy, where it is crystal clear that the more tickets someone gets the higher chance they have of winning compared to someone who just buys one.

What's the difference between buying lot of raffle tickets and buying lots of lottery tickets?

[dadj]

Someone wins a raffle every time the dude pulls a ticket from the bin, bitcoin mining isn't like that.

True, though let's focus a bit more on the analogy of lottery vs raffle.

Every time you increase your nonce and make a hash you have a fixed chance of winning (finding a valid block) regardless of whether everyone else just turned their miners off or if 1000 ASICs just came online. Later (every 2016 blocks) the requirement for a winner will change, but it is always an individual thing in the moment.

So as I understand every nonce increase / hash is a lotto ticket. In a lottery the difficulty doesn't change for any one draw. So with a difficulty adjustment this could be equated with a different lotto draw.

I think it is usually assumed that every miner is getting tons of these tickets in proportion to their mining speed, maybe it should be made explicit.

The issue still is that in a lotto draw buying multiple tickets increases your chance of winning but everyone else's probability of winning is unaffected (static winning numbers, prize is divided among winners).

I propose that instead of relying on the lottery analogy that we concentrate on a raffle ticket analogy, where it is crystal clear that the more tickets someone gets the higher chance they have of winning compared to someone who just buys one.

What's the difference between buying lot of raffle tickets and buying lots of lottery tickets?

In an unlimited raffle draw, when you buy tickets other people's chances decrease (static prize, variable entries).

[dadj]

Bitcoin block reward is definitely more like a raffle prize which only goes to one person, rather than a 1st division lotto prize which goes to whoever picked the winning numbers.

Also in a raffle if the winning ticket holder isn't present, a redraw happens and the next present winning number is awarded - very similar to bitcoin.

[hamdi]

mining is work

[FreeMoney]

mining is work

So is buying and checking 1000000+ lottery tickets per second. Analogy holds :-)

[FreeMoney]

Someone wins a raffle every time the dude pulls a ticket from the bin, bitcoin mining isn't like that.

True, though let's focus a bit more on the analogy of lottery vs raffle.

Every time you increase your nonce and make a hash you have a fixed chance of winning (finding a valid block) regardless of whether everyone else just turned their miners off or if 1000 ASICs just came online. Later (every 2016 blocks) the requirement for a winner will change, but it is always an individual thing in the moment.

So as I understand every nonce increase / hash is a lotto ticket. In a lottery the difficulty doesn't change for any one draw. So with a difficulty adjustment this could be equated with a different lotto draw.

I think it is usually assumed that every miner is getting tons of these tickets in proportion to their mining speed, maybe it should be made explicit.

The issue still is that in a lotto draw buying multiple tickets increases your chance of winning but everyone else's probability of winning is unaffected (static winning numbers, prize is divided among winners).

I propose that instead of relying on the lottery analogy that we concentrate on a raffle ticket analogy, where it is crystal clear that the more tickets someone gets the higher chance they have of winning compared to someone who just buys one.

What's the difference between buying lot of raffle tickets and buying lots of lottery tickets?

In an unlimited raffle draw, when you buy tickets other people's chances decrease (static prize, variable entries).

Ok, I'm tired now, but I think I follow.

[rebuilder]

So much energy goes into explaining mining to people who should be told why they would want to use Bitcoin in the first place. It's like you explained a city to someone who's never seen one, and mainly concentrated on telling them how the plumbing works and how much money plumbers make.

[deepceleron]

Exactly like a lottery - every time you attempt to find a block hash, you have a 1 in 14,475,041,481,077,218.113685271027695 chance of finding one, right now anyway.

It's like if you see a penny on the ground that could be worth 25 BTC, but to flip it over in order to check if it's a winner, you first need to perform about 6000 various math operations (addition, and and ors, shifts, rotations) on a 154 digit long number.

And the odds of the penny being a winner are small. Like if you lined up pennies that wrapped around the whole Earth, and only one of them was a winner, except it's 6,804,178 times around the Earth, more like a wall of pennies 10KM high around the entire equator of the Earth. Find the penny that's a winner.

[BkkCoins]

Exactly like a lottery - every time you attempt to find a block hash, you have a 1 in 14,475,041,481,077,218.113685271027695 chance of finding one, right now anyway.

It's like if you see a penny on the ground that could be worth 25 BTC, but to flip it over in order to check if it's a winner, you first need to perform about 6000 various math operations (addition, and and ors, shifts, rotations) on a 154 digit long number.

And the odds of the penny being a winner are small. Like if you lined up pennies that wrapped around the whole Earth, and only one of them was a winner, except it's 6,804,178 times around the Earth, more like a wall of pennies 10KM high around the entire equator of the Earth. Find the penny that's a winner.

F me. That was great.

[dadj]

Exactly like a lottery - every time you attempt to find a block hash, you have a 1 in 14,475,041,481,077,218.113685271027695 chance of finding one, right now anyway.

It's like if you see a penny on the ground that could be worth 25 BTC, but to flip it over in order to check if it's a winner, you first need to perform about 6000 various math operations (addition, and and ors, shifts, rotations) on a 154 digit long number.

And the odds of the penny being a winner are small. Like if you lined up pennies that wrapped around the whole Earth, and only one of them was a winner, except it's 6,804,178 times around the Earth, more like a wall of pennies 10KM high around the entire equator of the Earth. Find the penny that's a winner.

It's similar to a lottery. There is an important difference, though. If 2 people both choose the right numbers in a lottery scenario then they have the prize divided between them. In a raffle, only one person is rewarded with the 25 BTC prize.

So although most people seem to be comfortable with a lottery analogy, it really is misleading as to how exactly bitcoin mining works, IMO.

[dadj]

I changed 'lottery' to 'raffle draw' on the FAQ page https://en.bitcoin.it/wiki/FAQ#How_are_new_bitcoins_created.3F

[Pieter Wuille]

Every block attempt is like a lottery ticket, but the game is reset as soon as there is a winner. So if you just look at who wins, from the set of all coins to be generated, it's like a raffle (there is always exactly one winner for each block).

[dadj]

Every block attempt is like a lottery ticket, but the game is reset as soon as there is a winner. So if you just look at who wins, from the set of all coins to be generated, it's like a raffle (there is always exactly one winner for each block).

Why is a block attempt (or a hashing) more like a lottery ticket than a raffle ticket?

The question for this lotto/raffle analogy was: 'How are bitcoins created?'

I understand the lotto analogy works for people who equate choosing a set of numbers to an attempt of doing mathematical work. But for a simple analogy to explain how bitcoins are created, I think the idea of linking lottery and mathematical work is a complex idea, given that everyone understands that if two people win a lottery they both get the prize.

It could get very confusing when bitcoiners try to explain how bitcoins are created by using both the lottery and the raffle concepts. Everyone knows what lotto is and everyone knows what raffles are. I think the raffle analogy is a better one.

I see what you're saying about the game is reset is similar to the way a lottery works. It would still be better described as a continuous raffle draw. People know raffle draws can be gamed by purchasing more tickets and then have it automatically in their head that only one person gets the prize. You don't need to change the concept of lotto and explain to them that the 1st division prize only goes to one person.

Also lotto is a lot harder to win than raffles which would take a lot of the mystery and impossibleness out of bitcoin mining for laypeople.