dont quite understand mining?

[curiousone]

Is Bitcoin mining a fictitious concept which allows a slow, predictable growth of the currency?  Or when users are "mining" this data, is there legitimate calculations which benefit a company some where being used as processor bandwidth?  I don't quite understand yet, please help!

Thanks

[c0m47053]

It's the former, the hashes being generated are just there to make mining (variably) difficult.

[minor_miner]

When you are mining, you are solving for Hashes of the so called "Blocks", which contain all the transaction Data of Bitcoins being traded.

If you happen to find a Hash which is below the actual difficulty, you get a reward.

The difficulty is dynamic and regulated, so that there is one reward (50 BTC at the moment, will be decreased in the future) found every ten minutes in average.

[as3ard]

"50 BTC at the moment, will be decreased in the future"

When will that happen and who will decide it? Or is it hard coded in the model based on some calculation? Please enlighten me

[drawoc]

Mining does serve the purpose of generating new blocks as well. Each block contains information about recent transactions, which helps all of the bitcoin clients stay on the same page about what's going on. The bulk of the work, however, isn't very useful. Like c0m47053 said, the majority of your computer power is just to slow down mining - for issuing new Bitcoins at a steady rate.

[drawoc]

"50 BTC at the moment, will be decreased in the future"

When will that happen and who will decide it? Or is it hard coded in the model based on some calculation? Please enlighten me

The 50 btc is cut in 1/2 every 210,000 blocks. Each block lasts 10 minutes (on average).

Edit: you can also monitor the total # of BTC here: http://blockexplorer.com/q/totalbc

[minor_miner]

When will that happen and who will decide it? Or is it hard coded in the model based on some calculation? Please enlighten me

Hard coded.

It's halved every 210,000 Blocks, so the closer we are to 21,000,000 BTC generated, the closer this reward will go towards 0.

Below, there's an estimation:

https://en.bitcoin.it/w/images/en/e/e3/Total_bitcoins_over_time_graph.png

Miners will, however, always get the transaction fees that people are willing to add onto their transactions (check yout Bitcoin settings for that).

[curiousone]

this concept is absolute genius.  I intend to put my support behind bitcoins 100%, and put an end to all these gluttonous banks.

[minor_miner]

this concept is absolute genius.  I intend to put my support behind bitcoins 100%, and put an end to all these gluttonous banks.

Quoted for truth - we need more people like you

[Tronlet]

To put it in a little more simple terms that explain the concept of mining bluntly:

For the sake of this explanation, let's say your computer is a super old computer that can only do calculations very slowly.

When your computer mines, it is generating random values over and over again, let's say numbers between 1 and 1,000,000.

To get a block of bitcoin, the random value it generates must be below a certain number, for example 100,000. So on average, your super-slow computer would get a block after 10 attempts, since 100k is a tenth of one million. To ramp up the difficulty, the number it must be below can be decreased to 50k, making it twice as hard, or further to 10k, or 1k, or 1, etc.

The bitcoin client dynamically sees how fast bitcoins are being created and adjusts the difficulty here and there so that the speed blocks are gained at will always stay at an average of 10 minutes per block. And as people before me have described, every 210k blocks the amount halves. So when we reach 210k blocks, the reward will be 25 bitcoins per block, not 50.

See the current block count of all of Bitcoin here: http://blockexplorer.com/q/getblockcount

Hope that answered some questions.

[Gabi]

Welcome curiousone