Bitcoin Mining? Really?

[sk8bo]

Hello guys,

I have been interested in currency trading since 2011 and I have pretty much learned the basics (even more probably) of the day trading, technical and fundamental analysis. I understand the concept of the Bitcoin and its trading in general.

What I do not understand is how the hell you could mine a currency. Everywhere I read that people mine BTC and they invest in improving their home PC stations in order to mine BTC faster. People share that they do BTC mining but nobody explains the process of mining. Who is paying you BTC in order to perform "mining" and why are you paid to do "mining".

And please, do not compare BTC mining with gold mining for example. You cannot create gold from thin air ...yet.

I would be grateful if you share your visions with me here.

Regards,

D.

[_Miracle]

Fine then..."minting".

[brucemangy]

Miners takes data related to the last transactions on the network, the hash of the previous block, add some random (in brute force) and try to get a hash that starts with leading ZEROs in the resulting HASH.
If enough 0 are found, (it's related to difficulty) you get a block and a reward. For bitcoin, since november 2012, it's 25 BTC+fees of added transactions.

Mining is the process of securing the transactions (by making it hard to forge fake blocks) and also CREATE the crypto currency. BTC are created ex nihilo ... but in exchange of a crypto challenge...


hope this can help you ... keep reading ...

[malefice]

Hello guys,

I have been interested in currency trading since 2011 and I have pretty much learned the basics (even more probably) of the day trading, technical and fundamental analysis. I understand the concept of the Bitcoin and its trading in general.

Without minig you don't understand bitcoin.
https://www.youtube.com/watch?v=Lx9zgZCMqXE

[Trongersoll]

In simple terms, Bitcoin mining is turning electricity into money. you have hardware that runs and at a given rate and returns a certain number of bitcoins. The more efficient the hardware is in speed and power usage, the more bitcoin you make. The lower the per gigahash price is, the more likely you are to make a profit. Or, at least earn back your investment.

There are also outside factors affecting your return, such as the BTC exchange rate.

[Sonny]

When a block is found (unless orphaned), some unconfirmed tx will get their first confirmation, and those confirmed tx will get one more confirmation. So, mining is a critical part of the bitcoin world.

At first, miners were rewarded with 50btc for each block found, and it gets halved ~every 4 years.

[J_Dubbs]

http://www.youtube.com/watch?v=LjBZCKgFyNY
"really"

"yeah"

[J_Dubbs]

http://www.youtube.com/watch?v=LjBZCKgFyNY
"really"

"yeah"

even better
http://www.youtube.com/watch?v=YllVvCrnYXs

[iglasses]

I could share my visions with you but I doubt they would help you understand BTC mining because they usually involve naked ladies...sometimes doing pee pee.

[Mr.Bitty]

Please keep mining me cause  I love you All!!!!!

[SherdonIke]

Thanks malefice, the video https://www.youtube.com/watch?v=Lx9zgZCMqXE did explain a few points to me.

[mokahless]

Below, "Bitcoin" is the protocol and "bitcoin" is a unit of currency.

What you are missing is that Bitcoin is a protocol.

The code is open source.

Transactions require verification and miners do this, attempting to find a hash value that works with the previous hash value of the last block. This process solidifies transactions to prevent double spending. Essentially, verifying the Bitcoin ledger.

The protocol/ code of Bitcoin itself is responsible for issuing new bitcoins. These bitcoins are not issued by people; they are issued by the Bitcoin system automatically. This is part of the whole idea behind Bitcoin where no person can control any part of the system or inflate it at will like the FED can with the US dollar. This is part why Bitcoin is so important. It is a completely autonomous currency experiment, among other very amazing innovations in what can be done with the technology.

The newly issued coins become a new transaction with no inputs and just an output to the address of the miners. Only the process of mining can create transactions without inputs (a source).

The issuance is automatically controlled and set to an average rate of introducing 25 new XBT into the system per 10 minutes. This halves every ~4 years, resulting in controlled inflation of the amount of bitcoins in the system to eventually result in a static number, after which the transaction fees will encourage miners to continue verifying transactions.

To be a bit more detailed, mining attempts to find the correct hash by guessing at billions of hashes per second until a valid hash is found. The protocol itself adjusts the average rate needed to find a block such that no matter how much power is thrown at the network, a set number of bitcoins, and no more, will be introduced every 10 minutes.

[nezarkadhem]

Here is another way to look at it: Mining is the only way governments can't interfere with bitcoin. The bitcoin network requires "power" to function, so the "power" can either come from a server farm OR come from PCs and machines scattered all over the world. If the farm was located on one place, a government can easily shut it down.

So when you plug your computer in the wall, and so do computers in India, China, Australia, Brazil, Saudi Arabia, and almost every country in world, NO ONE can interfere and shutdown bitcoin = hence decentralized currency. And for your contribution in "powering" the network, you get compensated in bitcoin. Genius don't you think?

[kthejung]

"Mining" bitcoins is lending computing power to make transactions and secure the bitcoin server in exchange for a reward in bitcoins. 

[LogicalUnit]

What I do not understand is how the hell you could mine a currency. Everywhere I read that people mine BTC and they invest in improving their home PC stations in order to mine BTC faster. People share that they do BTC mining but nobody explains the process of mining. Who is paying you BTC in order to perform "mining" and why are you paid to do "mining".

And please, do not compare BTC mining with gold mining for example. You cannot create gold from thin air ...yet.

You need to read up on the basics of bitcoin. In my own words, mining is the process of validating transactions, and being paid a reward when you do so. It is not "creating money from thin air". It requires time and computational power to do. You could call it "minting" if you like. The difference is that bitcoins are minted at a steady, predictable rate -- whereas fiat currency can be controlled by banks.

[donnysimonton]

I think the biggest thing to know about explaining mining or even Bitcoins, is who is your audience.  If you are talking to a non-technical person, sure you can tell them you are making money out of thin air.  But if you are telling somebody else, all of the definitions here are great.

[quarkyplum]

Please keep mining me cause  I love you All!!!!!

THANK YOU Mr. Bitty, I am encouraged to mine!!!

[sk8bo]

Ok. So far so good.

What I understood from reading your posts is that the ''mining" process of the different PC machines all over the word is responsible for the code of every Bitcoin transaction, and for providing servers, which support the Bitcoin without having it centralized on one place. I hope I got it right.

But I still do not understand, whos pocket does the money for mining come from. Who pays you to mine?

In one of the previous posts I read somewhere that miners transfer electricity into money, which kinda sounds like written by someone who know as much as I do.

Regards,

D.

[studio1one]

Ok. So far so good.

What I understood from reading your posts is that the ''mining" process of the different PC machines all over the word is responsible for the code of every Bitcoin transaction, and for providing servers, which support the Bitcoin without having it centralized on one place. I hope I got it right.

But I still do not understand, whos pocket does the money for mining come from. Who pays you to mine?

In one of the previous posts I read somewhere that miners transfer electricity into money, which kinda sounds like written by someone who know as much as I do.

Regards,

D.

It doesn't come from anyone's pocket.  Coins are generated by the protocol as a reward for confirming transactions and keeping the ledger in order. You say you understand the concept of bitcoin but you don't.  The reward for proof of work is at the very core of what bitcoin is. The self management of the network by its users proving that all transactions are present and correct is at the core of what bitcoin is.  And it is this process that generates or you could say releases new coins. Imagine it like this. When satoshi created bitcoin he created a fixed amount of coins too. They were held back in cold storage to be used as rewards for people using their computers to keep checking over and over that the blockchain (ledger) was still all correct and i'm working order.  Once a block of transactions had been proved to be all in order some of the coins in cold storage would be released from cold storage and given to the computer that confirmed the block of transactions was correct as a reward.


This next bit is technically incorrect but is an easy way to understand.

The longer we go on the harder it is to confirm the ledger is still correct because it contains every transaction ever made so it takes more computing power to check over and confirm there are  no errors. This means it gets harder and harder to confirm and more powerful computer and computing power is needed to release the coins in cold storage.

[polarhei]

Mining contains many errors so people use the term to describe what they have been doing.

1 tonne ore to search just 4 grams of gold. In fact, we have been trying to find the combination with the pattern given.