Bitcoin is Based on Proof and Not on Trust

[hd49728]

Future blocks must be based on past blocks and past data of Bitcoin public ledger to move and confirm new blocks.

It's clear that Bitcoin Proof-of-Work blockchain is based on proof of works. Proof from works of miners on the network and these proofs are stored in Bitcoin nodes, full nodes, prune nodes and its public ledger. With many nodes, the blockchain data is stored on many locations and totally decentralized by geographical locations.

Miners and nodes don't work based on trust but they assess data from other nodes, other miners before adding new blocks to their node data base.

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[franky1]

blockchains are simply a batch of data(a block of data) where that block is linked to a previous block, thus chaining the blocks.. thus blockchain


blockchains are based on new blocks acceptance as viable my many rules and features needed, main one firstly is by including reference to a previous block. meaning the newest block could not have existed/been formed/mined before the previous block, due to needing the previous blocks reference to create the newest block thus blocks become a "proof of time"(the "timestamp" term used in bitcoin is not based on actual unix time of a day/hour format. but based on a physics and math fact of 'this block was made after that block' proof)

then comes the proof of work which not only adds complexity to the hash calculation of a block reference to ensure that effort was put into it, meaning attackers need effort too.. but also comes at a cost for that effort(electric/hardware)
the reason for the effort is that.
if it costs someone X to make 1 block then it costs X^N to make N blocks. making it more expensive to try going back and editing old blocks and then trying catching up again to outcompete a good healthy chain that just moves forward

to cover costs of this miners would calculate their costs. and refuse to sell their rewards for that time cost at a loss. but want to sell at a premium(profit) which case, enters the premium(public exchanges)

these become speculative as those with higher costs find it easier to acquire coin buy buying it when prices are low and mine it when prices are high.. but i am talking about the hobby miners that didnt buy hardware at wholesale/bulk cost, and not in regions where electric is cheap
these hobby miners jump in and out of the market-mining industries and acquire coin in both depending on market whim/speculation

these hobby miners are what oeleo describes, but these hobby miners are not the value discovery miners. they are the premium price discovery miners affecting market sentiment

the base value of bitcoin is not what oeleo pretends is based on a spread of different miners at different costs jumping in and out daily and causing some underpinned value to be as volatile as the market speculative premium

base value is beneath the market. its a more stable slow grother over lengthier periods of time.  its the non zero bottom of the most efficient cheapest miners on the planet. a number thats more stable than oeleo try to assume.

..
bitcoins base value is the most efficient miners that dont jump in and out. they are not looking at daily prices to make choices. they have contracted into hardware and electric deals for 2 years+ thus they just mine regardless of the speculative premium public market whims
they as the cheapest miners/acquirers of coin look at a periodic timescale of 6 months+ and then look at total coin collected in 6 months+ period to then see their coin per cost. aka cost per coin

these low cost acquirers of coin wont sell for less and because they are the cheapest acquirers of coin on the planet become the base level no one sells below, thus supporting a base value

as time moves on and things change. competition ramps up and other factors raise the cost of the base. which then reciprocates to affect the market numbers

this "value discovery" is a known thing as far back as the first trades of 2010
where users were calculating their PC usage time per coin and electric to come up with a value to refuse to sell below,.  and then develop a separate "price discovery" above it of what they can sell coin for to those that had higher costs or just didnt want to mine.

there are times when the premium market rises meaning other locations with higher cost can jump in and profit too by mining. but that does not negate away from the role of the most efficient miners who still mine regardless and set the base non zero bottom value

[Smartprofit]

I am currently studying Satoshi Nakamoto's original paper, "Bitcoin: A Peer-to-Peer Electronic Cash System". I came to the conclusion after I read this part below.

What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions. The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes

Honestly, I am not so much of techie so I am a little bit slow in understanding the technical aspects of the paper from from the little I understand about Bitcoin being based on proof and not trust. The proofs are:

• Timestamp Server network
• A proof-of-work system

I apologize; I'm still reading the article, so I might not be able to clearly explain the Timestamp server network and the proof-of-work method in my own words, but I'm understanding the gist of it. If someone could explain it to me as if I were five years old, I would be grateful.

Thank you.

Satoshi Nakamoto (based on the work of his predecessors) created a perfect system of decentralized virtual money. 

He excluded from the monetary transaction third parties - intermediaries (banks, payment companies, etc.).  Instead, a software algorithm mediates the transaction. 

The guarantor of the security and functionality of the entire system are miners - individuals and legal entities that mine bitcoins using special equipment.