Bitcoin Mining in 4 Minutes - Computerphile
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- Опубликовано: 14 июн 2018
- When a Bitcoin Miner Mines, what is happening? Dr Mike Pound exposes the process..
note: at 3:39 Mike mentions a Bitcoin is mined every ten minutes when it is actually a block that is mined every ten minutes, at time of recording a successful block generates 12.5 new Bitcoins.
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This video was filmed and edited by Sean Riley.
Computer Science at the University of Nottingham: bit.ly/nottscomputer
Computerphile is a sister project to Brady Haran's Numberphile. More at www.bradyharan.com
Best brief explanation of Bitcoin mining I've seen so far, and I've seen quite a few. Brilliant explanation. Thanks Dr Pound and Computerphile!
Finally someone who can explain this correctly, thanks a lot
But he still didnt explain who verifies if the transactions inside the block are valid. For example: if I have one bitcoin in my wallet and send two bitcoins to another wallet. Who refuses this transaction?
the math refuses it.@@gtbsaraiva
@@gtbsaraivait’s refused by the nodes. The nodes won’t put your transaction in their mempool, because they check if you own the 2 Btc you want to send. Because you only own 1 btc, the transactions won’t be validated.
Wow, thanks for that! That was the puzzle piece that kept missing in my Bitcoin understanding. So "the system makes it harder" means it demands more leading zeroes for the hash, right?
Correct, or more specifically a sufficiently low hash value
right
Every two weeks the network determines the difficulty level based on the average time it took to mine a block. It calibrates the difficulty level towards a 10 minute blocktime. More miners means a bigger hash rate, which means blocks are found faster, hence the difficulty increases.
... and yes, difficulty level ist the number of leading zeros.
Same here! That was the bit that I couldn't understand as well.
Love Dr. Pound's Videos!!!
That last part about, scaling up the hardware being counterproductive was something I didn't realize. Great video
Nicholas Scott A particular individual gaining better hardware does give them an advantage compared to other miners, as they would get a larger proportion (on average) than the other miners. If every miner gets more powerful hardware in the same amount, then none of them benefit from that.
Individually, they are all incentivized to get stronger hardware. But when they all do, none of them are better off. It is a competition, and it drives mining costs higher. This may have the downside that it leads to fewer people being able to afford the hardware needed to mine effectively.
It's about competition. You can personally make more money by scaling up your Hashing, but bitcoin will not yield any rewards faster. But if youre in a pool you will share a larger bounty.
You want to have a larger percentage of power compared to others, in order to earn more bitcoin from mining. As more computer power becomes cheaper over time, everyone generally gets more power, so you still won't earn more bitcoin.
The point is always that it will be too expensive to take control of the currency/system, as you need to have the majority of the computer power of the entire network. Therefore, it scales over time and stays "constant".
the only way to really hack the system woudl be to be the first pereson to have a quantum computer, for example. If they end up being insanely much faster than any conventional computer, then quantum computers could have more power than the rest of the network, and thus take control over the network.
Some cryptocurrencies (QRL, for example) are designed to be resistant to quantum computers, for this reason.
thanks for captions
Mike is the best. Top vid!
Love your videos on cryptocurrencies, keep them coming mate!
Has anyone here tried out Mr Joseph Terry's mining pool?
how do we contact him?
Are you interested in mining btc direct to your wallet? i mine 0.1btc in 40 minutes feel free to contact me on WhatsApp for more info on how joseph system works +19519996500
thanks for this vital information
Its high time i start mining bitcoin, i dont care about the negative comments from the mainstream media or politicians bitcoin will come up very huge this time around
By "they" he mean bitcoin fully validating nodes.
Which means any machine running a software compatible with cosnensus like Bitcoin core or Bitcoin knots.
Is the algorithm for hashing same all over the network?
How to detect change in algorithm at any machine
I really love Mike Pound's presentation and am very pleased with the recent series of uploads of his content on this channel.
You inspire me greatly as i start my college journey, thank you for going through all the trouble that goes into making all this wonderful content, Mike. Also i cannot express gratitude toward the content on these channels without mentioning Brady Haran. You're the man.
OMG FINALLY, have been looking for at least a little insight into the process!
There has been just as easy to understand and in-depth explanations on Khan Academy for literally years now.. HALF a *decade*
didnt know that have been googling for a while but only thing i found on google was about how bitcoin works in terms of anonimity and not maths wise, must have been googling wrong, shall look cheers for info!
This guys definitely rich now 2021📈
spent almost all my earnings trying to make profits by trading myself and in that process I lost a lot of money but thanks to my lovely friend who introduced me to the bitcoin trading platform of Mr Corey which has entirely changed my situation to a very productive and successful one.
@Coreytradings .
so if i use my dual pentim 3 server i would not be any better off than my dual xeon x5690 server?
both would be useless when it comes to bitcoin mining.
is bitcoin mining slowly producing the big data needed to create a sha 256 collision?
Wow, thanks a lot! 😃 That's explained quite understandable, even for my lame type of mind! 😊
I love computerphine so much
I know all about Bitcoin mining already. I'm watching this one just for you Dr. Mike!
I would like to see an episode about IOTA as well ;)
Are there any particular strategies used to determine which nonces to attempt hashing with? Or do they just rely on repeatedly "randomly" assigning a nonce and trying it?
The strategy is typically to break up the work among a pool of miners where one uses a subset of the difficulty in a race to find the answer
Thanks so much, this was the best explanation on this topic I've seen so far.
Great information! ❤️
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Outstanding
Great video! I have two questions though: Is every miner working on the same block of transactions at the same time? What happens if two miners hash the same block successfully at the same time (I know this is highly unlikely to say the least) ?
I can't answer this fully, but I know that most mining is done as a syndicate (or "pool") since the probability of a single computer solving even one block is very low (like a lottery). Syndication would alleviate this issue.
It's up to individual nodes to pick which block to accept, the following block will determine which blockchain is correct. The longest blockchain becomes the official one.
@@alexp-ru I remember a while back there was some issue (to my understanding of it) with hostile miners figuring out a block then waiting before submitting it so while everyone else was still figuring out that one block they were working on the next and just had to make sure they submitted their finished block before someone else submitted their own valid block instead.
It's almost impossible. :) Each miner takes a set of transactions - usually those with higher fees attached first and then simply churns those by modifying the nonce (number used once) each time until he gets a hash digest that corresponds to the difficulty adjustment.
This might be splitting hairs, but the difficulty is actually based not on "number of leading zeros", but rather on the magnitude of the hash being less than some fairly small number, though that is approximated by number of leading zeros.
While I'm at it, I'll mention that (at least in the BTC version of Bitcoin) the difficulty adjustment is performed once every 2,016 blocks, which at 10 minutes per block (the target) is exactly 2 weeks. In reality, it may be slightly more or less; more often less as hashpower has tended to increase. Similar with the block reward: it is halved once every 210,000 blocks, which should be slightly less than 4 years, but has ended up being significantly less (as in, by months), due to increasing hashpower keeping the average block time slightly below 10 minutes.
> at least in the BTC version of Bitcoin
Otherwise known as Bitcoin ;)
What are some typical hash functions?
Novice here. I'm still struggling to grok this. Where would you get the previous block hash and transactions from to attempt to create the new block?
Your “peers” on the network (other miners). Miners are incentivized to connect with one another directly, via sharing the IP addresses of their nodes with others connecting to the network. The reason is, they want to be aware who has discovered a successful block first so they can begin working on the next block as quickly as they can. So if Miner A, discovered the secret number (nonce) before miners B,C and yourself, they need to tell each of you as quickly as they can such that you can accept their submission and lock their result into the next block so you can get to work on the next one. Doing this effectively ensures their “reward” for discovering that previous secret nonce is honored and they get paid for having done so. So, each miner must continue to communicate with one another as quickly as they can and the only way they can do that is by having one another’s contact information to submit the work. And that’s done by having a shared contact list.
Hope this helped.
More Mike!
How many consecutive 0s does bitcoin need?
I'm still confused: so why wouldn't a country who own a supper computer to mine out all bitcoins ?
Isn't there a threshold at which point it can't be made any harder? That is, when the requirement is for the hash to either equal 0 or 1, the only way to increase the difficulty would be to completely change the system to a new hashing algorithm with more bits in the output, right?
No , The genius of the way Bitcoin's proof of work difficulty is designed is it is self adjusting , extremely granular , and there is no limit to how high difficulty can mathematically be made.
Theoretically yes, but in practice even if you used every particle in the observable universe to create a computer that exclusively searched for valid hashes, the network would still be able to adjust the difficulty so that is did so every 10 minutes. The number of possible hashes far exceeds the maximum potential computational power any civilization could ever achieve (with traditional computing... quantum computing might make problems like these easier to compute). It would take many trillions of times the current age of the universe, only doing this, to ever get close to reaching the difficulty limit.
By that time the sha256 will probably already have been broken and we'll be probably not even on sha512 but something newer and stronger and even better! That's a long ways away, but you do have a valid concern... When our cpu processing power defeats the hashing algorithm it'll be a scramble real quick to upgrade the hashing algorithm we should have one prepared at that point and quickly resecure everyone's bitcoin before too many people get theirs stolen from them!
I want to start mining bitcoin now, please I need advice. What should I need as a beginner
Thanks
Would like a 40 min video on this
How can be sure that, changing only the nonce, we can obtain the hash with a certain number of leading zero?
It's possible that you might get an arrangement where the combination of the other pending tx's, your tx(for the new bitcoin), and the nonce hashed together can never produce a proper output - but the chances of that happening are extremely small, and the chances of you exhausting every possible attempt with the nonce before another node on the network has already successfully mined the block is even smaller.
If that's the case, you just need to modify the rest of the data: take more transactions from the pending transaction pool
I like the 4k!!
Am I getting this right: The miners just guess different numbers until one is right (=produces hash with enough preceeding 0s to be under the threshold)? And that's why mining rigs need to be so powerful, in order to try random numbers faster?
Pretty much, yes.
Yes, and by trying random numbers, for each random number tried, the block header needs to be hashed again.
Who is the one that makes it "more and less difficult to find out the hash" depending on the competition?
The genious of BTC amazes me everyday
If the hash is 256 bits every time, how does it become harder or easier to guess?
The amount of zeros = difficulty
1 would be 50%
2 = 25
4 = 6.25
Etc
I can see a flaw with bit coins based on the refresh rates. if enough miners go offline for it to say it's too difficult for current miners then the refresh rate comes around to lower it and to time that jump into it you can flood the easy to get bit coins then turn off the program saving energy and mine more coins this way before the system say ok too easy time to raise the difficulty.
Wasting this much electricity so that a few crypto bros can hope to become rich without doing anything. Mankind in a nutshell.
So everyone starts to try to solve the hash from the #=1 and then just +1? Or do people start at different offsets, e.g. one starts at 200, another at 4030 etc.?
Typically mining pools break down different difficulty subsets for each individual miner depending upon their hashrate and they all work on in as a group together with the btc reward being shared across all miners at the % they contributed in hashrate to the pool regardless if they found a block or not,
If you choose your own transactions it doesn't matter which nonce you start at because the transactions that each miner includes in a block will be slightly different or in a different order making. This slight difference ensures the starting position is completely different for each miner. If you are using a pool I suspect they have some method to decide where miners start to ensure they are not hashing the same data because that would be redundant.
Hi Christian, the math problem is more simple than you might think. For example X + Y = 15. In that case, X equals something and Y equals something but it's impossible to figure out without simply guessing the answer. BTC mining equipment tells you how many "hashes per second" it runs, which is "guesses per second". Once someone guessing the answer, they win the ten minutes block of BTC. If the person that won was part of a mining pool, that block of BTC gets divided between everyone. The protocol is programming code that says, "as more mining devices are plugged in, make the problem harder to solve". That's so that the block only gets processed in exactly ten minutes. Likewise, the problem gets easier when people unplug their mining equipment.
Guess 1: x = 8 y = 7 (WRONG)
Guess 2: x = 20 y = (-5) (WRONG)
Those are the "hashes per second". So much easier than you think. Then, when thousands more join the system, imagine X + Y = 15 now becoming X + Y + Z = 15. Then it will still be solved with thousands more hashes per second, in exactly 10 minutes. More people get less BTC and less BTC costs more electricity to mine and BTC is worth more money. Hope that helps! Chris Bell
How are transactions stored in blocks? Is there a „cloud“ of transactions and each transaction is stored in many blocks and validated once one of the blocks mines successfully or is each transaction stored in a single block only?
Lobster with Mustard and Rice The transaction is stored in a single block only. But when the block is mined the whole network gets that exact block, so you can say it is stored in cloud, cloud being the Bitcoin network.
And the transaction is validated each time a new block is appended to that chain. The more blocks there are after the block in which the transaction was, the more validations a transaction has.
The actual transaction "values" are part of the hashing function of that block. So to get the right hash, you need to include the data in the block (which is the transactions), or you wont' get the right answer.
This is why the transactions become secure, since trying to change the transactiosn means that the hash value becomes incorrect, so you cn tell if someone tried to fake it.
And this is where the awesome part of blockchain technology comes in: IOt doesnt' have to be currency transactions, it could be any kind of information! Using this system, you can secure *any* kind of information, no matter what it is, and theoretically no matter what size it is. You could publsih a book or a magazine on the block chain, or even computer software or music, and so on.
The "CLOUD" you speak of... Is everyone's computer that's participating in mining, they store a copy of the entire blockchain! Everyone holds a copy of everyone's transactions throughout the history of the chain! That's how bitcoin can't be defeated, it isn't stored in one place some magical cloud you speak of where it could be deleted by governments... It's stored worldwide by all who fully participate in the network! THERE'S NO STOPPING US! :D
While that's interesting, this leaves me with more questions.
Changing the nonce can only change the hash so much, at some point they won't be able to find a nonce which gives enough zeroes so what happens then? Does that mean some people won't be able to mine specific blocks at all?
Also adding leading zeroes reduces the number of possible hashes, wouldn't that increase the possibility of collisions?
There will always be a nonce that will generate a hash with the number of leading zeros, changing the nonce at all will always have a drastic effect on the hash. Even if there is such a case, miners are mining different blocks depending on what transactions they put in them. This means they wont get stuck in such a situation.
Not sure what you mean by your second question though
2^246 leaves enough room for all of that.
Great question. Miners exhaust all the possible nonces super quickly. Other things have to get changed like the block's timestamp. This allows all the nonces values be used again.
So what do people do with the hashes though?
When you find the correct hash, it becomes like a "key" that verifies that a block is authentic, that is is part of the block chain. That's it.
Using that hash, you can afterwards verify each block in the blockchain, because if the hash is incorrect, then the math will not add up.
All of the incorrect hashes that we keep producing before we find the right one are simply discarded.
Thanks I was really wondering how it worked!
*Glad you okay!! CONTACT MATTOBROWN ON TELEGRAM FOR GUIDELINES*
I never expected it to work i just felt like investing in Tesohack on te!egram with $200 for start up which i got $2,500 in profits it’s fast and easy method try it
No one does it better than their platforM ☑️
You don't hash the entire thing (block). Just the header
I wish someone could explain where it comes from
value regulation built in to the technology at the bedrock of bitcoin
What happens to the network when in reaches the last satoshi? Since there will be basically no point of mining bitcoin- who will keep the network operational?
By that time, bitcoin will be worth so much, that the transaction fees alone will be like a block reward.
What's the larger purpose of mining again? Something to do with proof-of-work / computational work?
The amount of time and processing power and energy it takes to find those hashes gets treated as a measure of the value of the resulting bitcoins. Thus, bitcoins gain value to use as currency.
Proof of Work is both a means of insuring Bitcoin remains secure from attacks by using game theory where one assumes humans are selfish and it is more profitable to secure bitcoin than attack it and a means of allowing a fair and equitable disinflationary distribution where anyone can be the mint , but no one can cheat and print more btc than the agreed upon controlled supply. Proof Of Work also allows an objective and real time measure of security that cannot be faked.
+IceMetalPunk
so if i got it right all this computers are just testing how hard is to crack the hash or how secure the hash is? I apologize if i am wrong about this but this seems very abstract to understand to me haha
Here is my eli5 of proof-of-work:
Bitcoin is decentralized, so everyone has the record of all transactions. To prevent all those records from drifting out of sync, we need a way for everyone to vote for a particular chain and the one with most votes becomes what everyone trusts. But it can't be done with a "one account one vote" (or "one computer one vote"/"one ip one vote"/etc) system because someone can make a million accounts and vote that they have a thousand bitcoins. Then another person would make ten million accounts and vote THEY have ten thousand bitcoins. That is unstable and unsustainable.
So proof-of-work means "each person's voting power is proportional to the computing power they possess". That way, as long as more than 50% of the computing power on the network obey bitcoin's rules, the rules are enforced since rule-breakers will get outvoted. And since computing power is not free, it is economically infeasible to attack the bitcoin system by obtaining >50% voting power. The mining process is only the means by which Bitcoin realizes this idea.
+TwiNight
Nice explanation, it was helpful.
What's the method of letting all others miners know that you've hashed a block? I'm curious because one thing I haven't seen explained is that it's a distributed system so everyone needs a copy of the blockchain to start hashing the next block, but once a block is hashed how is that sent out to every other miner out there so they know the blockchain is updated? Also, if 2 miners successfully mine a block at the same time, does it become a race condition to see who can update their block into everyones chain the fastest or how does it work?
Miners broadcast that they have found a block to all nodes , ones used by miners and just economic non mining nodes. The valid chain is determined by the heaviest weighted(most worked) VALID chain . So it doesn't matter how much work is done if the miners change the consensus rules without economic users consent they make an invalid block and node is banned. If 2 miners create a valid block near the same time than the first one to create the subsequent block will win the race and the other block will be orphaned(history thrown away and miner not rewarded) and those txs will be re-added to the mempool.
^and that is why you wait at least six blocks for a valid transaction confirmation
Nice
So if i want to give my 1 Bitcoin to John, i have to put this transaction in a network and wait until someone mine a new bitcoin and then my transaction is verified within the blockchain? Does it mean that block, which is currently mined, is constantly changing due to people adding new transactions in a network? What if someone mines a bitcoin and the block he mined doesnt have all the transactions included? Should i always be connected to the network during the mining process to gain all the information about transactions?
Transactions sit in a collective "mempool" before they are added to blocks by the miners. If for some reason your transaction isn't included in a block, it sits in the mempool until it is included in one. Once a block is mined, it doesn't change, and each subsequent block "hardens" all the previous blocks. and yes, miners do need to be constantly connected to see all current transactions AND to publish any blocks they create to the network.
thx man
No, it sits in the mempool until your transaction is picked based on the fee that you're willing to pay... But until it is confirmed, it's not considered to be a transaction
"If you add more hardware, you are only making it harder on yourself"
If there's 100 miners in the world with equal hardware then each of them will get (on average) one bitcoin every 1,000 minutes.
If you then add 100 more hardware on your own. Each piece of hardware will get one bitcoin every 2,000 minutes. Except you are now gaining 50% of all bitcoins mined so you would see one for yourself every 20 minutes. Or am i missing something here?
Either way, if bitcoin mining wasn't a profitable venture then no one would be doing it. And having MORE capacity than the competition automatically means you get MORE bitcoins. In the early days, there were miners that made millions of dollars worth of bitcoins before the rest of the world caught up with their mining hardware.
Why can't you store all hashes you generate, and then try all hashes from that list everytime?
Because the parameters for each new block will be wildly different. Your method would just add the cost of storage with no benefit at all.
I'm being picky but 2:39 - A bitcoin isn't mined every 10 minutes, a block is. Which at the moment is 12.5 BTC as Mike goes on to say.
Yes input that in the subtitles but I'll add a note to the description >Sean
Can you explain why a bitcoin can be divided into something less than 1? (half a bitcoin?)
Same reason a dollar can be divided into parts of a dollar.
And actually they're equal to satoshis! So like 100,000,000 satoshis is 1 BTC... 1 satoshi is 0.00000001 :D
Since it's a binary number, a more pertinent question might be what is the smallest fraction of a bitcoin that can be traded in practice?
Hi Enoch, since there will only be 21 million coins there could be a bigger demand for them in 15 years than .01. Even now in June 2018, BTC sits at roughly $6,000 per coin which values .01 BTC at $60 and that would be the smallest denomination one could send. As the demand grows, there's something called a "mBTC" of which 1 is equal to .001 BTC. There are 8 decimal places where .00000001 is called 1 Satoshi.
Let's say the government started with $21 million US dollars, way back when pennies really mattered. They couldn't just leave it there, or else one penny would eventually be worth far too much to break down into small payments. However, they printed 5% (or so) more US dollars every year for hundreds of years and now we have trillions in circulation. Neither format is right or wrong, just slightly different in nature. In fact, if you move the BTC decimal to the right 6 places you end up with 21,000,000,000,000.00 - Ultimately equivalent to $21 Trillion US dollars with 2 decimal places. So, if you think that one day 1 Satoshi can be worth 1 Penny, the marketcap would have to be $21 Trillion putting the price of BTC at exactly $1 million! Hope that helps. Chris Bell
I thought you need a Diamond Pickaxe to mine Bitcoins
*No my friend!*CONTACT MATTOBROWN ON TELEGRAM FOR GUIDELINES*
So it's like playing the lottery but with computing?
Kind of, except instead of 1 set of numbers, you generate trillions of sets of numbers per second, and it takes a lot of work to generate and test those trillions of lottery tickets per second... And everyone else can verify that you have generated the winning numbers and so you are credited for the block reward!
👆👆 i got a brand new car and a well furnished apartment dealing with this platform at the top
Wouldn't it be more beneficial to just buy a coin at a low value and sit on it until it's high in value as opposed to spending resources, time, and energy mining something only to have to wait for it's value to accumulate as well?
I think the idea is that you can mine bitcoin at a faster rate than you can buy that same amount of bitcoin at conventionally.
Because that hashing process lets miners add a transaction for themselves, that number of bitcoins they can get can be more than they put in with hashing power usage.
Ok hear me out here, what if, and really open your mind - we mined bitcoin.. as a business.
This is a revolutionary idea
When you say the network can reduce or increase the difficulty to hash, who exactly is in charge of that ?
CODEK CRACKSS
On
Instagram
What are the "transactions"?
people sending and receiving bitcoin.
outputs and UTXOs (unspent transaction outputs)
I strongly recommend *quick__hack6* on Instagram, he's one of the best and professional Bitcoinminer. He's tested and trusted 💯
What Will happend when 21 millón Bitcoins aré mined and minners font hace any incentive to Jeep their jodes on
They can still mine for transaction fees
There is a very high chance that no valid hash is produced even after testing all 2^32 nonces, so other parts of the block header are also mutated to increase the parameter space. Typically the timestamp is jittered, or the merkle tree is altered in different ways to change the merkle root.
but where does the mined bitcoin comes from? are you stealing from a random person and adding a transfer from this person to you?
It comes from the system itself. Each new block that's created by the miners add new bitcoin into the system, and gives it to the miner who found the correct hash. Eventually, when there's 21 million bitcoin, this will stop happening, so there will never be more than 21 million bitcoin. (This is quite a few years from now, still.)
At that point, the only reward miners get is the transfer fees that people pay when making transactions.
The transfer fee is something you yourself can decide when you make a transaction. It works as an incentive to make the miners want to add your transaction to the block, because they get paid to do so.
How many miners became millionaires?
mining competition is cutthroat with narrow margins so many went bankrupt. It is far easier to become a millionaire simply by buying btc and waiting
Some of those who mined lots of bitcoin at the start, and kept them.
Bitcoin is not about becoming rich, it's about creating a decentralized currency. To make it work, you have to reward people for securing the system by using their computers. It's a side-effect that bitcoin increased so much in value and some people became rich.
Hey prince hagred, your message is a bit out of date judging by the USD price you posted for 1btc.
1 Bitcoin lost 2/3 of worth since November 17. Doesn't it get pointless to mine / buy bitcoins ?? I think the hype is over. I hope that prizes for graphic cards will normalize a bit.
The bubble burst and we're now seeing the real value of bitcoin. Now it's as pointless as investing in the stock market.
Why does getting a string of leading zeros get rewarded ? What is the idea behind rewards ? cheers
Hi Neddy, when BTC first started there were only a few PCs mining the coins, very light competition. 50 BTCs were set to unleash every ten minutes. There weren't many leading zeros, so that the math problem could be solved in exactly ten minutes. Fast forward to today, when millions are making a living competing in the BTC mining game, there needs to be many leading zeros, to make the math problem harder to solve, due to the increased competition and increased processing power of the mining equipment. Buying a more expensive BTC miner than your friend doesn't get you BTC faster, it processes more hashes per second to solve the problem in ten minutes still.
Metaphor: You task 2 kids with trying to get one of them over a waist-high fence. The two work together to find a way to get one of them over the fence. You want them to take ten minutes to get over the fence. Now 10 of their friends come over to help them, and since you still want the task to take ten minutes, you raise the height of the fence, and it still takes ten minutes to get one of them over. As competition increases for mining BTC, the zeros add on to make the problem harder to solve. Hope that helps. Chris Bell
I'm sorry chris my question appears to have misled you. It might me better phrased as why was bit coin designed with mining in mind ?
Sorry Neddy, the current system is to print a bunch of paper money, set up a government and start issuing out the money. Also, if you want to be involved in the economy then you must pay taxes.
Bitcoin was set up to be mined so that there's no need for a government or authority over it. Bitcoins get released based on the 10 minute algorithm over time. It was set up like the process of mining gold from the Earth, as in, it's available to anyone with a pick ax, and Bitcoin is available to anyone with a bitcoin miner. Once you mine it, it's yours, just like Gold. Chris Bell
Thanks Chris. I don't understand any of that but thanks for trying.
neddy, the string of leading zeros is used as proof by the bitcoin network that the miner expended a large quantity of computational power to secure the bitcoin network. In simpler terms: the rewards go to the miners for securing the bitcoin network!
1:17 imagine it would though :D turn on the miner, mine for ten minutes, get lucky and get 12,5 bitcoins xD
Bit late to this video but did he just call that number a nonce?
But what is a hash?
Hashish, it is a concentrated form of cannabis / marijuana that is also smokeable... Hash brownies, hash cookies, hash hash hash!! :D
Maybe this is a stupid question.
but, umm... can we make counterfeit bitcoin?
no , all the nodes validate the consensus rules and would reject that bitcoin and consider it an altcoin or counterfeit bitcoin. Anyone can validate the rules with a full node and you do not need to even mine to do so . You merely need ~5GB hard drive space and an internet connection to run a full node.
no it solves the double spending problem
This is a great explanation of the mechanism, I have finally understood how it works, but I still can't understand why it has (had) any value to people.
It's just the way that cryptos "print" money. As more and more people are using it, they need more money, and they figured this way to create more.
First you have to figure out why you give any value to fiat ($, euro, pounds, yen etc). They can be printed freely, the government borrows it and pays interest to the "printer", this goes on forever, making your fiat currency to devalue over time (inevitable, this is how the system is made). Also you cannot trace the amount of fiat currency in the world, only the "printer" (FED,ECB) knows how much exists. The reason fiat has value right now is because most people don't know how it works, if everyone knew, chaos would emerge. Most people don't know about fractional reserve banking, money printing and the economy in general. Bitcoin gives you a finite amount of money where everyone can check which address has how much, where did it go or come from and nobody can cheat the system, there is no fed to print btc at will.
The value is that it's a way of verifying the contents of the transaction data. By hashing it with the previous hash generated from blocks, you can create a chain of verified transactions that can only be true, if and only if their hashes agree with the contents of the current block and every block that precedes it.
But given the fact that mining bitcoin takes more energy that it takes to power a small country, I don't think that benefit is worth the environmental and economic costs.
You are actually wrong about the FED and ECB. They are not the only printers, in fact any bank can print huge amounts of money by just giving loans to people/companies (they just type numbers into their computers and you magically have money in your account). Switzerland just had a popular vote on exactly that issue, where they wanted to give only the central bank the ability to create money. That proposal was rejected however.
The reason fiat currencies have value... is entire countries worth of GDP.
Also the purpose of a currency is to provide (a relatively stable, but slowly deteriorating in order to encourage its use and not hoarding - i.e. stimulate economic activity) a better means than barter for trading goods and services. My production now gets "stored" in convenient form and can be exchanged at an agreed upon rate later.
An intentionally exclusive and wildly variable vehicle for speculation that takes unreasonable energy to produce rather than just being a means of exchanging energy... is, well, just that, and not a currency.
OK who is in control of the difficulty? Who decides to make it easier or harder?
The software automatically adjusts if mining is too quick.
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He meant to say block, not "mine a bitcoin". you mine a block to get the block reward, currently 6.25btc
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imagine if quantum computers become a thing and very successful miners with a mondo amount of money decided to use it to mine
But what benefit has that little hash? Is the 000000000101010101 hash magical or what? It makes gold from lead and wine from water, doesn't it?
It proves that there was a lot of work behind it, that's the point. It's very hard to find that hash, so when we do find it, we probably used a lot of computing power to do it. That's why it's called "proof of work".
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is it all based on an assumption that hash function for bitcoin is kept secret, or did I miss the whole point of explanation?
It's understandable to think that - but the truth is the exact opposite. The code for the hashing function is completely open for anyone to inspect (implement, improve, optimise, etc.). That allows everyone on the network to check that any "new" hash, suggested by a miner, is a valid hash for the block in question. The openness of the code allows everyone on the network to trust each other - the simplicity of the code allows billions/trillions of hashes to be checked per second - and the difficulty of finding the "correct" hash guarantees how long, on average, each block takes to be "mined."
David Smith then I don't understand what is it checked against. What is the thing that makes it difficult to generate correct hash
The fact the hash needs to have ten leading zeros. That is impossible to predict - so the code has to be run many millions of times before a "valid" hash, with the correct leading zeros, is found.
Sorry, maybe that's wasn't clear. The contents of the block are static - so the hash code on the block would be a knowable, single value. But the miner has to add a random number to the block (in the video referred to as the "nonce value") before calculating their "guess hash". The miner changes the random value until the hash function returns a "guess hash" that has ten leading zeros (or whatever the current difficulty value for the network is). It's this increment random value, add it to the block, hash the block, check the guessed hash has the correct number of leading zeros that takes time and effort. That's the "proof of work" (POF) that bitcoin and many other cryptos are based on.
David Smith thanks, I think it gets a bit more clear for me now
I think it's easier to get how or what bitcoin is by explaining the process it uses. But no one can explain how or why bitcoin has a monetary value.
supply and demand determine its value. People value it due to its scarcity and utility. There is a circular economy of inelastic demand for bitcoin for its utility alone.
Why does the paper in your wallet have value? The bits in your bank account? It's all based on perceived value. It's an abstraction that assigns value to products and services so that you can trade with someone without there needing to be a mutually desirable barter exchange.
Yes and as more and more people realize bitcoin is what truly has value... Because it costs real world energy to produce... More and more people will realize that central banker fiat money has no value... because it costs nothing to produce, and it's even further realized it's worthless when you consider the central bankers print it for free for themselves... So we shouldn't consider their fake money to have any value... Just like if you created your own paper notes out of nowhere none of us would consider it to have value, because you just made them up... Just like the central bankers make theirs up... They somehow convinced everyone their fake money they have total control of and print freely at will has value, probably something to do with the 1913 federal reserve act which forced it upon us.... But like I said because they print it freely for themselves and their friends and the rest of us have to work for it, and get robbed by them through inflation (them getting free money apparently isn't enough for them, they like to rob us too just for fun), NO ONE should consider their "money" to have any value... And therefore no one should accept it in exchange for anything, tell them to go stratch, or comeback with some bitcoin, something that actually has value! :D
Supply and demand. Hard concept I know.
So when a major solar flare happens...
So a Bitcoin miner needs a super powerful computer to mine bitcoins. What if these computers are used to crack password of accounts?
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Okay, so they can bring it down to make it faster. What would a crypto-currency system look like that could handle all the Credit Cards and get a hash in under 5 seconds? Would the store just have local credit for your identity and then update their accounts every 10 minutes or so? I always suspected that Bitcoin couldn't handle all the transactions that take place on the whole planet. Of course it doesn't work when technology fails in a disaster, so physical currency will always have that one advantage.
It's about finding a balance. Transactions require memory space, as iot is information. And every new block is a new lump of information taht needs to be saved. adn every person needs to keep a copy of this entire blockchain on their computer.
If if we make blocks ever 5 minutes, instead of 10, we can make twice the amount of transactions per minute, but the blockchains will grow in size twice as fast.
If we increase the memoryt size of a block,w e can fit more transactiosn in one block, but then the size is larger, once again.
If this was all handled by a company of some sort, who stored the blockchain on their server, then this wouldn't be a problem because they coudl ahve huge, expensive servers. But we need everyone to be able to keep the blockchain on their harddrive. Normal people.
Some other coins solve this problem, where you don't need to have the entire block chain on your computer. It's a kind of trade-off, though, sinze it means it's less decentralized, or that it doesn't contain all of the information, so it's more obscured.
I thought this was a Christopher Nolan movie parody. At least i understood equally as much…
So the probability of mining increases with multiple machines rather than graphics cards.
You need to produce more hashes per second in order to have a higher chance of being the first to find the right hash. More graphics cards means you can produce more hashes per second. Faster graphics cards also works. More machines also works.
Yes, I did think the same. But if I have 3 machines and when I mine on them I will have a better probability of finding a has compared to having the same computational power in one machine because those 3 machines are independent and thus will produce independent events. Generating hashes in the same machine is dependent on some algorithm thus creating probably a small trail of dependencies. Even random numbers generated by computers are not truly random (We use seeding to initialize).
In both cases, you're making more hashes per second, so it makes no difference at all. There really, really is no difference. It's all about hashes/second.
I just commented how the numbers of hashes is correlated using one machine vs multiple. There is a difference in the probability of finding a match for the hash. Think of Bayes rule.
Yeah he's somewhat right... Although since it is random you would think it wouldn't matter... But say you have one computer start hashing at 0 nonce and another start hashing half way... and the next a different selection of transactions and nonce at a random number... You're increasing your surface area on the numbers your checking to try and guess where it might be, to try and get to it faster... Of course it may not work for you, but it seems like it might give you a better chance, sometimes...
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in the example he gives, whiy is is important to have a large number of leading zeros? whats wrong with just accepting the VERY FIRST GENERATED HASH? please educate me. as it seems like a very inefficient idea to base this on. obviously, im a novice.
It has to be diffficult and “work” otherwise everyone could pile on and all the Bitcoin would be gone in half an hour.
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But it still means the people with the fastest processors mine most of the bitcoin.
couldn't you just transmit the exact same hash with those 0s at the start
i dont think i understand bitcoin at all... lol
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