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Helpful ReplyExplain this mining thing in moron speak

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HaywireHaywood
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2018/05/15 12:56:36 (permalink)
I've been reading a little about this mining thing and I can't get my mind wrapped around it.  I understand you are crunching numbers looking for blocks and those are worth coins which are then worth money but blocks of what?  Why are they worth anything and who is paying for them?
 
confused in kentucky...
Ian

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Cool GTX
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Re: Explain this mining thing in moron speak 2018/05/15 13:26:59 (permalink)

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Opolis
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Re: Explain this mining thing in moron speak 2018/05/15 13:30:21 (permalink) ☄ Helpfulby HaywireHaywood 2018/05/15 13:47:35
My understanding (may not be 100% correct), in very plain terms:
 
Computations must be done to verify/validate all transactions for a given cryptocurrency.
This is "mining" or "solving" blocks.  You are basically doing what a bank would do, ensure there is no double spending or other funny business going on.
 
Cryptocoins are given as the reward for being the first to solve/mine a block.
If you are part of a pool, you only get a fraction of the reward, since it was a team effort.
All the blocks put together make the blockchain, or complete history of transactions.
 
The reward is an incentive for the miners to mine, which is required to keep the system going.
 
To me, the coin is only "worth" the average cost of the mining.
Trading it like a stock is what leads to the crazy prices.
post edited by Opolis - 2018/05/15 13:31:46

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HaywireHaywood
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Re: Explain this mining thing in moron speak 2018/05/15 13:44:23 (permalink)
So mining is the equivalent of a distributed computing check clearinghouse.
post edited by HaywireHaywood - 2018/05/15 13:48:47

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Re: Explain this mining thing in moron speak 2018/05/15 14:08:47 (permalink) ☄ Helpfulby HaywireHaywood 2018/05/15 14:16:25
 Couple more easy reads
Cryptocurrencies Explained, in Plain English
Everything you need to know about what cryptocurrencies are, how they work, and how they're valued.
 
What Is Blockchain? 

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HaywireHaywood
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Re: Explain this mining thing in moron speak 2018/05/15 14:48:23 (permalink)
Ok, that was helpful.  A "block" is a batch of new cryptocurrency transactions which are of course, encrypted.  The miners are essentially attempting to break the encryption in order to verify the transactions.  If I understand, there are a bunch of miners working on any one block and the first one to break the encryption is rewarded with coin.  Seems like if they want someone to verify the contents of a block, they would give them the key, not make you break into it.  I think I have a little better understanding now but it still makes no sense to me.  Seems like an awful amount of effort built into something that they want you to do.

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Re: Explain this mining thing in moron speak 2018/05/15 14:53:01 (permalink)
happy to help

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Re: Explain this mining thing in moron speak 2018/06/11 20:59:45 (permalink)
Just when I thought I had a better understanding, Haywire's last comment throws me in a conundrum!
 
"These equations are a product of the encryption designed to protect transaction data on the digital ledger."
 
So yes, a lot of effort to encrypt and protect transaction data... makes good sense.
 
Best,
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ipkha
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Re: Explain this mining thing in moron speak 2018/06/12 07:34:04 (permalink)
Signing the block isn't the intensive part. Finding the new block is. Since the network scales to the power available each new entrant has a logarithmic effect on difficulty. Its akin to cracking AES crypto, lots of work for minimal gain.

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ty_ger07
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Re: Explain this mining thing in moron speak 2018/06/12 09:34:08 (permalink)
HaywireHaywood
The miners are essentially attempting to break the encryption in order to verify the transactions.  If I understand, there are a bunch of miners working on any one block and the first one to break the encryption is rewarded with coin.

To be clear, the activity of mining does not break the private/public key pairs which secure each accout/"address". To be clearer, they aren't breaking encryption at all; they are using encryption. Figuring out the private key which secures the funds in each account/"address" is basically impossible.
The cryptography necessary to verify the ledger is quite simple. Mining is often, essentially, purposely created waste added on, automatically based on the size of the mining pool, based on the author's intended wishes for the design of the cryptocurrency, in order to prove that some sort of supposed work has been performed. Yes it does serve the purpose of ensuring that account balances are accurate and for eliminating fraud and theft at the mathematic level, but it also often has designed into it a certain amount of wasteful overhead to supposedly legitimize the currency and to slow growth and inflation to some degree.
Fraud and theft is essentially mathematically impossible in the cryptocurrency world, but it's security isn't very much thanks to the work of miners. It is still possible for fraud and theft to exist through social engineering and by people saving their public/private key pairs in improperly secured exchanges or services -- for convenience -- which then later steal funds, get hacked, or leak the public/private key pairs to criminals. The public key is the "address"/account, and the private key is necessary each time any amount of currency is transferred away from the address.
post edited by ty_ger07 - 2018/06/12 09:52:45
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ipkha
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Re: Explain this mining thing in moron speak 2018/06/12 10:41:13 (permalink)
The encryption and integration of the transactions into the block is easy and happens at the end of the block creation process. Mining the blocks involves factoring the next logical number based on the difficulty in the chain determined by total estimates hashing power. As difficulty gets higher, the number of digits you hash for goes up making it harder to mine. The power usage is sucky because everyone hashing group is duplicating the work. So the more powerful the average pool the more power needed to mine the next block.

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HaywireHaywood
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Re: Explain this mining thing in moron speak 2018/06/12 12:43:40 (permalink)
I take it back.  I have absolutely no clue what mining is or why it exists.  It just makes my head hurt.  Unsubscribing.  LOL

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ipkha
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Re: Explain this mining thing in moron speak 2018/06/13 04:16:44 (permalink)
In pure simplicity, you are solving a math problem and the first solver gets a reward. Once the problem is solved, the transactions are signed into the answer and once verified by the next silver or two the system moves on to the next problem after crediting the original solver with the block.

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ty_ger07
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Re: Explain this mining thing in moron speak 2018/06/15 12:54:55 (permalink)
Ah, fantastic timing on this video release:
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Re: Explain this mining thing in moron speak 2018/06/15 13:51:25 (permalink)
What doesn’t make sense to me is how mess coins will be available over time while the computers needed for the encryption of the blocks will increase with time. It really seems like a bubble since we will hit a point in which it will take twice as long to make a profit as it does now and twice as many miners mining to support the coins already mined.
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ipkha
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Re: Explain this mining thing in moron speak 2018/06/15 17:23:57 (permalink)
Eventually the hashing power will stabilize. Once the cost to produce starts to near value if coins, new mining operations will switch to other coins. Of course it's all theory and hasn't yet been tested. Certainly the availability of graphics cards now shows that the high growth phase is ending/ended. Long term, eventually the entirety of the bitcoins/ altcoins will be mined and the incentive switches to transaction fees for the reward.

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ty_ger07
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Re: Explain this mining thing in moron speak 2018/06/19 09:54:01 (permalink)
It's going to be interesting when mining complexity becomes too hard. As stated, the mining incentive will then be fee-based payments for transactions. But the thing which will be really interesting is that each payment is a transaction so it will be a process of fees paid for fees paid, mining performed for mining performed, and aggregates, and just a really weird economy. Fees for fees for fees for fees .... smaller and smaller slivers of currency until it reaches effectively zero more growth. Any cryptocurrency which reaches that state will almost certainly have to have achieved widespread use in the financial system for purchase of everyday products, otherwise I imagine that it will certainly come crashing down quick as the growth stops and users exit the market.

Another interesting short video:
post edited by ty_ger07 - 2018/06/19 09:59:10
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Re: Explain this mining thing in moron speak 2018/06/19 14:34:36 (permalink)
Hoggle
What doesn’t make sense to me is how mess coins will be available over time while the computers needed for the encryption of the blocks will increase with time. It really seems like a bubble since we will hit a point in which it will take twice as long to make a profit as it does now and twice as many miners mining to support the coins already mined.



most coins have what is called a difficulty. this sets how hard it will be to find a new block such that on AVG a new block will be minted every X minutes, for BTC its 10. so as Computational power increases the difficulty will increase such that blocks will continue to be minted at the same rate, not longer or shorter timeframes. so no matter how much computational power, or how little, you throw at the coin there is always a stable output of new coins for miners.
 
so no you will not need constantly increasing massive amounts of computational power to support previous coins. you could secure it with just a single 1 core atom processor and continue a blockchain minting a new block every ~10 minutes after the difficulty adjusts. but because of the 51% attack the more power you have on the blockchain the more secure it is.


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