Analysis of how Bitcoin miners mine

Without motivation, there is no motivation. Everyone is self-interested, and no one is willing to provide their own resources to serve strangers and systems for free. Only by participating in the principle of self-interest, when the overall interests are consistent with the individual interests, the whole system will develop healthily and orderly.

Such a distributed system of Bitcoin is secure because all transaction information is stored in the blockchain, which is recorded in every device involved in bookkeeping. In this way, even if a node in the whole network has a problem, it will not affect the normal operation of the blockchain. Obviously, if such a system is to run healthily, it needs a large number of nodes to participate in recording.

Then the question comes. It takes computing resources to participate in bookkeeping. Why are there so many people competing for bookkeeping rights?

Satoshi Nakamoto, the founder of Bitcoin, created an incentive mechanism for Bitcoin, and offered Bitcoin rewards to the nodes that obtained the bookkeeping right, thus encouraging people to participate in bookkeeping.

Using the principle of Bitcoin cryptography, the hash algorithm is introduced into the algorithm.

The algorithm will give a very difficult calculation problem to the computers in the whole network, and the hash algorithm will adjust the calculation difficulty, so that it takes about ten minutes to get the correct hash value every time.

The stronger the computing power (computing power) of the nodes involved in bookkeeping, the greater the probability of being the first to calculate the correct hash value, gain bookkeeping rights and win bitcoin rewards. (Note that it is the probability, not the computer with the strongest computing power, that can guarantee that the hash value will be calculated first)

Such a way is very similar to mining. Therefore, people vividly call the computers involved in bookkeeping miners, and the process involved is called mining.

The following figure shows the trading mechanism of Bitcoin.

Bitcoin generates a block every ten minutes, that is, every ten minutes, the computer packs the whole network transaction into a block.

In fact, miners are people who compete for blockchain bookkeeping rights in the packaging game.

Whoever can solve the value of the mathematical proposition SHA256 quickly and accurately will win the right to package and book the block.

Every transaction within ten minutes will be stamped with a Timestamp.

Once the miners win the right to pack and keep accounts, they will receive bitcoin from the system as a reward.

In the first four years of Bitcoin’s creation, miners can receive 50 bitcoins when they successfully mine a block (get the bookkeeping right). After that, every four years, the reward of each block is halved, 25, 12.5 …

The total amount of bitcoins issued is 21 million, and the supply is limited, so it will be about 2140 years before all these 2100 bitcoins will be put into circulation.

Through this incentive mechanism, miners are motivated to participate in mining. At the same time, once Bitcoin is discovered, they will be more motivated to ensure the long-term development of the platform, purchase advanced equipment to strengthen computing power and spend energy more efficiently to maintain the operation of Bitcoin and promote the development of blockchain. Such an incentive mechanism is actually like employee stock ownership, thus forming a positive feedback.

 

 

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