Tuesday, October 19, 2021

What exactly does bitcoin mining mean? What is the value of bitcoin?

Let's first understand the basic concepts of seven blockchains: first, "mining": the process of obtaining bookkeeping rights is vividly called "mining"; Second, "miners": people or organizations competing for mining, called "miners"; Third, "calculation force", that is, assuming that a mining machine is of the calculation order of about 10t, we can say that this 10t mining machine has 10t calculation force; The fourth, "proof of workload", is simply understood as "the more you do, the more you receive", referred to as "pow"; The fifth, "proof of equity", is simply understood as "the more you hold, the more you get", referred to as "POS"; The sixth "block" is a page of the account book born on the network every 10 minutes, which we call the block; The seventh, "blockchain", each block is time stamped and connected in strict order, which is called blockchain. We know that when the mysterious man Nakamoto invented bitcoin in 2008, it was because of the global economic crisis. Nakamoto thought that if we could build a currency issuance system without a central institution, the currency would not be exceeded infinitely, and everyone was very fair and just. So Nakamoto built a system like bitcoin. So, how does the issuance, bookkeeping and transaction of bitcoin proceed without a centralized organization? Nakamoto first stipulated the issuance mechanism of bitcoin. It stipulates that the total number of bitcoins is 21 million. The bitcoin network issues a page of bill about every 10 minutes. The generation of each bitcoin is accompanied by the generation of each page of bill, that is, the generation and issuance of each block. Nakamoto also stipulates that the bitcoin reward for each block is 50 at the beginning, and then halved every 210000 blocks. Until 2140. All bitcoins have been issued. Let's calculate the 210000 blocks. On average, one block is produced every 10 minutes. How long does it take to produce 210000 blocks? Theoretically, it takes 1458.3 days, that is, 3.99 years. This is the origin of the popular saying that "bitcoin is halved every four years". Since July 8, 2016, bitcoin has been halved for the second time, that is, the bitcoin reward associated with each block is 12.5. How do we calculate the number of blocks in the current block? It's very simple. Let's mark it with "block height". That is, the height of a block is the number of blocks since the birth of bitcoin! Open the block browser of any bitcoin, and we can see the latest block height. Through the block height, we can calculate how long it will be, how long bitcoin will be halved next time, how long it will be difficult to adjust, and how long it will be a major event. Then Nakamoto stipulated the form of bookkeeping. We know that bitcoin adopts workload proof mechanism, namely POW mechanism. All miners compete for accounting power by competing for hash calculation. Similarly, a math problem is thrown into the network every 10 minutes. We compete to see who is fast. In each round of competition, whoever first calculates the correct answer will obtain the bookkeeping power of this round. The bill on this page he recorded should be subject to this. Then, on the basis of this page of bill, everyone competed for the bookkeeping right of the next page of bill. Through this consensus mechanism, Nakamoto solved the unique rights and interests of the ledger under a decentralized system. Why should miners compete for bookkeeping? Using a computer to calculate needs to consume electricity and store a large amount of data. What are the benefits for miners? After all, relying solely on public welfare, such a system can not go far. This is also one of Nakamoto's smartest places: He binds the issuance of bitcoin with competitive bookkeeping. Every time bookkeepers get bookkeeping rights, they will get new bitcoin generated by the system as a reward. In other words, the fastest computer will "dig" a certain number of bitcoins. In each round of competitive bookkeeping, whoever obtains the bookkeeping right will obtain the newly born bitcoin reward in this block and the handling fee of the transaction recorded in the bill. In 2017, if you are a miner and get the bookkeeping right in a round of competition, you will get 12.5 newly issued bitcoin awards and all handling fees in this block, about a few tenths to two bitcoin handling fees. As the new bitcoin is halved every four years and the new bitcoin reward is less and less, will miners still have the incentive to dig? The answer is yes. Because they have another part of their income, which is the handling fee for bitcoin transfer. Do you remember we mentioned that in the bitcoin world, the transfer fee can be filled in by yourself? With more and more people and institutions using bitcoin, global bitcoin transfers are becoming more and more frequent, and the total transfer handling fee will be larger and larger. The handling fee will become the main source of income for miners in the future.

https://preview.redd.it/s2ttgimfceu71.png?width=1280&format=png&auto=webp&s=c8352772b9499616babb843c79c26ac3fa15cb04


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