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judymcconville@roadrunner.com 2017-05-01 15:43:21 -07:00
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((("bitcoin", "mining and consensus", id="BCmining10")))((("mining and consensus", "purpose of mining")))The word "mining" is somewhat misleading. By evoking the extraction of precious metals, it focuses our attention on the reward for mining, the new bitcoin created in each block. Although mining is incentivized by this reward, the primary purpose of mining is not the reward or the generation of new coins. If you view mining only as the process by which coins are created, you are mistaking the means (incentives) as the goal of the process. Mining is the mechanism that underpins the decentralized clearinghouse, by which transactions are validated and cleared. Mining is the invention that makes bitcoin special, a decentralized security mechanism that is the basis for peer-to-peer digital cash.
Mining _secures the bitcoin system_ and enables the emergence of network-wide _consensus without a central authority_. The reward of newly minted coins and transaction fees is an incentive scheme that aligns the actions of miners with the security of the network, while simultaneously implementing the monetary supply.
((("consensus", "achieving in absence of central authority")))((("central trusted authority")))Mining _secures the bitcoin system_ and enables the emergence of network-wide _consensus without a central authority_. The reward of newly minted coins and transaction fees is an incentive scheme that aligns the actions of miners with the security of the network, while simultaneously implementing the monetary supply.
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The purpose of mining is not the creation of new bitcoin. That's the incentive system. Mining is the mechanism by which bitcoin's _security_ is _decentralized_.
((("decentralized systems", "purpose of bitcoin mining")))The purpose of mining is not the creation of new bitcoin. That's the incentive system. Mining is the mechanism by which bitcoin's _security_ is _decentralized_.
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Miners validate new transactions and record them on the global ledger. A new block, containing transactions that occurred since the last block, is "mined" every 10 minutes on average, thereby adding those transactions to the blockchain. Transactions that become part of a block and added to the blockchain are considered "confirmed," which allows the new owners of bitcoin to spend the bitcoin they received in those transactions.