@ -209,12 +209,12 @@ A common misconception about bitcoin transactions is that they must be "confirme
The transaction is now propagated on the bitcoin network. It does not become part of the shared ledger (the _blockchain_) until it is verified and included in a block by a process called _mining_. See <<mining>> for a detailed explanation.
The bitcoin system of trust is based on computation. Transactions are bundled into _blocks_ which require an enormous amount of computation to prove, but only a small amount of computation to verify as proven. This process is called _mining_ and serves two purposes in bitcoin:
The bitcoin system of trust is based on computation. Transactions are bundled into _blocks_, which require an enormous amount of computation to prove, but only a small amount of computation to verify as proven. This process is called _mining_ and serves two purposes in bitcoin:
* Mining creates new bitcoins in each block, almost like a central bank printing new money. The amount of bitcoin created is fixed and diminishes with time.
* Mining creates new bitcoins in each block, almost like a central bank printing new money. The protocol regulates the bitcoin creation rate over time: It sets a fixed amount of bitcoin created per block, gradually reduces the amount created in future blocks, and will ultimately produce a predictable amount of total bitcoin.
* Mining creates trust by ensuring that transactions are only confirmed if enough computational power was devoted to the block that contains them. More blocks mean more computation which means more trust.
A good way to describe mining is like a giant competitive game of sudoku that resets every time someone finds a solution and whose difficulty automatically adjusts so that it takes approximately 10 minutes to find a solution. Imagine a giant sudoku puzzle, several thousand rows and columns in size. If I show you a completed puzzle you can verify it quite quickly. If it is empty, however, it takes a lot of work to solve! The difficulty of the sudoku can be adjusted by changing its size (more or fewer rows and columns), but it can still be verified quite easily even if it is very large. The "puzzle" used in bitcoin is based on a cryptographic hash and exhibits similar characteristics: it is asymmetrically hard to solve, but easy to verify and its difficulty can be adjusted.
A good way to describe mining is like a giant competitive game of sudoku that resets every time someone finds a solution and whose difficulty automatically adjusts so that it takes approximately 10 minutes to find a solution. Imagine a giant sudoku puzzle, several thousand rows and columns in size. If I show you a completed puzzle you can verify it quite quickly. If it is empty, however, it takes a lot of work to solve! The difficulty of the sudoku can be adjusted by changing its size (more or fewer rows and columns), but it can still be verified quite easily even if it is very large. The "puzzle" used in bitcoin is based on a cryptographic hash and exhibits similar characteristics: it is asymmetrically hard to solve but easy to verify, and its difficulty can be adjusted.
In <<user-stories>> we introduced Jing, a computer engineering student in Shanghai. Jing is participating in the bitcoin network as a miner. Every 10 minutes or so, Jing joins thousands of other miners in a global race to find a solution to a block of transactions. Finding such a solution, the so-called "Proof-of-Work", requires quadrillions of hashing operations per second across the entire bitcoin network. The algorithm for "Proof-of-Work" involves repeatedly hashing the header of the block and a random number with the SHA256 cryptographic algorithm until a solution matching a pre-determined pattern emerges. The first miner to find such a solution wins the round of competition and publishes that block into the blockchain.
Ed Eykholt
10 years ago