Parthenon wrote:I just don't get exactly what a bitcoin is. From what I can tell you download a program onto your computer that calculates stuff and if it successfully finds a solution you get paid some bitcoins by the cloud of all the interconnected programs. However, it is possible to download the program, have it running 24/7 for weeks and not get any bitcoins, or have someone else find the solution just before you and make your processing time wasted.
Doesn't this reward people who have enough money to set a few servers to calculating and ignore the vast majority of people? They say themselves in the FAQs that only the high end GPUs are useful for making bitcoins. So basically I have little to no chance of making bitcoins myself.
First, instead of thinking about "a bitcoin", think about "a voucher for some number
n of bitcoins, where
n is any positive rational number". These vouchers can be infinitely combined and subdivided; for instance,
this transaction takes three vouchers, combines them, and then splits the total into two vouchers that are then given to different people.
Vouchers are transferred whenever someone creates and publishes a "block", which is a chunk of cryptographically-secure transactions with some random numbers thrown in so that the entire thing (if viewed as a sequence of bits) has a particular and very, very, very special property that is equally rare. "Mining a block" means that you find a set of the random numbers such that the block has that special property. Finding this set of random numbers is almost impossible; the protocol tunes the difficulty so that it takes the combined effort of every bitcoin miner on Earth ten minutes to find a valid set of these random numbers. Blocks that don't have valid numbers are rejected. Blocks that have valid numbers are accepted by the network and the transactions in them become "real".
To convince people to create blocks, there's a reward for doing so. In particular, the network lets you create a voucher for fifty bitcoins out of thin air and give it to yourself. You also collect any transaction fees people have paid to thank you for crunching all the numbers to move their vouchers around.
Now, going back to finding random numbers to mine a block. It turns out that the special property is special in such a way that the only way to find random numbers is pure guess-and-check; there are no heuristics or "guidelines". This means that anybody can just randomly generate a block, but the people
most likely to find a block are the ones with the most computational power and the most guess-and-checks per second.
One way for average people to get around this is to join a cooperative-mining pool. Basically, you and a thousand other people cooperate to find a block and split the profit when you do. It may have taken you a year to find a block (and $500 in bitcoins) by yourself, but since you're raising the pool's chance of rolling a natural 6549873254 by some small amount, you get a cut of the money.
Cynic wrote:I wonder if I could use it to play poker online in the states. Yes, this is the most diabolical thing I can think of...
Yup.
name_here wrote:I'm wondering how exactly the system intends to prevent some jerk with a botnet from simply distributing a completely made-up set of blocks on a sufficiently massive scale to convince the overall network that they're real.
First, the original paper calculates the amount of computational power that would be required to do this, and how much power you have. It turns out that you'd have to control more than 50% of the
entire computational power of the bitcoin network. I'd guess that, right now, Bitcoin is something like the most powerful computation on the planet. Good luck.
You also really can't do very much with it.
You know, I should really just sign up for that TA position. I find far too much entertainment value in just explaining things to people.
