Back to Top

What is Bitcoin Mining – Bitcoin Mining Explained (in laymans terms)

One of the most confusing concepts within Bitcoin on the whole, is the process of mining. The explanations to “what is bitcoin mining” often given on the new…

Reblogged 4 months ago from www.youtube.com

Comments

ino145 says:

So you shouldn’t do this to make money? It’s to help and secure
transactions? I’m so confused by all this since the other day my friend was
like: I ‘got’ this game and they say there is a Bitminer in it.. And he
asked me if I knew what that was. So yeah, how does that work? A bitminer
in an instalation of a game, possible?

YeastyFerment says:

So if I understand this correctly the service that is awarded currency is
the act of processing a transactions mathematical puzzle? Why is this
information of value to anyone?

Also, why is the electricity or hardware cost relevant? My interpretation
is that bitcoin miners are using their rig that they invested in for other
uses to run background tasks while the machine is not in use to generate
this “revenue”? And if one leaves their computer on at all times for
instant communication accessibility, isn’t this merely a potential way they
are recouping costs? Otherwise, if this wasn’t the case, the electricity
argument makes sense, while the hardware argument still doesn’t really
apply?

My greatest confusion though, is why processing the transaction is of any
value? I’ve always understood traditional online banking is secured by NP
puzzles that are of value because they are very hard to break, and the
transactions require very little resources to process because of this. What
exactly is BitCoin doing that is any better than this? Somehow a currency
that is of value because each block is actively being solved by scripts
gains more value?

Maybe I’m just misunderstanding what a block is. As far as I can tell, it’s
a measurement of problems that are valuable when they are not broken, and
when broken a new problem is presented to be the crypt for the currency?
This seems insane for such a currency to carry any monetary value. I’m not
really worried about the “pool” problem, that seems a moot point.

I spend Canadian dollars because everyone acknowledges that pool and
thereby my money is worth something. Bitcoin seems to be suggesting money
has an intrinsic value, but the value is some kind of alternative to
current online banking. More to the point though, as a human, I can’t even
access this intrinsic value, my brain can’t do those computations at any
reasonable speed, so the only “people” that can consider this currency
worth something are what? CPU’s and GPU’s? Alternatively, banks seem to be
doing the job just fine with their problem sets?

This video’s explanation really makes this sound like a “something from
nothing” scenario. Someone help me out please.

Amin Masoud Moradi-Talebi says:

Thank you for your explanation, but I still can’t get the value of Bitcoin
Mining as MelonBobby said this is not worthy electricity cost more versus
bitcoin.

Matthew Pflugfelder says:

Hey man, i was just wondering what happens when bitcoins stop being
distributed and transactions keep taking place? Where will the incentive be
to keep the system going?

TheSeeka says:

Good video and clear explanation, thanks. Quick question; the fees deducted
from the mining charge go where? The operators of the platform or pools?

Mack Johnny says:

If you live on a university can you use their electricity? 

LIX 59 says:

It will be quite amusing when this Ponzi Scheme implodes. When will idiots
learn from history ?

Ainoa Medina Cruz says:

I suggest you guys try a new way of mining bitcoins. You purchase your GH/s
like stocks on the market, the moment your order gets filled it starts
mining for you automatically without you having to invest in hardware or
wait for delivery. The obvious benefit is that you can sell back your GH’s
anytime you want, like I say, as on the stock market. Check it out, its
pretty cool: http://goo.gl/68IP2B

Maxx Memmels says:

I switched from mining myself to cloud mining. You can buy mining
equipment instantly and the earnings are applied to your account
https://cex.io/r/1/Envalon/0/
(Free 1 Gh/s of mining if you use the link!)

Nikola Pavlovic says:

You can roll free bitcoins if you don’t have hardware to mine it :) You can
get anywhere from 0.000002 bitcoins to 0.2 bitcoins. It only depends on
your luck :) You only need bitcoin wallet to register :)
Here is the link:
If you find this helpful be my referal: http://freebitco.in/?r=42858
In not and don’t like me: http://freebitco.in 

Bitcoin Catalogue says:

What is Bitcoin Mining – Bitcoin Mining Explained

#BitcoinMining #Bitcoin

Mark Swift says:

Thanks this is the first time anyone has made sense explaining this. I knew
there was a catch.

tubebility says:

Great microphone.
You seemed a bit high at the end though.

Joshua Myler says:

You sound South Africa, am I correct?

Frank Sininger says:

hey send me bit coins FAGGOT !!!!

markus peg says:

If you dont want to mine you can still make some bit coins here
http://freebitco.in/?r=10449 though the amount is less you can get it every
hour and it all adds up

Fabian Szabo says:

great video thx :)

adevezar says:

I’m using a site called CLOUDHASING

Dieselmechanic509 says:

im pretty sure all the computer geeks are getting rich

Republic of Software says:

Thanks!

fiker ayalkem says:

so i know it is like your helping out a friend by letting them use your
computer like big research facilities like Stanford or the SETI DO,but is
there any way that i might be helping people that are not from the bank/
and i know nothing about this so even if my question sounds stupid … what
i don’t understand i ask. and thanks for the video

Adam Chalmers says:

Nope. You can go to cloudhashing (dot com) and pay for a contract. They do
all the processing for you.

Adam Chalmers says:

Multiply that by 365 days and that’s $12,045 per year. Not bad!

Evan Clegg says:

Looks tyranny proof, besides the electric bill. huehue

S Craigs says:

I understand the basics of a peer to peer process but where is the logic or
rules of creating a bitcoin block stored/enforced? I understand groups of
mining computers run routines to “match” a new block but where is this new
block waiting to be discovered, what code decides a match has occurred? Is
all that logic in some base program code that resides on all machines in
the P2P? It can never be changed? There have been no errors or
unanticipated problems with this code?

Desmond McNamee says:

If only 21 million bitcoins will ever be created, what will be the
incentive to “mine” bitcoins when there is none left to distribute?

Dave Burrows says:

Thorough, reasoned, objective; excellent. Thank you.

WAPTek2 says:

the only math routines are network system encription routines to prevent
bitcoin from being traced crashed, & or “gamed”

WAPTek2 says:

your theory is based on an ideal so ok, but in the real , practical world
you are wrong, . i know you will ignore this , but i had to point this out

WAPTek2 says:

Lets say you set up a peer to peer system you help the network by allowing
your computer to share (seed) any file you download or want to share, your
reward is that the more seeders their are the better the network performs
if you build a computer system to help bitcoin process transactions
securely & anonymously the system reimburses you for the work done by your
system with bitcoins

William Franklyn says:

only making $33 in btc/day…..but it’s just fun to do!!!

Nikkolo Makaveli says:

i’m assuming you need a computer with a high rate graphics card for this
right?

yinzjagoffs says:

What happens after all the coins are mined? How are the transactions
checked if no one is mining?

yinzjagoffs says:

Gold miners are also expecting more people to use gold, so by your
definition gold is also what you see as debt.

JOHNRFC72 says:

I hope your sister and mom die.XD

JOHNRFC72 says:

$99 wright now

Против Глобал says:

Take a look at this: /watch?v=jW1hFQndX2I

MrShorty1899 says:

finally I’ve found a great explanation! thanks m8

MelonBobby says:

A useful explanation – in the beginning – but missing a conclusion. If you
get 25 bitcoins (~US$2,750) for mining a block of data, and this requires
an outlay of US$10,000 in electricity, what is the incentive?

Write a comment

*

http://lasallestreetcapital.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon properties.