So, I am already aware of a few things with the BitCoin. Block chain seems simple enough. Get paid for finishing "work" got it! Foreign, not a US based situation. OKIE DOKIE!!!
Can someone explain the "work" to me. I have been pondering this for days and it is driving me up the wall. Best I can tell is it is an encryption breaking system that they let out into the wild to see if they could market such technology... I think it has done quite well, given all the secrecy surrounding it. I have heard that it preforms crazy mathematical equations and the only reason that I see it as necessary, actually functional in anyway, is encryption mining. Can someone explain in detail how it is not being used in this way? What maths is it being used to figure out and why is it necessary to get everyone on board with this new system? Given it's ability to conceal data within itself (that would be, as I understand it, the very nature of the beast) keeping a log of everything that passes through it. I hear that it is encrypted itself so I am really just curious. Is BitCoin/block-chain really just a front for encryption mining? Can this new tech be used in a way that is not outwardly apparent? I myself have ran some miners in the past and they do consume loads of power, so they are obviously doing something.
It is fairly simple, but difficult to explain.
The mathematics is not difficult; there's just a lot of it. You can take any binary data and calculate a "hash". If you are not familiar with that operation, look into "hashing data".
Each block in the blockchain is a ledger of transactions and includes the number of the previous block in the chain. Also, it includes a "nonce", which is a number the value of which is unknown.
Each block is hashed using SHA-256, which transcribes data into a unique code of fixed length. The actual "work" is finding the value of the nonce, such that the hash of this block has certain properties.
A typical hash looks like a string of hexidecimals and is always of fixed length. Now, we call a block finished when we find a value of the nonce such that the hash of the block is such that the first N characters of the hash are 0. This is what is called the "difficulty" (so if N = 10, the difficulty is 10) . As the blockchain grows, rewards get lower and the difficulty rises. This guarantees that only a limited amount of BitCoin will ever exist.
You can imagine it is quite simple to find a value for the nonce that makes the hash of the block start with a 0. It becomes more difficult, the more zeros you want to have at the beginning of the hash.
The process is very simple. You can write a BitCoin miner in Python in about 10 lines of code. However, the difficulty is with the speed of the calculations. It takes very long to find the correct value of the nonce for a block, because you have to try all values. On top of that, hashing large amounts of data just takes a lot.
So, now you understand where "megahash per second" comes from. You will probably understand why you can not mine anything anymore with a GPU with less than 6GB of memory. You will probably understand why there are mining pools (people spread their luck by pooling their results together).
That sounds like encryption mining to me. Having the computers of the end user to make all of the possible #hashes and writing them down for later use by an unknown source. I could be wrong. Do we really want the foundation of our money to be "luck" based?
Well, there is a little more to it than that. The important thing is that the ledger is public and the blockchain can only grow through mining. Mining costs time and electrical energy, so there needs to be an incentive. This incentive is being paid out in BitCoin when finding the correct nonce.
The correct solution changes depending on the content of the current block. You can not store hashes for future use. Each value of the nonce has to be added to the current block; then the whole block needs to be hashed to see if we have found the correct nonce.
I would rather have such a system than have hyperinflation and deficit spending to be honest.
BitCoin has already experienced those. STOP TAXING THE FUCKING MONEY and we wont have an issue. So long as the currency can be taxed for it's own existence we will never be rid of this. Not to mention ending fractional reserve lending, dropping the interest rates of everything to a solid, no changing, limit and only taxing NEW products and not a continuation of taxes levied through fees and "privileges". Everything was put on a subscription basis. Hell, you have to subscribe to your bank just to have them offer you the opportunity to hold your money for you. Made sense when it was physical and required safe housing and ACTUAL transport.
Making technology awesome only to nickle and dime every step of the way. Already happening, https://www.youtube.com/watch?v=GLlzAv2GTdc