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I know that you get bitcoins by mining, but mining is just lottery, right? What I want to know is what miners do to deserve bitcoins, or the money is just randomly given without requiring someone to work for it?

marked as duplicate by Murch, David Perry Nov 13 '13 at 0:38

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    You asked a very similar question two weeks ago, to which some answers were given and also a few potential duplicates. Are we not getting the purpose of your question right, or did you not see that? – Murch Nov 12 '13 at 23:12
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    Nope, Miners don't do anything but stabilize the network and make the transaction validation work. So, if you boil it down to it, the Bitcoin network creates money out of thin air to pay for it's continuation. However, the existence of Bitcoin in itself creates value as it is a useful tool. – Murch Nov 12 '13 at 23:34
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    This isn't a forum for debate. Stop asking the same question repeatedly just so you can argue your pet point. – David Perry Nov 13 '13 at 0:39
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    I think the problem at the core of this discussion is that your argument is inconsistent. You are arguing that people are getting paid, but you don't see how the effort that they are getting paid for is valuable. The inconsistency then is that either a) stating that they are being paid, means that Bitcoin has value and therefore providing the infrastructure necessary for Bitcoin to work is valuable, or b) what they are doing is redundant/worthless, then obviously their payment in Bitcoin is worthless as well. – Murch Nov 13 '13 at 18:05

Miners keep the bitcoin network running

  • Miners create new bitcoins, but

  • Bitcoin network adjusts its own mining difficult so that more there are miners less bitcoins each miner receives. This keeps the money supply steady (not inflatory - you simply cannot "print more bitcoins" like you do with fiat currencies as USD).

  • Mining requires a lot of power, so miners face the rising cost of electricity and how much you need to invest into mining equipment to have your mining operations profitable.

  • Miners also confirm bitcoin network transactions. When you send someone bitcoins, miners check that your transaction is genuine and not double-spent attempt.

Here is also related question How does a difficulty increase affect a miner's income?

  • All of the above seem to be all about maintaining bitcoin and all of it's functions, so it seems redundant, in the sense that you're working for bitcoin, to get bitcoins, it's money being made out of thin air, you're not serving any purpose to get the money. To make it more suspicious to me, when you say that miners require power and equipment, it makes me think that the only real thing that bitcoin does is help the computer industry – Fernando De Souza Martins Nov 12 '13 at 23:14
  • I think I am starting to understand what you are getting at. – Murch Nov 12 '13 at 23:23
  • @FernandoDeSouzaMartins Assuming you don't think there's any value in being able to make electronic payments around the world in an hour without needing the permission of any central authorities or risk of counterparty default. That's a hard argument to make given that there aren't any previous systems that let you do that. – David Schwartz Nov 13 '13 at 2:48
  • That value in which you're talking about, is usefullness, what i'm questioning is it's economic worth. I'm sorry, but i think i need an actual economist to answer me. – Fernando De Souza Martins Nov 13 '13 at 2:57
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    @FernandoDeSouzaMartins While there is a difference between usefulness and economic worth, pretty much anything useful will have economic worth. You can make this same argument about fiat currency having no economic worth and all the effort to create, hold, and trade it being wasted. – David Schwartz Nov 13 '13 at 8:01

Bitcoin is a payment system that has a number of characteristics that make it superior for some applications, e.g. international money transfer, online commerce, and peer-to-peer money transmissions.

Mining serves the purpose to slowly spread sufficient liquidity to the community, in order for it to be usable. Also, mining serves the stability of the Bitcoin network by validating transactions, and protecting against fraud. People giving their electricity and hardware are reimbursed by the miner's reward, creating an incentive to do what is good for the network. In exchange every user gets to use the Bitcoin network.

The mining reward is given out in a kind of lottery, but since it is being given out so often and through the miners forming mining pools, the reward is actually spread pretty evenly to all miners.

  • Again, all that miners do to get bitcoin is helping support bitcoin, that's redundant, if that all miners do, this currency rewards the making of the currency, it's like the money has been made out of thin air, it doesn't repesent a real value, i don't understand how it can have any value – Fernando De Souza Martins Nov 12 '13 at 23:33
  • Okay, so your question is, "if Bitcoin isn't backed by anything, how can it have value"? – Murch Nov 12 '13 at 23:36
  • No, that's another issue, i'm asking first about what is it paying? which leads me to what or why is it worth something? – Fernando De Souza Martins Nov 12 '13 at 23:51

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