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As far as I understand it currently, when winning the "lottery" (mining) you can add a block, sum of transactions, to the blockchain. This block is in the first instance verified by all network users.

BUT can`t a lottery winner also add a fraudulent block to the chain?
What does this lottery contribute to the validity of the chain?

Or in other words: How are miners approving a bitcoin transaction, besides adding it to the blockchain when they win? Potentially, they could also add a lot of "sh**" to the blockchain.

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Miners do not prove validity. They solve the problem of needing to decide between two potentially conflicting but otherwise valid versions of history.

The rule that full nodes follows is that they accept the longest valid block chain, where valid is defined by the network's consensus rules, and long is defined as having more mining work performed. If a miner produces a block that is invalid according to those rules (for example, it spends a coin without valid signature), full nodes will ignore the block and any block built on top.

There are also lightweight nodes ("SPV nodes") which do not verify validity at all, and will accept whatever block chain has most work. Their security however relies on the fact that blocks are expensive to produce, so a miner wouldn't create one that isn't accepted by full nodes.

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  • Does the above concept work also in distributed ledgers? Where you have several network participants with different ledgers?
    – Carol.Kar
    Commented Feb 18, 2016 at 21:26
  • @Kare: In the above concept, several network participants have their own ledgers, but they will (most of the time) arrive at the same state.
    – Murch ♦
    Commented Feb 18, 2016 at 22:46
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BUT can`t a lottery winner also add a fraudulent block to the chain? What does this lottery contribute to the validity of the chain?

No. If the block is invalid, it's ignored by everyone.

The "lottery" only determines which chain of all fully valid blocks is the right one. For example, say I have 1 bitcoin and I sign two transactions, one sending that bitcoin to Alice and one sending that bitcoin to Bob. Both those transactions in the same chain would be invalid. But you can imagine two chains -- one with the transaction to Alice and one with the transaction to Bob. Both are valid, which is right. That's what the mining lottery is for. It solves the "double spend" problem without a central authority to arbitrate.

Or in the other way: How are miners approving a bitcoin transaction, besides adding it to the blockchain when they win? Potentially, they could also add a lot of "sh**" to the blockchain.

The same way everyone else does. If they add a transaction other people won't consider valid, then their block will be ignored and they will have wasted the effort they spent mining it.

Blocks that don't pass all the requirements for validity, including checking every transaction in them, are totally ignored. Honest clients will never relay them to other clients or consider them part of the valid block chain.

Every participating Bitcoin full node can verify every single transaction in every single block.

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the answer is simple. if miner puts shit into the block, the next miners would ignore the incorrect block. the original miner looses the reward.

mining without reciving reward is pointless, the miner would be just wasting power

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