146

Here is an extremely simplified sketch of the problem, but it should give a pretty good idea of what the problem is. The data: This is the hash of the lastest block (shortened to 30 characters): 00000000000001adf44c7d69767585 These are the hashes of a few valid transactions waiting for inclusion (shortened). 5572eca4dd4 db7d0c0b845 And this the hash ...


63

The following is a description of the global, statistical gamble which is played every 10 or so minutes. The interval of the game is controlled by the difficulty which says how many "hashes" are needed per interval. In other words, the difficulty and target define the "odds of the house" against your chance of getting a winning SHA hash. The nonce is the ...


39

They try to find a random nonce (a little random data) that goes into a block and makes the block have a (SHA256) hash that (in binary) starts with a certain amount of 0's. The more zeroes the more rare hash is. A good hash' outcome is not predictable, and so you have to try a lot of times to find a good nonce. The amount of zeroes are based on how ...


30

The term "coinbase" is used to mean many different things. But the two you're probably asking about are: The "coinbase transaction" is the transaction inside a block that pays the miner his block reward. Inside the coinbase transaction is a field that is called the "coinbase". It's the generation transaction's equivalent of a scriptsig. Since it doesn't ...


27

Basically there are five main ways of getting bitcoins: Mining Buying Offering goods and services for Bitcoin Obtaining for free through micro payment Asking a friend who already has them to give a tiny fraction for free Let's start with mining: first of all I have to warn that currently there is almost impossible to mine by your own. You need to have a ...


25

The estimate is 2140 based on the block reward halving frequency of four years. According to math and knowledge that there are 32 halving events, in 2136, the block reward will yield 0.00000168 BTC per day, which is 0.00000042 BTC per block. That's 42 satoshis. It's arguable that there could be one additional halving, to a block reward of 0.00000021 BTC, ...


23

There will definitely be a tragedy of the commons problem if things stand as they are now. This was discussed at some length here and elsewhere. There are some proposed ways to address this and make transaction fees nonzero (block size limit, hardcoded fees, insurance entities, mining cartel, gentleman's agreements which are maintained for fear defection ...


23

Assuming Bitcoin is still active at that point in time, mining will continue, because transaction fees will make it worthwhile to do so. This topic has been discussed heavily in other answers, including: What happens once the mining reward gets cut in half? How many bitcoins will there eventually be? How much will transaction fees eventually be? The last ...


22

The block is accepted, and the coins are lost. Poor miner. Here is a link to the part of the 0.6.3 source which checks this: https://github.com/bitcoin/bitcoin/blob/v0.6.3/src/main.cpp#L1362 Also, this has effectively happened before; block #124724 claimed one satoshi less it than could have.


20

Mike Hearn just posted about how Network Assured Contracts handle this problem. I don't find an immediate flaw with this. This is how I understand the proposed solution: Anyone with an interest in a high hash rate (basically, anyone holding a large amount of coins), can initiate or cooperate on SIGHASH_ANYONECANPAY transactions. Those are an ...


17

Mining is not essential for coin creation. New coin introduction can be tied to new block creation, or be time based. Even if you don't use proof of work, you will still have blocks (even if you don't call them that way anymore; they may be called "database updates"). More interesting however, if you don't use proof of work, you don't even need your own ...


14

Every block has exactly one "coinbase transaction", the one transaction which doesn't have actual inputs, but gets all the fees and mining subsidy. Every 210000 blocks, this subsidy halves. Right now, each block is allowed (not required!) to bring 50.00000000 BTC into circulation. Very soon, this will become 25.00000000. Four years later, 12.50000000. And ...


12

Mining provides a way to reach consensus on what the transaction ledger should look like and know that nobody is cheating. That's the non-technical definition of mining. What exactly is Mining? The "authority" for double spending is the blockchain. The blockchain consists of the history of all blocks in the blockchain plus the next block of transactions. ...


12

It is exactly at block 420000. When block 420000 will be mined is not certain, as the block mining process is random and influenced by hashrate variation.


11

As you mentioned, bringing coins into the network is one of the main purposes of mining. But this reward is just an incentive to do the other more important part of mining: 'processing' transactions. Immutability As detailed here, when a block has been solved, not a single bit can be changed without invalidating it. This means that all of the ...


10

No, mining will not come to an end at that point. The article is incorrect. Mining will continue once the block rewards are no longer available, as transaction fees will continue to be offered. As the block rewards tend towards zero, the total value of transaction fees in each block will start to exceed the block reward. This will happen long before the ...


10

Immature coins are coins that were created in a block reward and haven't aged sufficiently, yet. The problem with block rewards is that they could still disappear again, if the generating block ends up being invalidated by a competing block chain. In order to minimize the confusion and subsequent problems from someone spending coins that end up disappearing ...


10

the protocol allows a miner when he creates a block to send himself 25 BTC which do not have a proper source (input). that's how those 25 BTC are created, they're bitcoins that come from nowhere.


10

how is the output of a coinbase transaction (plus block's transaction fees) different than the outputs of any other transaction? Because it's validity is tied to WHICH block it is included in. You can't take a coinbase transaction and include it as if it were a standard transaction in another block, because it creates more bitcoins than it spends, which is ...


9

There will be 32 more if the precision doesn't increase. If Bitcoin lasts this long (very unlikely), precision probably will be increased.


9

Because the block halving incentives getting into Bitcoin NOW, rather than later. Early birds take more risks and get more rewards. Otherwise the network would have problems getting enough miners involved in the first place. Asides that, there is a concept of inflation and deflation - we have already experienced the first one, so we might as well try the ...


9

These charts show the approximate network hash rate on the left axis: http://bitcoin.sipa.be/ We know the network adjusts for 25 new bitcoins per 10 minutes. Together this provides enough info to give an approximate answer to your question: hashes per bitcoin = (network hash rate) / (25 BTC per 10 minutes) = (180 * Th / s) / (25 * BTC / (600 * s) ) = ...


9

Technically, yes it's possible to do this. Practically, doing this would probably break everyone's trust in Bitcoin. One of Bitcoin's principle guarantees is that nobody can confiscate anyone else's bitcoins through the Bitcoin protocol. This protects all of us, but it also means that we're each responsible for keeping our private keys secure. If we fail ...


9

The answer is constantly changing, but this is something you can calculate yourself. Look up the current Bitcoin difficulty value. Right now it is 460,769,358,091. Let's use scientific notation: 4.6e11. The difficulty determines the average number of hashes needed to mine one block. A minimum difficulty of 1 corresponds to 2^32 = 4.3e9 hashes, so we need ...


8

I've read some of the linked discussions, and it seems some of the participants fail to understand the basic economic theory of the marginal cost. In any high fixed-capital business, the net present value (NPV) determines the ROI (IRR) and determines the opportunity cost where investors apply their capital. Thus, in normal functioning markets, the lowest ...


8

According to the list of available charts, that chart is showing "miners revenue divided by the number of transactions". That is, it's the average amount a miner earns for each transaction they process. "Bitcoin mining cost per transaction" isn't a very good title for the chart. So far, the vast majority of miners' earnings comes from the 50 BTC per block ...


8

A block may contain only one transaction: the coinbase transaction. However, the time it takes to mine a block is not affected by the number of transactions in that block, so mining blocks with fewer transactions does not benefit the miner. On the other hand, miners collect fees from the transactions they include in a block, so by including more transactions ...


7

David has already given a good explanation of the term coinbase, but I'd like to give further details on the coinbase transaction. The coinbase transaction is a special type of transaction. Every block must have a coinbase transaction, other transactions are optional. The coinbase transaction must be the first transaction of the block (it follows that ...


7

All times approximate. Each block takes ten minutes, so there are six blocks per hour, 24 hours per day. The original block reward was 50 BTC. Thus, 7200 BTC per day introduced to the system. I contrived this script to model the decline, including the year the halving is expected to occur: ruby -e 'reward = 7200.0; halving = 0; while halving < 33 do ...


7

This rule is to prevent people from unintentionally spending Bitcoins that they wind up not owning. For any Bitcoins other than the block reward, unless you intentionally double spend, a reorganization leaves your transactions valid. So they can just be included in the new blocks. (Assuming they don't spend the proceeds of a double spend.) However, if ...


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