Bitcoin pool chart 2015
A hash is a fingerprint of data. Hashes look random compared with the data put in. You can play with hashing here: If you change just one part of the data, the hash looks entirely different. I added a question mark:. Adding or changing just one characters results in a totally different-looking hash. What does the hash of this look like? I kept going, and to find something that gave a hash starting with a double zero, it took attempts:. Bitcoin mining is essentially the same game, where you tweak the input data the block header so that you get an output hash that matches what is required by the network at that point in time.
Satoshi Nakamoto, the proposer of bitcoin, recognised that if you want lots of people to spend hardware and energy creating this network, you need to incentivise them: The white paper is here , and well worth a read.
How do you pay anonymous participants, without creating some sort of power structure? Any source of funding provided by some entity e. Satoshi realised that an intrinsic source of funding, where a payment is paid by the system rather than by any external party, would be the answer.
This is why miners are paid by the system, in tokens which have a value that is related to the size and security of the system. Theoretically, the more valuable the tokens become, the more money can be spent mining, leading to an increase in security and an increase in the value of the network.
You just need to download some software and run it. Your computer will then start taking transactions that it receives through the bitcoin network, and it will bundle them into blocks, and start mining the block.
Your chance of mining a block is somewhat proportional to the amount of computing power you throw at it, because mining is a guessing game, and faster computers guess more quickly. In practice, successful miners form groups, or pools, and combine their processing power. If they win a block, the reward gets shared between participants.
This is similar to forming a lottery syndicate, so you win less, but more often, and your income becomes lumpy. So despite the rhetoric of bitcoin being decentralised, it is controlled by a handful of people in China. See this Financial Times article for further reading: Mining is mainly done by Chinese pools. In , at first people could mine successfully on their laptops and home computers, using the CPU Central Processing Unit to do the calculations.
This was the next revolution in hashing power, starting in I recommend this article which describes the history of mining better than I can: Other nodes will reject this, which is why it is important to confirm a transaction across a number of nodes. With transactions, the effect a dishonest can have is very limited. If the rest of the network is honest, they will reject any invalid transactions coming from the baddie, and they will hear about valid transactions from other honest nodes, even if the miscreant is refusing to pass them on.
With blocks, if the miscreant has sufficient block creation power and this is what it all hinges on , he can delay your transaction by refusing to include it in his blocks. This lets him unwind a transaction. Mining pools may contain hundreds or thousands of miners using specialized protocols. The Pay-per-Share PPS approach offers an instant, guaranteed payout to a miner for his contribution to the probability that the pool finds a block.
Miners are paid out from the pool's existing balance and can withdraw their payout immediately. This model allows for the least possible variance in payment for miners while also transferring much of the risk to the pool's operator.
Miners earn shares until the pool finds a block the end of the mining round. In other words, all shares are equal, but its cost is calculated only in the end of a round. Bitcoin Pooled mining BPM , also known as "slush's system", due to its first use on a pool called "slush's pool', uses a system where older shares from the beginning of a block round are given less weight than more recent shares. This reduces the ability to cheat the mining pool system by switching pools during a round, to maximise profit.
PPLNS method is similar to Proportional , but the miner's reward is calculated on a basis of N last shares, instead of all shares for the last round. Therefore, if the round was short enough all miners get more profit, and vice versa. GM was invented by Meni Rosenfeld. Multipools switch between different altcoins and constantly calculate which coin is at that moment the most profitable to mine. Two key factors are involved in the algorithm that calculates profitability, the block time and the price on the exchanges.
To avoid the need for many different wallets for all possible minable coins, multipools may automatically exchange the mined coin to a coin that is accepted in the mainstream for example bitcoin.
This method also increases demand on the intended coin, which has the side effect of increasing or stabilizing the value of the intended coin. From Wikipedia, the free encyclopedia. This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed.
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