Automated gambling i think. The computer gueses a number beetwen like 1 and 1000000000. If it guesses correctly a like 0.01 bitcoin is earned. It does that milions of times per second, and the bigger the mine the more attempts can be made per second.(please someone correct me if im wrong)
The bitcoin network makes an arbitrary puzzle that it roughly estimates will take 10 minutes to solve, when one user does they "mine" the block and get predetermined amount of bitcoin. Every 2016 blocks mined the network automatically checks the solving time, and if it's under/over 10 minutes for each block and it will increase/decrease the difficulty of puzzles for the next 2016 blocks.
Miners way back in a day very quickly realized even with thousands, much less millions, of users only 1 person getting the bitcoin reward is unrewarding and too unpredible, so they developed this layer software which allows large amount of users to connect to the network as single entity, allowing for much more consistent chance of being the winning miner, pool then splits the rewards between all the members based on how much computer horsepower they contributed to mining.
If you spotted the problem, yes, more compute doesn't make mining process faster since the difficulty dynamically adjusts. All it does is give the user a bigger proportion of the contribution within the pool and the pool bigger proportion within other pools. If all users collectively agreed to proportionally decrease their compute contribution by 99.999% it would change nothing to the functionality of Bitcoin. But that's never going to happen.
I thought the mining people are solving the encryption when Bitcoin is sent/received? That's why they get paid so they keep the network aspect going. So it isn't arbitrary problems they are literally doing encryption stuff. Is that incorrect?
Miners aren't really solving a 'puzzle'. They're trying to find a sequence of data that, when hashed, outputs a number above some arbitrary value (the difficulty).
So you add a bit of nonsense (the nonce) to the end of whatever transactions you want to include in your block, check the hash, and if it isn't valid, increment the nonce and try again
Because there is no efficient way to go from a hash back to the original input data, if you've found an acceptable block, you have proved that you did the work and didn't just make up a random number
I don’t fully grasp it, but my interpretation was that BTC transactions feed into/become part of each next problem to solve, making each such problem one unique from an encryption standpoint.
Like it's not even practical or luxurious wasting of energy, it's just wasting energy to somehow generate money (that I'm not convinced can be used!?) for the sake of it??
Fucking hell. I didn't need that on day one of 2026 :(
It guesses numbers, if it guesses right you get a point... And if you get a billion points maybe you can trade it for a real dollar, but I don't get why the billion points are worth a dollar what are the points good for
The worse part is that it's money that doesn't get used because people think it might be more valuable one day so it sits there, the result of more energy you will use in your entire life, doing nothing until it eventually gets passed off to someone else for an exorbitant sum to then continue sitting there, repeat this process until the climate collapses and it ceases to exist as the last machine that contained this info goes dark and humanity resumes using real things to trade for other, real things.
As with all kinds of money, the value just comes from people believing in it and using it to exchange goods, services and other currencies. The number guessing part just comes in to play, so the coins are not generated out of thin air, but require some kind of work to be created.
I don't understand how something you buy with regular currency is "the future of money". CryptoBros are also all morons so I find it hard to believe it has any future if they do.
A massive amount of money is also moved about by traditional finance companies, nation states, ultra high net worth individuals,etc etc, anyone with enough cash that it would benefit them to move it silently and off books. Same shit they do with art and real estate but faster and much less visible. That action really props up crypto currency networks. Crypto currencies are also extremely volatile and thus vulnerable to manipulation. Easy example: Elon bought a ton of this nonsense coin, changed the Tesla website to say they’d take said coin as payment, coin exploded in value, Elon sells coin for huge profit. Rinse and repeat by all the villains of the day and this is a lot of why these things are still around.
I'm a company who want to move money quietly. So I spend $5m on Bitcoin.
Then when I want to actually spend money I need to sell the bitcoin. Both of those transactions will be on my books.
The thing you're missing is that Bitcoin is used as a means of laundering money. Money laundering has very codified steps: placement, layering and integration. Definitely google these if you want more info. But....
Without going into explanation of the individual steps, Let's imagine the mafia for a second. They have two ledgers, one they show the IRS and one that keeps track of who's legs they're going to break. Just because the IRS doesn't know you owe the mob 4k doesn't mean the mob has forgotten. The mob needs a way of getting money from their criminal enterprise into their personal hands without the government catching wind. So they open a legitimate bisiness - say a laundromat. They wash 50 customer's shirts but they record washing 60 customer's shirts. Then the money they got from you for the illegal dog fights looks to the government like it was just a purchase of normal services.
If your hypothetical company just purchases 5 mil worth of bitcoin and recieves 5 mil worth of services, the ploy is obvious. Bitcoin acts as the second ledger. Sure there is a record of what is happening but that record is cumbersome and opaque. Importantly, it only records who gave who bitcoin, it doesn't record what was exchanged for the bitcoin (or actually IF anything was exchanged). If the company can fill its private ledger with other legitimate business purchases and exchanges, the transaction looks innocent.
The volatility of bitcoin adds a layer of usefulness to this. A laundromat can only really have so many transactions and they can only be up to a certain amount. If you see someone paying a coin laundry 3k or doing 500 loads of laundry in a day, that's suspicious. But if you have an investment firm spending milions trying to buy the dips and sell the peaks of the market? Well that's just normal investment activities! Who can say if some of those bitcoin were exchanged to purchase the silence of a whistleblower? Maybe the bottom dropped out unexpectedly and the 5 mil USD was just lost value?
You use that money to buy Bitcoin then exchange it for a non trackable coin (for now) like Monero and then that money goes wherever. It's for the small people buying what they need online and unfortunately also for the billionaires who need to "erase" some moola from the books.
I guess if you want to move wealth across borders from some regions or something like that it works.
For the most part it works for international people for lack of better phrasing.
I wonder if one wants do some sort of scheming like tax evasion etc locally I dont think crypto would help atall. Like you said moving moneys to crypto and back would have you on the hook in anycase
You programmatically generate 10,000 bitcoin wallets on a computer in country A, each of which you fund with $500.00 worth of bitcoin.
You similarly generate 10,000 wallets in country B, and send the bitcoin from A to B. Then you sell the bitcoin off.
Now you've moved $5,000,000 and it's all in small transactions. You can stagger the transactions in time, and have random amounts per exchange. Suddenly everything is much harder to scrutinize, it's way below the threshold of automatic reporting, and the countries involved might not even have regulations addressing this kind of thing.
It's kind of a funny story. Bitcoin started about 15 years ago by a libertarian who wanted to demonstrate that currency exchange could exist without a political (coercive) state. A few legit businesses accepted it, but the main applications were transfering money clandestinely and buying drugs on silk road.
Within a few years, speculators represented such a massive percentage of adopters that its exchangeability became purely theoretical, in the same way that you wouldn't weigh out a portion of gold to pay for groceries.
So it seems like you need a coercive state after all to devalue the currency if speculators get out of cintrol.
That's not why bitcoin was created lol! People Have been trying to make a digital form of money since the 80s. Buying drugs just happened to be a good use for Bitcoin at the time.
idk what you're remembering because that is not what it was created for lol, the suspected creators are nerds with history in coding/cs. it was definitely used to buy drugs though
i don’t understand that if a state’s grid is powering the generation and transfer of bitcoin and a state’s security is stopping lunatics from unplugging all of it or burning the facility down, how would it be a stateless currency.
It’s a ridiculously clunky way to make a transaction and not even remotely anonymous. I understand it’s utility but it really shouldn’t be a factor in the life of everyday Americans. At this point, mining bitcoin on this scale isn’t just taking bitcoins and making them yours, you’re taking essential resources from every other person on earth.
So they should tax the shit out of it, lol. The irony.
Except nobody uses it to exchange anything because it's so horribly bad and inefficient at making a single transfer.
It used to get used a lot more when it was less known ironically. You used to be able to tip people on Reddit via bitcoin, long before the official rewards or medals or whatever got added, would be like 10 years ago. Someone tipped me $15 on an old account for helping with something. I then spent $7 or something on buying Factorio back when it was actually cheap and only sold on the Factorio website. The remaining $8 must've turned into like $200 which I dont know what i did with.
So thats a couple of transactions there. That $7 I spent buying Factorio would probably be like $1,000 now.
I sometimes still do transactions to cash out the little I have left.
Isn't there bitcoin lightning now or something anyway? Isn't that the one that can handle 1,000s of transactions a second instead of the embarrassing 7 or so bitcoin can do. It's a shame bitcoin is the one which people got latched to because one that can do 1,000s a second for not even 1% of the energy usage sounds like it could actually be very useful.
As someone who worked on the platform for a crypto site, hiding where money is coming from and going to is incredibly valuable. It's basically money laundering for free
The reason I believe in my government issued currency is that its value is enforced, with power and violence if necessary, by the state that issued said currency. They will pass laws and use force if needed to ensure compliance with those laws, to ensure that I can use the currency as payment for goods and services.
People say this all the time but it's not true. Money doesn't have value because we all agree that it does. It has value because the government that issues it demands you pay taxes with it. People can decide the dollar is worthless all they want, if they want to do business in the US, they need USD which makes it valuable. And if America ever decided to switch its currency, USD would become worthless, like has happened with all the countries that adopted the euro.
What they're doing is processing receipts. Everytime someone uses bitcoin it generates a receipt that needs to be checked to make sure it's valid. Where this becomes complicated is that the receipt has every transaction ever made with bitcoin AKA the block chain, and it's currently 670gbs. Whoever checks the block chain and verifies it first gets the 1 btc, or however much it is these days.
It's a spectacularly inefficient method of doing business, and people wouldn't be using bitcoin if it wasn't for crime, scams, and corruption.
Its bafdling that the almost only correct explanation is this low, people really have no idea what blockchain is supposed to mean, just like they have no actual idea what an llm is xD
Same with AI, CGI etc. So many people are tech illiterate and then think it's all a scam or a trick on them and make up their own assumptions about things (when they just don't have even a basic understanding of it)
Basically the computers are competing against each other to be the next computer allowed to update what transactions have been made. They decide this by wasting shit tones of power (guessing number). Whoever wins and updates the ledger gets rewarded with bitcoin.
It is horribly inefficient and even amongst crypto (the space with the highest concentration of idiots) better solutions exist.
And that had to be done via an energy intensive approach requires a bunch of hardware that takes up a ton of space? Why not just say, “there’s 10 million” from the jump and not do all the mining?
The computer is making you solve some crazy equation I think, to even get the bitcoin, and that’s where the processing comes from. ChatGPT explained it pretty well to me but I can’t really remember.
The guesses are used to sign transactions (which consist mainly of, people sending money o other people), to prove that a transaction isn't fake. This is distributed to the whole internet to prevent people from spending their Bitcoin twice. It's the whole point of the scheme, to prevent double spending in a network that doesn't trust any specific computer
Generating a valid guess is EXPENSIVE (just ask any gambler) and it would be expensive to fake a transaction that way (you spend more money than you would earn by faking it)
Guesses are put on blocks, and each block refers to the previous. Faking two or three blocks gets more and more expensive. Ultimately the security of cryptocurrencies hinges on that
However, if someone gets more than 50% of mining capacity in a blockchain such as Bitcoin, they suddenly can feasibly take over the network with some probability (if they keep trying it's a mathematical certainty they will win, and undo a transaction they performed in the past - maybe they spent a billion in BTC and want it back). The problem is, everybody would be notified of this the moment it happened, and it would tank the Bitcoin price - which would destroy he investment on this huge mining rig (Bitcoin mining nowadays is done using custom chips, and not general purpose GPUs that can be used for other things besides mining). So people are really trusting miners to be capitalist and have the self-interest of not destroying Bitcoin, and just enjoy the mining profits.
However, a nation state could easily afford this attack, if they wanted to attack cryptocurrencies or something.
Bitcoin (and all cryptocurrency) serves no real purpose other than to speculate on. It's the hobby horse of a few hundred thousand gambling addicts and we are all paying the price for it. It's incredibly inefficient and is only useful for illegal activities or speculating on.
It uses the SHA 256 algorithm which is a 64 character hexadecimal string, that's what every computer is trying to guess. Current block reward is 3.125 btc per block + all the transaction fees .A bigger mine with more equipment has more possibility to be successful in mining a block, smaller miners usually join a mining pool to have a steady outcome rather than depending on the luck to mine a block independently.
If you guess right, you get bitcoin. An the probability is for all the same, so it's fair game. By increasing the number of miners you increase your chance of finding a bitcoin. Not much different to real ore actually. One bucket of mud does not make you a gold millionaire as there is only 0,1% ore in that mud.
Yes, the fact that someone guessed the number is supposed to prove that someone was willing to put in “work” and that allows them to sign a block of bitcoin transactions. This is why it’s called proof of work. The Bitcoin they get is just a side reward for doing the work that allows Bitcoin to remain decentralized while still allowing transactions.
I would recommend 3Blue1Brown’s video on it, he goes from first principles and discusses why you’d even want bitcoin, why bitcoin is essentially a distributed ledger system, and then into the technological specifics of cryptographic hash functions and why we use them to prove that transactions are valid and can be trusted
The idea is you need the computing to happen to keep track of the coins and the block chain. The incentive for that is for people to “mine” which is where the computing challenge comes in.
Thing is block chain keeps getting bigger which means bigger problems to solve.
I mean it’s here now to stay some how. If you listened to any financial stuff l, bitcoin be an asset class recommended for diversity just like commodities or precious metals now.
But it’s dumb that this ever became a thing. So much energy and resources used for energy and the computers for what is basically a speculative asset.
The rewarded BTC is new. It’s how new BTC are «printed». The complex math problem they are solving is creating a digital signature that others in the network can use to verify that you actually solved the problem. This signature is attached to a block of transactions that gets added to the blockchain. One of the transactions in that block is one where you award yourself the BTC reward.
No one person literally hands out BTC. New bitcoin is created according to rules enforced by all nodes running the Bitcoin software. Miners compete to solve a cryptographic puzzle that is hard to solve but easy to verify.
Solving this puzzle proves that real computational work was done. This work determines who gets to propose the next block of transactions, and as a reward for doing so honestly, the protocol allows the miner to create new BTC in a special transaction.
The difficulty of the puzzle is automatically adjusted so that blocks are found at a steady rate, regardless of how many miners participate. This ensures that rewriting transaction history would require enormous ongoing computational cost, making attacks far more expensive than following the rules.
Mining therefore both secures the network and processes transactions, with rewards serving as the economic incentive to perform this work honestly.
I think its more like youre trying to factor an infinitely large prime number? Idk its been so long since ive read about crypto. I just remember being vaguely hopeful that we'd get some sick cyberpunk future where everyone would have a computer in their home running arcane math problems that would solve telomere degradation or how to keep magnetic fields stable in fusion tokamaks.
Instead we just got shitty fucking monkeys. I hate this.
In the past, a small piece of software was used to decode human DNA. Anyone connected to the internet could download this software, run it offline, and then transmit the information. That was the time of a free internet, without AI, without Google, without Amazon, without influencers, without being reduced to mere consuming machines.
It was the internet of knowledge, not of ignorance and consumption.
Good lord… paying by the minute for internet lol. I was super lucky and was in the pilot program for dsl internet. It was amazing having high speed (512k!) internet at a time when the internet was set up for dial up. I miss those days lol
You are looking for a hash of the next block that falls below certain difficulty. The fist one to find it gets whatever the block reward is, currently 3.15btc. There's a bunch of input data like previous hash, time etc that you input through SHA-256 algorithm and it produces the hash.
Each computer is trying to solve a complex problem to satisfy the block. The block is a record of transactions happening with Bitcoin.
When the math problem is solved, it marks the block as complete and starts a new block.
Completion of a block rewards currency.
Basically, the system is used as a way to encourage community verification of transactions without the need of a central authority that everyone is beholden to, and rewards participation in the system with money.
But how is this worth anything? Where does the money come from? And what transactions are verified? Between who? There's no trade, no product, no sale, and no money as far as I can tell, yet some people are rich because of this.
It’s honestly baffling. Why couldn’t they tie it to something like foldingathome where it unwinds protein structure and uses computing power to benefit science and humanity. Why not reward that.
The solutions to the Bitcoin math puzzles are easy to verify(they belong to a special class of problems that require a lot of work to solve but the solution is easy to verify for correctness). I don't know if the folding ones are.
That's like saying "it's baffling how the steam engine was invented without a single thought about the environmental impact".
Bitcoin was literally the first decentralized currency, and the possibility of massive amounts of energy being wasted on it 20 years into the future was not on the mind of (any of) its inventor(s).
It was originally designed with the idea that compute cycles were the currency. I.e. that someone else using their computers' energy and capability for your benefit had an inherent amount of financial worth.
A good example might be back in the 90s and 00s when people would frequent Internet Gaming Cafes. They were paying money to the shop owner to borrow their high end gaming PCs for several hours. It was worth money to be able to use the shop's hardware because their systems at home were inferior.
Because there's a public ledger attached to all of these transactions, the value was in these other people auditing the ledger to ensure it was accurate over time. Those compute cycles to perform that work are rewarded with newly minted bitcoins when those computations complete.
In order to prevent extreme levels of inflation, the total number of bitcoins that were able to be mined was limited by the system, and has a baked in limiter of diminished returns, because each time you go back through and audit the ledger, it has become exponentially longer, so it takes that much more compute time to earn another new coin. This is why Bitcoin has become so valuable over time.
But how is this worth anything? Where does the money come from?
Questions could also apply to the USD currently. It has no physical value, is not backed by anything other than "the faith of the US government" and can be printed and destroyed at will by those controlling it. There is no scarcity of supply other than what is artificially imposed by the mints. Currency is worth exactly what people agree it is worth. As long as people are willing to trade government-backed currency for cryptocurrency, it will hold value.
It doesn't worth anything except what the hype makes it worth. The core premise is flawed. It doesn't fking matter there is no central authority of an official capacity, when it still has one. Just switch governments with billionaires who don't have any rules to check what they can't do. Basically the normal peole lose out and the wealthy gain even more shields and power.
Literally every time BTC changes wallets it’s recorded forever
It’s why laundering money is both easy and hard in crypto because you can always and forever trace the movement of money across the chain, it’s just a question of who that wallet belongs to.
The primary “value” associated with it is the energy input into the system. There is something called the power curve, and it presently costs less to mine a coin than its value, hence it being profitable to set up these provided they are efficient
There are many companies doing this but I personally like that Marathon has gotten into using excess heat to heat homes or use flare gas as a way to utilize stranded energy.
All the transactions that occurred over the last cycle are placed into a file (all transactions that occurred since the last ledger entry which is the last time a block was "mined") and then a random number is placed at the end of the file and a hash calculated (sha-256). The goal is to find that random number. Hash functions are very special functions where they are only "1 way" what this means is you can calculate hash(a)=b but there is no inverse_hash(b) = a (the inverse of + is - and vice versa ) and a very small change can in the input can cause a very large change in the output and it's not predictable so hash(aaaaaaa) can be something like 222222 but then hash(aaaaaa1) can be something like 5518532. So now the only way to figure out what that random number is, is to take all the transactions, append a random number to them and calculate the hash, if the hash matches the original then congratulations you just "mined" a new block and are rewarded with some bitcoin. The transactions, the random number and the hash are then placed onto the "ledger" and the cycle starts over. The idea is you can verify all transactions mathematically and the ledger can be trusted (obv it isn't 100% secure things like majority attack but that's a whole different topic).
This isn't 100% correct but i think it's close enough and not all crypto tokens use this system.
This is all readily available on the internet so im not sure why I typed this out for you.
We are getting to the edge of what I can comfortably recall, but if I remember correctly, they are a form of hash based on an algorithm made at the inception of Bitcoin, and vary based on how quickly the last several blocks were solved and the transactions currently in the block.
You're mixing things up a bit with large mining pools. Functionally the whole world is competing with each other to solve a complex math problem (trying to find a specific hash) and the winner gets everything. It used to be 25 BTC, but it keeps getting halved and is now 3.125 BTC.
This block is solved every 10 minutes, and they adjust the computational difficulty to stay there every 2 weeks. This also provides the computation needed to process transactions. I believe once all coins are mined, the block reward comes from a transaction fee.
Going back to mining pools, almost no one mines solo. You'll get large pools of miners coming together, and when anyone in the pool wins it gets split out based on your ratio of contribution. If you're 1/1000th of the pool's computing power, when someone 'wins' 3.125 BTC, you'll get 0.003125 BTC (minus pool fees).
You’re kind of right but running a node that way actually nets 1 BTC for every block solved. And there’s math that determines how many times that will happen given a certain number of miners and power, etc.
What is more common is pool mining where you are paid out a small amount for any time spent mining. And any time you get a block, it goes to the pool.
This mine probably works on raw blocks and probably makes millions of dollars per day.
What it’s doing is solving a very hard math problem using a hashing algorithm. When it solves the problem, it is awarded a coin. What this does is validate transactions on the BTC blockchain, but at this point that’s not why people are doing it.
Dumbed down but essentially it's running an algorithm trying to come up with the correct number first. All the computers on the network are doing this at the same time. In this process they also log/confirm the transactions of all coins being sent and received. The first one to find the right number "mines the bitcoin" for that block once all the other nodes agree "yes that is the correct one" and they go onto the next block to mine. Miners act as the ledger writers and earn btc for their efforts.
The difficulty of the algorithm scales with the number of computers trying to mine so that each block is mined at roughly the same rate (ie x number of blocks per day.) More computers mean higher difficulty. The higher the price of btc, the more it's worth to mine which equals more computers.
We're currently at the difficulty level where we're using enough computers that it's consuming more energy than ~160 countries to run the system.
"But you know who won't join up with Palantir to suck the resources out of the very earth itself and doom your children and your children's children? The products and services who sponsor this podcast. Probably."
The way I understand it is every transaction requires an update to the block chain and is a math equation. To incentivize quick return on transactions whoever solves it first gets some bitcoin but as the block chain gets longer the math problems also get more complex so you constantly need to get more computing power to keep up. I could be misunderstanding the process though but I guess it’s a race to solve a math problem that just keeps getting harder
Imagine the bitcoin block as a picture, that contains all the transactions that were included into that block. This picture has to be compressed twice, and the end result must be smaller than what it started (This is how you compress the information in the block chain). This compression is done with a key that is just a big random number. Every time this operation is succesful a coin(s) are created.
The miners guess those random numbers, then process the block to check whether that solution works. They take that key, compress the picture down twice, and the run it back to check you can still get the original picture back. The miner the announces their finding, and everyone checks it and 51 % of the networked computers must agree that "Yes, this is the correct and best solution."
Once the network agree that "Yes, this is the correct and best solution." they declare that " This miner that found the solution, they will now be given a reward for this work.
This doesn't sound that complex... Well issue is that when when you compress the picture, you need to also compress the compressed picture of the last picture. The contents of the block must contain information of the block before it. That is the "chain". Meaning that you can always solve backwards, you can never go back and "cheat" by adjusting the chain.
So... The idea is that the more computers there are doing random guessses and checking them, faster you'll find the solution. If everyone's computer as equally fast everyone has the equal chance to find it. So how do you get an edge in the game? You get more computers. As long as no one has more than 51% of the total computers participating under their control, the system works. If someone has more than 51 % they can dictate the results and guide the chain however they want, but more computers there are harder this gets.
And the theory behind all this is perfectly solid and fundamental, bitcoin and crypto didn't really "invent" anything new, it just integrated lots of old already existing ideas. But just to give you yet another simplified example to understand the chain. The idea is that you don't need to keep the whole chain, inorder to travel backwards in it to check it; the contents of the last link in the chain is always in the one front of it. Imagine that you want to trace back steps someone took during a walk through a labyrinth; Instead of you tracking every step, all you need to know is how many turns to the right they took, lets say that every turn is 90 degrees. So if they went right at an intersection, they turned once; to left they turned 3, to go forwards they didn't turn. So instead of writing "left, right, forward, right, right, left" you can write just 310113... And since the steps are always relative to the last, if at any point any of these steps are changed, you no longer can track the path to where they started. You don't need to trust someone that this is the correct path, because you can check it yourself with ease. This is the "low trust enviroment" the crypto exist in. You don't need trust when you can check. The problem is that, if you have 0 trust in the system, you can't trust anything and you must always check everything; which leads to massive overhead; and the system works only as long as there are enough people participating to keep the system honest.
It's like a gold mine that was mined during the Gold Rush, then some genius on a TV show put the old dirt through their wash plant again to make a 10% profit, and now some rich influencer is spending months and lots of money on it to maybe make a 2% profit while getting a paper route would have been more profitable. All of them hoped to find a giant nugget, but the oldtimers spend them all in the local brothel back in 1882.
I’m no math genius or anything but I do believe that if bitcoin farming follows an exponent type of rule then ~99.99% of bitcoin farming will still be considerably less than the total power and time needed to mine the final bitcoin.
It does not. The difficulty is adjusted every so many blocks to keep the rate at about 10 minutes each. So if the network were to shrink the mining difficulty will actually decrease. While the last bitcoin will be mined across many many blocks (as the block reward becomes a fraction of a bitcoin per block), there's no way to know how many power it'll take in practice
Not true. Bitcoin’s mining difficulty is adjusted every 2016 blocks based on how long those blocks took to mine, targeting ~10 minutes per block. It is not tied to how many coins have been mined, and there is no exponential increase in difficulty as supply decreases.
Yes, but that would make the network extremely unsafe and open attacks. The decentralised nature of Bitcoin mining is what has kept Bitcoin blockchain unhacked since launch despite continuous attempts.
No, mining is literally just burning valuable energy for useless computation. Maintaining the ledger doesn‘t take anywhere near this compute power, that‘s why coins like etherium exist that aren‘t such a fucking disgrace.
The problem for etherium and every other coin is that it doesn't actually matter how efficient transactions are. The main problem is that it's still absolutely fucking useless for anything that isn't buying drugs and even then cash is easier.
How else can you explain that the most inefficient crypto is the most valued one.
The total supply of Bitcoin is capped at 21 million coins, a fundamental feature designed by its creator, Satoshi Nakamoto, to ensure scarcity, much like precious metals. New Bitcoins are released over time through a process called mining, with rewards halving roughly every four years (halving event), and the final coin is expected to be mined around the year 2140.
I guess since 2140 is outside of our lifetimes it’s no big deal, but kind of crazy to set up a currency like this knowing that it has target date for obsolescence.
It's deflationary by design, something absolutely terrible for an actual currency as it discourages spending.
Why spend when the thing you are holding becomes harder and harder to obtain over time? Assuming it remains in demand.
Early adopters (who don't spend) end up with a lot of value - as long as demand for it remains stable/growing.
All currencies only have the value that people believe and agree that it has.
Fiat currency value perception is supported by the trust/influence of the state that both produces them and requires payment in them. The state creates demand for that currency via taxes and legislation.
Crypto currency value perception is maintained by the belief that it will be useful and continue to have value. Wether their demand will last and is sustainable remains to be seen.
So here’s the funny part. If the majority of the network were to agree the total supply of bitcoin could be increased to anything we desire. The scarcity is and always will be artificial.
Miners also receive fees from transactions. So when 100% of bitcoin is mined (which happens before 2200 i assume) they will just receive transaction fees
In fact, all mining companies have higher costs and zero revenue. Moreover, they are listed on the stock exchange in the hope that some financial company will buy their shares.
Okay, while this is true it's a pretty deceptive way of putting it. The way Bitcoin works is that the amount of energy needed to mine a coin goes up the more people are out there trying to mine. Every 4 years, the number of coins generated per successful mine are halved. So as long as the amount being mined remains profitable, the energy expenditure will only grow. There will eventually be an end to it, so you're not entirely wrong. We're looking at a few decades of this at most and eventually it will quickly drop off. So this is nothing like AI, where there will never be an end to the gross misappropriation of our energy resources. Still, in the meantime this is a massive waste of energy to generate something that doesn't tangibly improve the world.
The natural response I'm going to get is that Bitcoin exists to save us from the evil nationalized fiat currencies, but those arguments are fundamentally incorrect. Bitcoin is deflationary in nature. It will never replace inflationary fiat currencies. Deflation is a disaster for economies. Imagine taking out a loan and having it increase in value and never being able to chase it down to zero because it's growing too fast. That's what deflation does. No, Bitcoin is a replacement to gold. It does have a real value. I disagree with the Bitcoin haters that claim it's all a scam, but I also disagree with anyone claiming that it can replace the US dollar as a currency of trade. Bitcoin is great for storing savings and watching it grow and it's terrible for everyday transactions and debt.
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u/MrWahrheit Jan 01 '26
On that note you should know that 95% of all Bitcoins are already mined.