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Someone explain this to me

Raytsou
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Go to solution Solved by Mira Yurizaki,
2 minutes ago, Raytsou said:

Oh I see. Well, last question: are you able to verify these block chains regularly based on the power of your computer or is it more of a random thing?

Both.

 

If I understand it correctly, transactions are encoded using a secure hashing algorithm and a random number called a nonce (number used once). The process of verifying a block involves guessing the nonce such that the hash the miner generates meets some signature of the original transaction hash. And I'm probably going to get this wrong, but let's say you have a transaction whose hash produced this value:

 

0000000000000756af69e2ffbdb930261873cd71

 

Then all you have to do for the mining to be accepted is generate some nonce that produces the string of 0's at the beginning.

 

So essentially, you have to guess until you get it, which is where the luck part comes into play. Having powerful hardware allows you to make more guesses per second, which gives you an advantage.

 

However most cryptocurrency systems are set up such that it takes on average some amount of time to verify a block. For Bitcoin this is 10 minutes.

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How does mining work? From what I've heard it's when you solve algorithms, you are rewarded with blocks of coins. So in that case, wouldn't it be like a lottery where you sometimes randomly get a certain amount of coins? How do people mining ethereum say they make like $6 a day? How is that possible when the payout is a batch of 5 coins?
Thanks to anyone in advance but I'm just really confused.

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4 minutes ago, Raytsou said:

How does mining work? From what I've heard it's when you solve algorithms, you are rewarded with blocks of coins. So in that case, wouldn't it be like a lottery where you sometimes randomly get a certain amount of coins? How do people mining ethereum say they make like $6 a day? How is that possible when the payout is a batch of 5 coins?
Thanks to anyone in advance but I'm just really confused.

When you verify a block chain through mining, you are generally awarded some fixed amount of that cryptocurrency. How much it's worth in real money depends on the value of the cryptocurrency.

 

Think of it more like the stock market. You work for a company and they pay you in stocks. How well the company does determines how valuable those stocks are, which in turn determines how much money you supposedly make.

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Just now, M.Yurizaki said:

When you verify a block chain through mining, you are generally awarded some fixed amount of that cryptocurrency. How much it's worth in real money depends on the value of the cryptocurrency.

 

Think of it more like the stock market. You work for a company and they pay you in stocks. How well the company does determines how valuable those stocks are, which in turn determines how much money you supposedly make.

so how does that relate to mining block chains? Do you have to configure your computer to do one or the other? And is verifying block chains guarantee that you'll be awarded the cryptocurrency?
I'm sorry, but I'm just really lost because I don't see how anyone is able to make a stable income off of this (in the sense of $6/day).

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Just now, Raytsou said:

so how does that relate to mining block chains? Do you have to configure your computer to do one or the other? And is verifying block chains guarantee that you'll be awarded the cryptocurrency?
I'm sorry, but I'm just really lost because I don't see how anyone is able to make a stable income off of this (in the sense of $6/day).

Verifying block chains is called mining.

 

And yes, you'll be awarded coins if you verify them. That's how the system (or at least Bitcoin and its derivatives) works.

I have a blog! And a list of guides I've posted

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1 minute ago, M.Yurizaki said:

Verifying block chains is called mining.

 

And yes, you'll be awarded coins if you verify them. That's how the system (or at least Bitcoin and its derivatives) works.

Oh I see. Well, last question: are you able to verify these block chains regularly based on the power of your computer or is it more of a random thing?

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2 minutes ago, Raytsou said:

Oh I see. Well, last question: are you able to verify these block chains regularly based on the power of your computer or is it more of a random thing?

Both.

 

If I understand it correctly, transactions are encoded using a secure hashing algorithm and a random number called a nonce (number used once). The process of verifying a block involves guessing the nonce such that the hash the miner generates meets some signature of the original transaction hash. And I'm probably going to get this wrong, but let's say you have a transaction whose hash produced this value:

 

0000000000000756af69e2ffbdb930261873cd71

 

Then all you have to do for the mining to be accepted is generate some nonce that produces the string of 0's at the beginning.

 

So essentially, you have to guess until you get it, which is where the luck part comes into play. Having powerful hardware allows you to make more guesses per second, which gives you an advantage.

 

However most cryptocurrency systems are set up such that it takes on average some amount of time to verify a block. For Bitcoin this is 10 minutes.

I have a blog! And a list of guides I've posted

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most people mine together in pools so each time any of those cards running finds some coins the reward is divided among everyone according to how much compute power they provide to the pool

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Okay! Thanks for clearing things up! 

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