What Bitcoin Miners Actually Do

Bitcoin mining is pretty weird and it relies on some complex math but people who want to invest in bitcoin want to know how it works … at a basic level, at least This video is an attempt to explain just that This diagram helps explain mining Each block includes the previous hash This is what I’m going to explain in this video

100 thoughts on “What Bitcoin Miners Actually Do”

  1. I am planning on starting a small mining entrepreneurship with some friends where we live (South America –cheap electricity), and this video has been the one who helped me to understand the process the most. Thanks a lot for the excellent work! I just would like to confirm my understanding on one point:

    We say that the rewards are paid for confirming bitcoin transactions. So, for example, if someone wants to buy something from me that costs 1 bitcoin, that’s like the buyer saying “Hey, I have 1 bitcoin and I want to buy your goods”.

    However, that statement needs to be verified, and so the mining community comes in.

    As soon as someone verifies (via the process you have described in this video) that the buyer actually has 1 bitcoin, then I get a +1 bitcoin in my wallet, the buyer gets a -1 bitcoin in his wallet, and the miner gets a, lets say, 5% fee (“reward”) for doing the work.

    My question is: who pays that fee?
    – Does the 5% gets discounted from the seller’s wallet (so he receives only 0.95 bitcoin and pays the 0.05 fee to the miner),
    – Is it discounted from the buyer’s wallet (so he pays 0.95 bitcoin to the seller and 0.05 bitcoin to the miner),
    – Is the 5% just awarded/printed/created (I don’t know what word would be best) out of thin air as a reward for the work the miner put into it (the buyer's wallet shows a -1 bitcoin, the seller's wallet shows a +1 bitcoin, and the miner's wallet shows a +0.05 bitcoin)?

    Thanks in advance for your help, and keep up the good work.

  2. Can bitcoin miners help criminals to break security code? I wonder who is bitcoin miners employer ? Everybody who uses 256 bit hash function ? Banks, NASA etc. ?

  3. If they hooked up all these computer processors to universities [for instance] – to solve actual math/scientific problems [to make the world a better place] – I would say that all the energy consumed in running the processors and to make the computers in the first place – That would be awesome. Consuming all this energy [mostly from fossil fuels no doubt- polluting the world] – purely to solve some arbitrary hash seems a little like a waste of time. If we mined silver lets say, which has many many uses in the world, we could have that in a vault waiting to be used – but in the meantime until its used its paper certificate can be used as money. Crypto seems like a bunch of geeks got together to prove how clever they can be without having needed to. Waste of energy. Money that requires an internet connection is flawed. One EMP from North Korea could wipe it all out. Just thinking out loud. Maybe I'm just a Luddite. Peace!!

  4. So the more miners there are, the more difficult it is for a miner to find a hash that works because more zeros are being demanded by the self regulating entity?

  5. i will say you were very thorough, but i did not enjoy this video. I didn't know to much about bitcoin but with this being explained, i have come to the conclusion that bitcoin is a scam. I do like the concept of bitcoin having no government regulation and being able to spread currency in seconds globally without tax or 3rd party interference.

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  7. Read satoshis. White paper bitcoin 2009
    Also question … if sha256 was created by NSA does that have anything to do with bitcoin ? Like manipulation? Etc thanks

    moved all my assets from cash to crypto just Incase people wondered what I invest in. Bitcoin ethereum and electroneum.

  8. Thanks for the video. But what are transactions? who generates them? What is the point of this math? who issues you bitcoins? oh. so many questions.

  9. Wow all that computing power being used for what seems innocuous. Are you sure you are not all helping some unknown entity to build a means of decoding any encrypted message?

  10. I don't get it. Do I need to know some math or coding, and does mining include physical work? Or do I just need the equipment/software and let it run

  11. What dose the calculations when the 21 mil is mined. The info structure will collapse. There will be nothing the keep track of transactions and no reward to crunch numbers.

    Sounds sus. Please comment.

  12. Help me understand the mining. When you say minders look for hash value starts with 17 zeros, this sounds like a game algorithm that gives you such hash values when reached. I mean, how can we mine something that's intangible and make it have a value? I'm not clear on this bitcoin thing in general, especially the mining part, sheesh!!

  13. Can you describe how the self regulating feature work?  You mentioned that the system would require more zeros at the start of the hash, but is that increasing the number of digits/letters in the hash or simply requiring the same number of digits/letters just that there needs to be more string of zeros at the beginning?

  14. I spent half a day searching for videos explaining me the process of mining untill I found yours. It may be overspimplifying certain steps but at least it doesnt skip any and that is very helpful indeed.

  15. Who issues the currency? This is the most critical question – WHO ISSUES THE BITCOIN???
    The explanation is nice for most but superficial to someone trying to really understand it and frankly i'm tired of people pretending to understand what they don't understand beyond a superficial explanation.
    Definition of fiat
    1 : a command or act of will that creates something without or as if without further effort

    This is a con job. A complicated con job which is the giveaway of course.

  16. So it’s not an important world problem or question being solved via all that computing power. It’s not global model of the weather for example that’s being run. It’s just hashing blocks….what a waste of computing power.

  17. Who needs these 'hashes' with a lot of zeroes?
    Who pays for these hashes?
    Are these hashes useful for anything?
    Does the computer do this mining by itself with a program?
    How many bitcoins can a single computer farm / day?

  18. Regular miners like me and you are doing nothing but renting our computers out. Instead of building a super computer to do all the transactions or (whatever they choose to use your computer for) they pay you a fee in BITCOIN to rent your computer. In turn a super computer is born!

  19. Great explanation of fundamentals. Wonder why this methodology can't be applied to something like curing cancer? For example, running an algorithm to test the efficacy of a drug molecule against a specific type of cancer cell, etc. Wouldn't there be a potential high-value payoff incentive to provide processing power to reach an end-goal (cure)?

  20. so with other words bitcoin is allowing some to break thrue private networks ???? sounds like all thous callculations is for breaking something for someones, for what and whom is this big thing done for, what is the bigest purpouse ????

  21. So, eventually the number of zeros will be too high for money to be made efficiently. Or if that happens will it subtract a zero?

  22. i kind of asumed that they were using this incredible computing power to something important in reality, but maby not

  23. I was trapped with a full tank of gas and no csh because the gas station will not accept bitcoin? what good is a currency that only one way?

  24. Basically this could be used to combine the processing power of a great many computers in order to process extremely complex applications. Or linked together in a universal AI…

  25. The missing piece here is the fact that only the longest existing blockchain is valid.
    Say someone creates a fraudulent block and sends it to the network. He would then have to constantly beat everyone else in creating blocks to keep that forked chain valid. The valid chain does not have this fraudulent block but everyone else is adding blocks to the valid chain.
    So he could only keep his chain with the fraudulent block alive if he controls more than 50% of all hashing power.

    I.e only trust a block (I.e the transactions in that block) that has a few blocks behind it and is in the longest existing chain.

  26. Finally what I was looking for. One of my questions remains. Why do we need special equipment like ASIC miners to calculate this SHA256 value, I imagine a normal CPU can do this math – the algorithm is not that complicated. Are those miners actually that much better than CPUs at calculating SHA256?

  27. Thanks for putting this together. I got a couple of eureka moments watching this. The only tweaks I would make to the presentation are (1) explain what a nonce is when we first see it in the intro rather than waay later during the breakdown (2) mention the important property of hashes that although hello will get the same hash every time, it's hard to get from the hash back to the data.

  28. Spectacular video to invest! It is valuable to have knowledge and be able to succeed, you just have to start and be successful, so I love seeing this video

  29. If the NSA developed the sha algorithm then doesn't that mean the feds own bitcoin and satoshi is a fed? And sha means king.. Merkle means something too.. It has to do with algorithms and such but who are they naming these functions after? I like crypto but it's soooooooo confusing to explain or comprehend and overstand. For that reason most folks will be out. If we do not eradicate the powers that threaten alternative currencies value then we could be handing over the keys of our own prison cells back to the warden.. Just sayin.. Thanks for the upload!

  30. I invested 1.5btc at kloviaclinks. com and I got back 14.99btc within 2 days. The risk was worth taking guys. Gush, I am saved.

  31. This is certainly one of the better videos on the net explaining this topic. So, miners get rewarded with bitcoin for their work in computing "hashes", and people invest in bitcoin…so is their a certain number of bitcoin available…and who issues bitcoin?

  32. ok, but what is done with the hash results. And what gives the people who allowed the hash to be solved the bitcoin to be given away?

  33. That's weird didn't ps3 support use to Linux at one time were they militarily miners for bitcoin or were they doing research

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