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> mining bitcoins is just a way to distribute the 21 million coins to people No. This is a common misconception. Mining Bitcoins is necessary to keep the netw

by vog 13y ago

> mining bitcoins is just a way to distribute the 21 million coins to people No. This is a common misconception. Mining Bitcoins is necessary to keep the network running and secure. Distributing Bitcoins is just a side effect to encourage people putting number-crunching power at the network in the early stage, as this is what makes the network secure in the first place. The additional coins will become tiny and vanish over time. They are continually replaced by transaction fees. Over time, the Bitcoin users will pay the "mining people" directly, via transaction fees, for doing all that hard number crunching with their specialized hardware.

yason 13y ago
I basically know how it works, that was just my interpretation of the scheme and I stick to it. But I think I used the term mining in an unorthodox way. What I meant by mining is getting reward coins from doing the number-crunching required to find good hashes for blocks. I think the current semantics is that mining means doing that hash-finding number-crunching but it's also being used to refer to mining bitcoins which is maybe a bit misleading. Thus, I rephrase my statement: I maintain that bitcoin rewards themselves aren't necessary —— the rewards are just an incentive and indeed a convenient way to distribute bitcoins in a rather stable way. When we hit the 21 million mark and have no new bitcoins left, the number-crunching part would still have to continue. This is no problem because of transaction fees will provide a sufficient incentive for that. And this brings us back to my point that theoretically we could've started with just that. Theoretically, we could've started with distributing 21 million bitcoins to 21 million random people and let the peer-to-peer network start with doing only transaction verification, and incentivize that with transaction fees. (Probably wouldn't have worked in reality but that's only because of the human factor.) That's what I meant.

by vog 13y ago

yason 13y ago

I basically know how it works, that was just my interpretation of the scheme and I stick to it. But I think I used the term mining in an unorthodox way. What I meant by mining is getting reward coins from doing the number-crunching required to find good hashes for blocks. I think the current semantics is that mining means doing that hash-finding number-crunching but it's also being used to refer to mining bitcoins which is maybe a bit misleading. Thus, I rephrase my statement: I maintain that bitcoin rewards themselves aren't necessary —— the rewards are just an incentive and indeed a convenient way to distribute bitcoins in a rather stable way. When we hit the 21 million mark and have no new bitcoins left, the number-crunching part would still have to continue. This is no problem because of transaction fees will provide a sufficient incentive for that. And this brings us back to my point that theoretically we could've started with just that. Theoretically, we could've started with distributing 21 million bitcoins to 21 million random people and let the peer-to-peer network start with doing only transaction verification, and incentivize that with transaction fees. (Probably wouldn't have worked in reality but that's only because of the human factor.) That's what I meant.