FREEDOM FORUM: Discussion

Make a Comment

Comments in Response


Comment by PureTrust
Entered on:

We are reaching the point where this 4 years worth of bitcoins will have been mined far sooner than expected. To keep this from happening, the core bitcoin programmers are going to have to increase the complexity and difficulty for decrypting new bitcoins. This may seem unfair to some bitcoin miners (people). Personally, I'd say, don't invest heavily in mining equipment. See below.

==========

From https://en.bitcoin.it/wiki/Introduction:

----------

Creation of coins

The creation of coins must be limited for the currency to have any value.

New coins are slowly mined into existence by following a mutually agreed-upon set of rules. A user mining bitcoins is running a software program that searches tirelessly for a solution to a very difficult math problem whose difficulty is precisely known. The difficulty is automatically adjusted regularly so that the number of solutions found globally, by everyone, for a given unit of time is constant: an average of 6 per hour. When a solution is found, the user may tell everyone of the existence of this newly found solution, along with other information, packaged together in what is called a "block".

Blocks create 25 new bitcoins at present. This amount, known as the block reward, is an incentive for people to perform the computation work required for generating blocks. Roughly every 4 years, the number of bitcoins that can be "mined" in a block reduces by 50%. Originally the block reward was 50 bitcoins; it halved in November 2012. Any block that is created by a malicious user that does not follow this rule (or any other rules) will be rejected by everyone else. In the end, no more than 21 million bitcoins will ever exist.

Because the block reward will decrease over the long term, miners will some day instead pay for their hardware and electricity costs by collecting transaction fees. The sender of money may voluntarily pay a small transaction fee which will be kept by whoever finds the next block. Paying this fee will encourage miners to include the transaction in a block more quickly.

==========

We can see that Bitcoin mining is expanding far faster than anyone might have anticipated back at the start of Bitcoin. Some of it is due to new technology, or new application of old technology.

http://www.theverge.com/2013/2/1/3941768/new-chips-mine-bitcoins-50-times-faster

http://motherboard.vice.com/blog/engineering-the-bitcoin-gold-rush-an-interview-with-yifu-guo-creator-of-the-first-asic-based-miner

http://launch.avalon-asics.com/

https://en.bitcoin.it/wiki/Avalon
 

Make a Comment