Bitcoin

[Whorty]

Which is 0.5% of total worldwide electricity consumption. (And nearly half of UK consumption)

Over the past 5 years, bitcoin's consumption has approximately doubled every year. If that trend were to continue:

2021: 0.5%
2022: 1%
2023: 2%
2024: 4%
2025: 8%
2026: 16%
2027: 32%
2028: 64%

At some point, something has to change or give (or break!).

I'm going to admit my ignorance here (and why I haven't touched any of these crypto currencies) but how exactly does it all work? I think that there is a long xx digit 'key' that relates to a coin, but how are these keys created and why is the energy consumption so high?

Is there a 'dummies guide' somewhere online that explains it all in laymen's terms?

[BR14]

I'm going to admit my ignorance here (and why I haven't touched any of these crypto currencies) but how exactly does it all work? I think that there is a long xx digit 'key' that relates to a coin, but how are these keys created and why is the energy consumption so high?

Is there a 'dummies guide' somewhere online that explains it all in laymen's terms?

https://www.investopedia.com/terms/b/blockchain.asp

[Andy2]

I'm going to admit my ignorance here (and why I haven't touched any of these crypto currencies) but how exactly does it all work? I think that there is a long xx digit 'key' that relates to a coin, but how are these keys created and why is the energy consumption so high?

Is there a 'dummies guide' somewhere online that explains it all in laymen's terms?

The way bitcoin works is that computational power required to mine a bitcoin increases progressively as more and more bitcoins are mined. So far 19 million bitcoins have been mined out of total 21 million possible and the enrgy required to mine the rest 2 million is getting too much now.

[Whorty]

The way bitcoin works is that computational power required to mine a bitcoin increases progressively as more and more bitcoins are mined. So far 19 million bitcoins have been mined out of total 21 million possible and the enrgy required to mine the rest 2 million is getting too much now.

That bit I understand ... what I didn't understand was how they are mined. Mining for coal is easy ... dig a hole, pull out some coal. But I can't quite grasp how bitcoins are mined .... in really laymen terms, is it just a case of creating a new key, or is it more complex? I had a look at BR14's link, but most of it still went way over my head.

[AtW]

Mining in this case is totally wasting energy

[DealorNoDeal]

Am I right in thinking that it is mining which maintains the blockchain?

If so, what happens if it ever becomes uneconomical to mine because of the cost of the electricity (or governments clamp down on it)?

[TheGreenBastard]

Am I right in thinking that it is mining which maintains the blockchain?

If so, what happens if it ever becomes uneconomical to mine because of the cost of the electricity (or governments clamp down on it)?

If it becomes uneconomical then the blockchain becomes less "democratic" / decentralised and increases the likelihood of 51% attacks. The more financial incentive the more distinct miners (in theory), the more secure.

Ethereum is planning moving to PoS (proof of stake) in which you front an amount of ETH and the mechanisms behind this secure the network, "staking" ETH results in "interest". This has angered some PoW (proof of work) miners, some are obviously quite influential, so it could result in a forking of ETH (like ETH classic back in the day when ETH mainline undemocratically chose to revert some transactions due to a flaw).

I do wonder if proof of stake will increase centralisation as there's giant pockets of ETH holdings.

[BlueSharp]

Am I right in thinking that it is mining which maintains the blockchain?

If so, what happens if it ever becomes uneconomical to mine because of the cost of the electricity (or governments clamp down on it)?

My understanding is you don't mine bitcoins, but you mine the nonce used to sign the key chain. I belive they can tweak how hard it is to sign the blockchain such as finding a nonce that allows for a hash with 4 leading zero's instead of 5 of all the transactions in the block (the lowest hash created by the nonce and block chain). That way the reward can always be kept at a level that makes it worth while for the miners to sign. The reward for completing the block chain decreases by half every four years.

It's an intresting concept as the value in finding the nonce to sign the block chain requires a lot of computational power. If 51% of market colluded they could in theory create a fradulant block of transactions to sign (i.e. steal people's money), but if you have enough computational power to do that invested why would you? The value of bitcoin would crash and you would be left with a worthless mining ability. The miners do work in clans so they are trying difrent nonce ranges so not to dulpicate the efforts in their clan. SOme of those clans control 40% + of the market. I belive the Chinese are the biggest miners with over 80% of the hardware dedicated to signing the chains over there.

[Whorty]

My understanding is you don't mine bitcoins, but you mine the nonce used to sign the key chain. I belive they can tweak how hard it is to sign the blockchain such as finding a nonce that allows for a hash with 4 leading zero's instead of 5 of all the transactions in the block (the lowest hash created by the nonce and block chain). That way the reward can always be kept at a level that makes it worth while for the miners to sign. The reward for completing the block chain decreases by half every four years.

It's an intresting concept as the value in finding the nonce to sign the block chain requires a lot of computational power. If 51% of market colluded they could in theory create a fradulant block of transactions to sign (i.e. steal people's money), but if you have enough computational power to do that invested why would you? The value of bitcoin would crash and you would be left with a worthless mining ability. The miners do work in clans so they are trying difrent nonce ranges so not to dulpicate the efforts in their clan. SOme of those clans control 40% + of the market. I belive the Chinese are the biggest miners with over 80% of the hardware dedicated to signing the chains over there.

In this context, what is a 'nonce'?

[Lockhouse]

What's the best/cheapest way to cash ETH out to a UK bank account these days? I've got a Coinbase account but I'm getting fed up with waiting for them to verify my UK bank account.