It's an ingenious system when you think about it! But let me ask you a couple of dumb questions I couldn't figure out from the article;
If I understand well, a block is mined by multiple nodes, but the first one that creates a valid proof of work 'wins'.. right? What happens with the computing power of all the other nodes working on the same solutions, was that 'useless' so to say?
If you only have a small mining-rig, do you stand a chance to mine anything at all against mining farms?
I should read up on this myself, but I don't really get the whole Coinbase thing. Is Coinbase like a central bank? And if so, doesn't that defy the purpose?
This is one of the problem with this Proof of Work mechanism. It has to consume a lot of electricity to solve the problem. If you don't win a block's race, the energy used during those 10 minutes you tried to solve the problem is wasted. This is one of the reasons why the blockchain mechanism doesn't scale so well.
I believe you can't compete as an individual today against mining farms. I know you can 'rent' some mining powers. Like, you pay 20 000 € to generate 0.00000001 BTC each second. As far as I know, you need to have a powerful installation to make a profit from this kind of activity.
I believe you are confusing the Coinbase plateform and the coinbase transaction. Yes, Coinbase is a plateform that allows you to buy and sell crypto currencies. You're right, it does look like a central bank now, because so much transactions go through plateforms such as this, which kind of defy the purpose of a decentralized currency.
The coinbase transaction is just a transaction that the miner includes in the block he is mining. The miner indicates that he is paying himself. In the article, our miner Joe said to the network that he calculated his reward ( 17 or so BTC ) and gave his wallet's address. When the block is validated, the miner receives the reward in its wallet.
It is called a coinbase transaction, but it has nothing to do with the Coinbase plateform.
Thank you for the kind words :)
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It's an ingenious system when you think about it! But let me ask you a couple of dumb questions I couldn't figure out from the article;
Thanks again for this great series, Damien!
This is one of the problem with this Proof of Work mechanism. It has to consume a lot of electricity to solve the problem. If you don't win a block's race, the energy used during those 10 minutes you tried to solve the problem is wasted. This is one of the reasons why the blockchain mechanism doesn't scale so well.
I believe you can't compete as an individual today against mining farms. I know you can 'rent' some mining powers. Like, you pay 20 000 € to generate 0.00000001 BTC each second. As far as I know, you need to have a powerful installation to make a profit from this kind of activity.
I believe you are confusing the Coinbase plateform and the coinbase transaction. Yes, Coinbase is a plateform that allows you to buy and sell crypto currencies. You're right, it does look like a central bank now, because so much transactions go through plateforms such as this, which kind of defy the purpose of a decentralized currency.
The coinbase transaction is just a transaction that the miner includes in the block he is mining. The miner indicates that he is paying himself. In the article, our miner Joe said to the network that he calculated his reward ( 17 or so BTC ) and gave his wallet's address. When the block is validated, the miner receives the reward in its wallet.
It is called a coinbase transaction, but it has nothing to do with the Coinbase plateform.
Thank you for the kind words :)