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173 sats \ 2 replies \ @_stacktoshi 15 May \ on: What's the best explaination of Proof of Work Mining for non-technical people bitcoin
I always like to explain it in terms of security:
- We need a way to incentivize people to check that the most recent transactions (in the last 10 minutes or so) are valid, and a way to ensure that new blocks are allowed to be added to the database (blockchain). Just like you rely on a secure connection to your bank, and the banks rely on secure connections to each other so that funds can't be intercepted, this sequence of transactions needs a similar amount of security to guard against theft.
- These tasks need to be performed in such a way that can't be gamed by a centralized organization or a group of coordinated actors, because then they could write whatever sequence of transactions & blocks they wished and divert potentially all funds to themselves. We want to make it extremely costly to do that.
- So we need an algorithm or computer program that anybody in the whole can run that allows them to 1) organize the most recent transactions 2) factor in the solution from the previous block and 3) combine them in such a way that produces a solution to a new puzzle unique to those inputs. It's very difficult to solve this new puzzle, but it's easy to verify that it's correct. This asymmetry is the basis of modern cryptography and is what virtually guarantees the integrity of the transaction history.
- The people running this program need to produce a block roughly every ten minutes, so as computers get faster with technological advancements and the number of running this program increases, the algorithm needs to be periodically adjusted so that new blocks are added on that schedule.
Very good.
And these people running computers are incentivized into doing this work to secure the network by being rewarded with bitcoin. The fact that they are willing to expend capital to run these machines is one way to tie this digital token to the physical world.
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Yeah, sorry, left out that key bit about what to incentivize them with. Was in a rush. lol
And tying to the physical world is how we know each block (each puzzle or set of transactions) is mined (solved or validated) using real work, a fact that many imitators can't claim or at least nowhere near the extent of the Bitcoin network.
Finding the right combinations of words for the right audience is tricky though. I need to dust off my copy of the Bitcoin Standard and make sure I'm phrasing these concepts correctly for a broad audience.
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