Bitcoin uses miners to maintain and build its blockchain database. ‘Miner’ is a bit of a misnomer. They aren’t digging for buried bitcoin. They are not even creating bitcoin or finding bitcoin. They are getting paid in bitcoin from a pool set aside just for this task by the system’s designer. Only in the sense that the bitcoins they receive weren’t in the public marketplace before miners did their work, should miners be thought of as the prospecting type of miners.
Miners are artificially put to a task that takes a random but sufficiently long period of time that the task makes mining sort of a specialty. One has to have the right training, sufficient capital investment and access to the right technology in order to do mining. But the system allows anyone to do it and you will get paid — eventually. It’s a random assignment sort of thing. By artificial, I mean that the work is not accomplishing anything other than having a sufficiently large enough pool of miners for a random selection to be made, a lottery per se, to keep the system fair and honest. Miners have to guess a randomly generated ‘key’ which can be thirty characters long.
I read somewhere that $147,000 would be the energy cost to run all bitcoin mining equipment for just an hour. That’s a huge amount of computing. That seems like an awful waste of talent and energy just to keep things fair and honest. Don’t get me wrong, fair and honest is worth all the money in the world. Without fairness and honesty bitcoin would have no value and no future. Fairness and honesty are what give people TRUST in bitcoin. However, if what the miner is doing is creating a new database record with the first one hundred characters he processes and then must generate another billion-billion more characters just to win (it’s a lottery) a fee for the work, that is a terrible waste and inefficiency. Sounds like the perfect opportunity for a Bitcoin 2.0. What do you think?