Note
Each post I write, is building upon the stories from the prior articles. Before reading this story I recommend to read through the prior articles again. You will get more confident with the technology behind cryptocurrencies, the more often you read through the articles and refresh your present knowledge. Take your time, to understand cryptocurrencies, it's worth it.
If something in the article is not clear to you, don’t hesitate to ask. There are several persons who might have the same question. So don’t hesitate and comment, if something is unclear. Me and other readers will appreciate it!
In Bitcoin Mining 2.1 we saw that Alice is taking part in a mathematical-contest in the Bitcoin-Park (Bitcoin-Network) in order to win a reward in Bitcoins. As she takes part in the competition, she is a Miner. She won the contest by solving a complex mathematical-equation.
In Bitcoin Mining 2.2 we saw that Alice actually had to spend a lot of money for the computer and electricity which she brought with her to the competition in order to have some help solving the mathematical-equation.
And in Bitcoin Mining 2.3 we saw that Alice would only get the reward if she secures the Bitcoin-Network correctly. In order to secure the Bitcoin-Network correctly Alice must choose which Bitcoin-Transactions (envelopes) should be executed ( =„Boat takes off from the harbor“)and therefore be valid.
The visitors from the mathematical-contest, who verified the mathematical solution from Alice before, are now inspecting the Bitcoin-Transactions (envelopes) on the boat, which Alice let through. If the visitors, find an unvalid Bitcoin-Transaction among these envelopes, all the Bitcoin-Transactions on the boat will not be executed.
Hence, Alice will not get the reward.
This little sum up should give you a good answer to the question „What is Proof of Work?“.
By providing the solution for the very complex mathematical task, Alice (miner) proves that she must had spend a lot of money (computers and electricity) to find this solution. That means that she has a lot of bills which she has to pay in the Real-World. The simple but important fact here, is that the bills for computers and electricity have nothing to do with the Bitcoin-Ecosystem! Alice has to pay these bills, regardless if she gets the reward in Bitcoin or screws it up by not securing the Bitcoin-Network correctly.
Hence, it is in the miners best self-interest to secure the Bitcoin-Network correctly in order to get the reward in Bitcoins. The miner can then sell the Bitcoins for US-Dollar or any other Fiat-Currency and so be able to pay his computer and electricity bills.
Summary:
The Bitcoin-Network is so secure, not because the miner is a good person, but because he doesn’t want to screw up his reward by not securing the Bitcoin-Network correctly. It is in the best self-interest of the miner to not try to cheat or steal money in the Bitcoin-Network, as he must pay high computer and electricity bills and is relying on the reward.
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