Bitcoin Wiki - User contributions [en]

Seed phrase

2022-12-09T15:09:45Z

Kamariks:

{{sample}}

A '''seed phrase''', '''seed recovery phrase''' or '''backup seed phrase''' is a list of words which [[Storing bitcoins|store]] all the information needed to recover Bitcoin funds [[Transaction|on-chain]]. Wallet software will typically generate a seed phrase and instruct the user to write it down on paper. If the user's computer breaks or their hard drive becomes corrupted, they can download the same wallet software again and use the paper backup to get their bitcoins back.

Anybody else who discovers the phrase can steal the bitcoins, so it must be kept safe like jewels or cash. For example, it must not be typed into any website.

Seed phrases are an excellent way of backing up and [[storing bitcoins]], so they are used by almost all well-regarded wallets.<ref>[https://bitcoin.org/en/choose-your-wallet Bitcoin.org: Choose your wallet]</ref>

Seed phrases can only backups funds on the [[block chain]]. They cannot store funds involved in [[off-chain transactions]] such as [[Lightning Network]] or [[Blinded bearer certificates]]. Although these technologies are in their infancy as of 2019 so its possible in future seed phrases could be used to backup them.

== BIP39 and its flaws ==

[[BIP_0039|BIP39]] is the most common standard used for seed phrases. One notable example is [[Electrum|Electrum wallet]], which is using its own standard, and for good reasons. BIP39 has some flaws, known in the technical community but not known much wider. They are described [https://electrum.readthedocs.io/en/latest/seedphrase.html#motivation here on this electrum doc page]. Most seriously, BIP39 flaws mean it is not true to say that backing up a BIP39 seed phrase and name of wallet software is the only thing a user needs to do to keep their money safe. BIP39 works this way because its designers wanted their hardware wallet to also support [[altcoin]]s. [https://walletsrecovery.org/ walletsrecovery.org] is an attempt at helping with this issue, but ideally there will be a better solution in the future.

== Example ==

An example of a non-BIP39 seed phrase is:

hotel obvious agent lecture gadget evil jealous keen fragile before damp clarify

The word order is important.

[[File:Seed phrase.jpg|300px|thumb|none|alt=An example seed phrase written on paper|Example seed phrase on paper.]]

== Explanation ==

A simplified explanation of how seed phrases work is that the wallet software has a list of words taken from a dictionary, with each word assigned to a number. The seed phrase can be converted to a number which is used as the seed integer to a [[Deterministic wallet|deterministic wallet]] that generates all the [[Private key|key pairs]] used in the wallet.

The English-language wordlist for the BIP39 standard has 2048 words, so if the phrase contained only 12 random words, the number of possible combinations would be 2048^12 = 2^132 and the phrase would have 132 bits of security. However, some of the data in a BIP39 phrase is not random,<ref>[https://github.com/bitcoin/bips/blob/master/bip-0039.mediawiki#Generating_the_mnemonic BIP39: Generating the mnemonic]</ref> so the actual security of a 12-word BIP39 seed phrase is only 128 bits. This is approximately the same strength as all Bitcoin private keys, so most experts consider it to be sufficiently secure.<ref>[https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki#Security BIP32: Security]</ref>

It is not safe to invent your own seed phrase because humans are bad at generating randomness. The best way is to allow the wallet software to generate a phrase which you write down.

As seed phrases use natural language words, they have excellent error correction. Words written in bad handwriting can often still be read. If one or two letters are missing or unreadable the word can often still be deduced. The [[#Word_Lists|word list]] that the seed phrase words are drawn from is carefully chosen so that the first four letters of each word are enough to uniquely identify it. This compares well with writing down a raw [[private key]] where a single letter being unreadable or incorrect can make the private key useless (depending on the serialization format).

== Two-factor seed phrases ==

Seed phrases, like all backups, can store any amount of bitcoins. It's a concerning idea to possibly have enough money to purchase the entire building just sitting on a sheet of paper without any protection. For this reason many wallets make it possible to encrypt a seed phrase with a password.

The password can be used to create a two-factor seed phrase where both ''"something you have"'' plus ''"something you know"'' is required to unlock the bitcoins.

This works by the wallet creating a seed phrase and asking the user for a password. Then both the seed phrase and extra word are required to recover the wallet. Electrum and some other wallets call the passphrase a '''"seed extension"''', '''"extension word"''' or '''"13th/25th word"'''. The BIP39 standard defines a way of passphrase-protecting a seed phrase. A similar scheme is also used in the Electrum standard. If a passphrase is not present, an empty string "" is used instead.

'''Warning''': Forgetting this password will result in the bitcoin wallet and any contained money being lost. Do not overestimate your ability to remember passphrases especially when you may not use it very often.

'''Warning''': The seed phrase password should not be confused with the password used to encrypt the wallet file on disk. This is probably why many wallets call it an extension word instead of a password.

== Storing seed phrases for the long term ==

Most people write down phrases on paper but they can be stored in many other ways such as [[Brainwallet|memorizing]], engraving or stamping on metal, writing in the margins of a book, chiselling into a stone tablet or any other creative and inventive way.

In the past many people have accidentally lost bitcoins because of failed backups, mistyped letters, forgotten hard drives, or corrupted SSD devices. It's also important to protect the seed from accidental loss.

It could be a good idea to write some words of explanation on the same paper as the seed phrase. If storing for the long term you may forget what a phrase is how it should be treated. A sample explanation that can be adapted is:

<blockquote>These twelve words have control over BITCOINS. Keep this paper safe and secret like cash or jewellery. The bitcoin information on this paper is encrypted with a passphrase. It is part of a multi-signature wallet and was made by Electrum bitcoin wallet software on 2019-01-01.</blockquote>

==== Paper and pencil backup ====

Through bitter experience it has been found that one of the most practical storage mediums is '''pencil and paper'''. The private keys of a bitcoin wallet are encoded into [[seed phrase|random words from a dictionary]] which can be written down. If your hard drive crashes, you can find the paper with the [[seed phrase]] and restore the entire wallet. As [[seed phrase]]s use natural language words, they have good error correction. Words written in bad handwriting can often still be read. If one or two letters are missing the word can often still be deduced. The [[Seed_phrase#Word_Lists|word list]] that the seed phrase words are drawn from is carefully chosen so that the first four letters of each word are enough to uniquely identify it.

For storing on paper writing with pencil is much better than pen.<ref>[http://www.joethorn.net/blog/2011/12/07/pencil-does-not-fade Pencil Does Not Fade]
</ref><ref>[https://www.quora.com/How-do-I-maintain-a-paper-notebook-that-can-remain-for-years How do I maintain a paper notebook that can remain for years?]
</ref>
Paper should be acid-free or archival paper, and stored in the dark avoiding extremes of heat and moisture.<ref>[https://www.loc.gov/preservation/care/deterioratebrochure.html Essential facts about preservation of Paper]
</ref><ref>[https://www.quora.com/If-I-write-with-a-pencil-on-my-notebook-will-the-writing-last-for-a-long-time-say-50-years-or-will-it-just-fade-away-gradually Writing in a notebook with pencil]
</ref><ref>[http://copar.org/bulletin14.htm CoPAR: Creating records that will last]</ref>

==== Metal backup ====

Seed phrases can also be [https://blog.lopp.net/metal-bitcoin-seed-storage-stress-test--part-ii-/ stamped or engraved into metal] which is significantly more durable than paper. Metal backups are recommended if the threat model involves fire, water, extremes of temperature or physical stress.

==== Methods that are not recommended ====

Some methods that are not recommended are: storing in a file on a computer (including online), or storing online.

Some people get the idea to split up their phrases, like storing 6 words in one location and the other 6 words in another location. This is a bad idea and should not be done, because if one set of 6 words is discovered then it becomes far easier to brute-force the rest of the phrase. Storing bitcoins in multiple locations like this should be done with [[multi-signature]] wallets instead.

The [[Shamir Secret Sharing]] algorithm is sometimes promoted as a way to divide control of bitcoins, but in practice there are many pitfalls and trade-offs that make it not worth it.<ref>[https://blog.keys.casa/shamirs-secret-sharing-security-shortcomings/ Shamir's Secret Sharing Shortcomings] by Jameson Lopp, Casa blog, 2020</ref> 

Another bad idea is to add random decoy words that are somehow meaningful to you and later remove them to be left with only the 12-word phrase. The phrase words come from a known dictionary (see next section), so anybody can use that dictionary to weed out the decoy words.

It's possible but risky to memorize ([[Brainwallet]]s) seed phrases. This should probably only be done in situations that really need it, such as crossing a hostile border where one expects to be searched.

== Word lists ==

Generally, a seed phrase only works with the same wallet software that created it. If storing for a long period of time it's a good idea to write the name of the wallet too.

The BIP39 English word list has each word being uniquely identified by the first four letters, which can be useful when space to write them is scarce.

* [https://github.com/bitcoin/bips/blob/master/bip-0039/bip-0039-wordlists.md BIP39 wordlists]
* [https://github.com/spesmilo/electrum/blob/1.9.8/lib/mnemonic.py Electrum old-style wordlist]
* [https://github.com/spesmilo/electrum/blob/master/electrum/wordlist/english.txt Electrum new-style wordlist]

== Alternative name "mnemonic phrase" ==

Seed phrases are sometimes called ''mnemonic phrases'', especially in older literature. This is a bad name because the word "mnemonic" implies that the phrase should be memorized. It is less misleading to call them seed phrases.

== The power of backups ==

An especially interesting aspect in the power of paper backups is allowing your money to be two places at once. At the London Inside Bitcoin conference, the keynote speaker showed 25 paper backups they were carrying—all password-protected. With that, one can carry $100,000 which can instantly be moved to a phone or transferred yet with total security. If it's stolen, then there is no risk because it is backed up elsewhere. That is powerful.<ref>https://www.reddit.com/r/Bitcoin/comments/2hmnru/poll_do_you_use_paper_wallets_why_why_not_what/</ref>

== See also ==

* [https://github.com/bitcoin/bips/blob/master/bip-0039.mediawiki BIP39 seed phrase standard]
* [[Deterministic wallet]]
* [[Storing bitcoins]]
* [[Brainwallet]]
* [https://github.com/6102bitcoin/6102bitcoin/blob/main/content/faq-bitcoin-seed.md FAQ regarding bitcoin seeds]
* [https://web.archive.org/web/20210214135049/https://www.hodlalert.com/2020/12/21/generating-cryptographically-secure-random-numbers-with-coins-and-a-cup/ Generating Bitcoin Seed Phrases With Coins and A Cup]

==References==
<references />

[[Category:Technical]]

Seed phrase

2022-11-23T18:11:42Z

Kamariks:

{{sample}}

A '''seed phrase''', '''seed recovery phrase''' or '''backup seed phrase''' is a list of words which [[Storing bitcoins|store]] all the information needed to recover Bitcoin funds [[Transaction|on-chain]]. Wallet software will typically generate a seed phrase and instruct the user to write it down on paper. If the user's computer breaks or their hard drive becomes corrupted, they can download the same wallet software again and use the paper backup to get their bitcoins back.

Anybody else who discovers the phrase can steal the bitcoins, so it must be kept safe like jewels or cash. For example, it must not be typed into any website.

Seed phrases are an excellent way of backing up and [[storing bitcoins]], so they are used by almost all well-regarded wallets.<ref>[https://bitcoin.org/en/choose-your-wallet Bitcoin.org: Choose your wallet]</ref>

Seed phrases can only backups funds on the [[block chain]]. They cannot store funds involved in [[off-chain transactions]] such as [[Lightning Network]] or [[Blinded bearer certificates]]. Although these technologies are in their infancy as of 2019 so its possible in future seed phrases could be used to backup them.

== BIP39 and its flaws ==

[[BIP_0039|BIP39]] is the most common standard used for seed phrases. One notable example is [[Electrum|Electrum wallet]], which is using its own standard, and for good reasons. BIP39 has some flaws, known in the technical community but not known much wider. They are described [https://electrum.readthedocs.io/en/latest/seedphrase.html#motivation here on this electrum doc page]. Most seriously, BIP39 flaws mean it is not true to say that backing up a BIP39 seed phrase and name of wallet software is the only thing a user needs to do to keep their money safe. BIP39 works this way because its designers wanted their hardware wallet to also support [[altcoin]]s. [https://walletsrecovery.org/ walletsrecovery.org] is an attempt at helping with this issue, but ideally there will be a better solution in the future.

== Example ==

An example of a non-BIP39 seed phrase is:

hotel obvious agent lecture gadget evil jealous {{taggant private key}}keen fragile before damp clarify

The word order is important.

[[File:Seed phrase.jpg|300px|thumb|none|alt=An example seed phrase written on paper|Example seed phrase on paper.]]

== Explanation ==

A simplified explanation of how seed phrases work is that the wallet software has a list of words taken from a dictionary, with each word assigned to a number. The seed phrase can be converted to a number which is used as the seed integer to a [[Deterministic wallet|deterministic wallet]] that generates all the [[Private key|key pairs]] used in the wallet.

The English-language wordlist for the BIP39 standard has 2048 words, so if the phrase contained only 12 random words, the number of possible combinations would be 2048^12 = 2^132 and the phrase would have 132 bits of security. However, some of the data in a BIP39 phrase is not random,<ref>[https://github.com/bitcoin/bips/blob/master/bip-0039.mediawiki#Generating_the_mnemonic BIP39: Generating the mnemonic]</ref> so the actual security of a 12-word BIP39 seed phrase is only 128 bits. This is approximately the same strength as all Bitcoin private keys, so most experts consider it to be sufficiently secure.<ref>[https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki#Security BIP32: Security]</ref>

It is not safe to invent your own seed phrase because humans are bad at generating randomness. The best way is to allow the wallet software to generate a phrase which you write down.

As seed phrases use natural language words, they have excellent error correction. Words written in bad handwriting can often still be read. If one or two letters are missing or unreadable the word can often still be deduced. The [[#Word_Lists|word list]] that the seed phrase words are drawn from is carefully chosen so that the first four letters of each word are enough to uniquely identify it. This compares well with writing down a raw [[private key]] where a single letter being unreadable or incorrect can make the private key useless (depending on the serialization format).

== Two-factor seed phrases ==

Seed phrases, like all backups, can store any amount of bitcoins. It's a concerning idea to possibly have enough money to purchase the entire building just sitting on a sheet of paper without any protection. For this reason many wallets make it possible to encrypt a seed phrase with a password.

The password can be used to create a two-factor seed phrase where both ''"something you have"'' plus ''"something you know"'' is required to unlock the bitcoins.

This works by the wallet creating a seed phrase and asking the user for a password. Then both the seed phrase and extra word are required to recover the wallet. Electrum and some other wallets call the passphrase a '''"seed extension"''', '''"extension word"''' or '''"13th/25th word"'''. The BIP39 standard defines a way of passphrase-protecting a seed phrase. A similar scheme is also used in the Electrum standard. If a passphrase is not present, an empty string "" is used instead.

'''Warning''': Forgetting this password will result in the bitcoin wallet and any contained money being lost. Do not overestimate your ability to remember passphrases especially when you may not use it very often.

'''Warning''': The seed phrase password should not be confused with the password used to encrypt the wallet file on disk. This is probably why many wallets call it an extension word instead of a password.

== Storing seed phrases for the long term ==

Most people write down phrases on paper but they can be stored in many other ways such as [[Brainwallet|memorizing]], engraving or stamping on metal, writing in the margins of a book, chiselling into a stone tablet or any other creative and inventive way.

In the past many people have accidentally lost bitcoins because of failed backups, mistyped letters, forgotten hard drives, or corrupted SSD devices. It's also important to protect the seed from accidental loss.

It could be a good idea to write some words of explanation on the same paper as the seed phrase. If storing for the long term you may forget what a phrase is how it should be treated. A sample explanation that can be adapted is:

<blockquote>These twelve words have control over BITCOINS. Keep this paper safe and secret like cash or jewellery. The bitcoin information on this paper is encrypted with a passphrase. It is part of a multi-signature wallet and was made by Electrum bitcoin wallet software on 2019-01-01.</blockquote>

==== Paper and pencil backup ====

Through bitter experience it has been found that one of the most practical storage mediums is '''pencil and paper'''. The private keys of a bitcoin wallet are encoded into [[seed phrase|random words from a dictionary]] which can be written down. If your hard drive crashes, you can find the paper with the [[seed phrase]] and restore the entire wallet. As [[seed phrase]]s use natural language words, they have good error correction. Words written in bad handwriting can often still be read. If one or two letters are missing the word can often still be deduced. The [[Seed_phrase#Word_Lists|word list]] that the seed phrase words are drawn from is carefully chosen so that the first four letters of each word are enough to uniquely identify it.

For storing on paper writing with pencil is much better than pen.<ref>[http://www.joethorn.net/blog/2011/12/07/pencil-does-not-fade Pencil Does Not Fade]
</ref><ref>[https://www.quora.com/How-do-I-maintain-a-paper-notebook-that-can-remain-for-years How do I maintain a paper notebook that can remain for years?]
</ref>
Paper should be acid-free or archival paper, and stored in the dark avoiding extremes of heat and moisture.<ref>[https://www.loc.gov/preservation/care/deterioratebrochure.html Essential facts about preservation of Paper]
</ref><ref>[https://www.quora.com/If-I-write-with-a-pencil-on-my-notebook-will-the-writing-last-for-a-long-time-say-50-years-or-will-it-just-fade-away-gradually Writing in a notebook with pencil]
</ref><ref>[http://copar.org/bulletin14.htm CoPAR: Creating records that will last]</ref>

==== Metal backup ====

Seed phrases can also be [https://blog.lopp.net/metal-bitcoin-seed-storage-stress-test--part-ii-/ stamped or engraved into metal] which is significantly more durable than paper. Metal backups are recommended if the threat model involves fire, water, extremes of temperature or physical stress.

==== Methods that are not recommended ====

Some methods that are not recommended are: storing in a file on a computer (including online), or storing online.

Some people get the idea to split up their phrases, like storing 6 words in one location and the other 6 words in another location. This is a bad idea and should not be done, because if one set of 6 words is discovered then it becomes far easier to brute-force the rest of the phrase. Storing bitcoins in multiple locations like this should be done with [[multi-signature]] wallets instead.

The [[Shamir Secret Sharing]] algorithm is sometimes promoted as a way to divide control of bitcoins, but in practice there are many pitfalls and trade-offs that make it not worth it.<ref>[https://blog.keys.casa/shamirs-secret-sharing-security-shortcomings/ Shamir's Secret Sharing Shortcomings] by Jameson Lopp, Casa blog, 2020</ref> 

Another bad idea is to add random decoy words that are somehow meaningful to you and later remove them to be left with only the 12-word phrase. The phrase words come from a known dictionary (see next section), so anybody can use that dictionary to weed out the decoy words.

It's possible but risky to memorize ([[Brainwallet]]s) seed phrases. This should probably only be done in situations that really need it, such as crossing a hostile border where one expects to be searched.

== Word lists ==

Generally, a seed phrase only works with the same wallet software that created it. If storing for a long period of time it's a good idea to write the name of the wallet too.

The BIP39 English word list has each word being uniquely identified by the first four letters, which can be useful when space to write them is scarce.

* [https://github.com/bitcoin/bips/blob/master/bip-0039/bip-0039-wordlists.md BIP39 wordlists]
* [https://github.com/spesmilo/electrum/blob/1.9.8/lib/mnemonic.py Electrum old-style wordlist]
* [https://github.com/spesmilo/electrum/blob/master/electrum/wordlist/english.txt Electrum new-style wordlist]

== Alternative name "mnemonic phrase" ==

Seed phrases are sometimes called ''mnemonic phrases'', especially in older literature. This is a bad name because the word "mnemonic" implies that the phrase should be memorized. It is less misleading to call them seed phrases.

== The power of backups ==

An especially interesting aspect in the power of paper backups is allowing your money to be two places at once. At the London Inside Bitcoin conference, the keynote speaker showed 25 paper backups they were carrying—all password-protected. With that, one can carry $100,000 which can instantly be moved to a phone or transferred yet with total security. If it's stolen, then there is no risk because it is backed up elsewhere. That is powerful.<ref>https://www.reddit.com/r/Bitcoin/comments/2hmnru/poll_do_you_use_paper_wallets_why_why_not_what/</ref>

== See also ==

* [https://github.com/bitcoin/bips/blob/master/bip-0039.mediawiki BIP39 seed phrase standard]
* [[Deterministic wallet]]
* [[Storing bitcoins]]
* [[Brainwallet]]
* [https://github.com/6102bitcoin/6102bitcoin/blob/main/content/faq-bitcoin-seed.md FAQ regarding bitcoin seeds]
* [https://web.archive.org/web/20210214135049/https://www.hodlalert.com/2020/12/21/generating-cryptographically-secure-random-numbers-with-coins-and-a-cup/ Generating Bitcoin Seed Phrases With Coins and A Cup]

==References==
<references />

[[Category:Technical]]

File:Seed phrase.jpg

2022-11-23T18:10:10Z

Kamariks:

Seed phrase

File:Mnemonic phrase.jpg

2022-11-23T18:07:10Z

Kamariks:

Mnemonic phrase

Mining

2022-11-23T17:56:00Z

Kamariks:

[[File:Quick-and-dirty-4x5970-cooling.jpg|thumb|right|A home-made "[[Mining rig|mining rig]]"]]
== Introduction ==
'''Mining''' is the process of adding transaction records to Bitcoin's public ledger of past transactions (and a "[[Mining rig|mining rig]]" is a colloquial metaphor for a single computer system that performs the necessary computations for "mining".
This ledger of past transactions calls itself the [[blockchain]] as it is a chain of [[block|blocks]].
The blockchain serves to [[Confirmation|confirm]] transactions to the rest of the network as having taken place.
Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual [[blocks]] must contain a [[proof of work|proof of work]] to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the [[hashcash]] proof-of-work function.

The primary purpose of mining is to set the history of [[transactions]] in a way that is [[Irreversible Transactions|computationally impractical to modify by any one entity]]. By downloading and verifying the blockchain, bitcoin [[full node|nodes]] are able to reach a consensus about the ordering of events in bitcoin.

Mining is also the mechanism used to [[Controlled supply|introduce Bitcoins]] into the system:
Miners are paid any [[transaction fees]] as well as a "subsidy" of newly created coins.
This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.

Bitcoin mining is so-called because it resembles the mining of other commodities:
it requires exertion and it slowly makes new units available to anybody who wishes to take part. An important difference is that the [[Controlled supply|supply]] does not depend on the amount of mining. In general changing total miner hashpower does not change how many bitcoins are created over the long term.

== Difficulty ==
=== The Computationally-Difficult Problem ===
Mining a block is difficult because the SHA-256 hash of a block's header must be lower than or equal to the [[Target|target]] in order for the block to be accepted by the network. This problem can be simplified for explanation purposes: The hash of a block must start with a certain number of zeros. The probability of calculating a hash that starts with many zeros is very low, therefore many attempts must be made. In order to generate a new hash each round, a [[Nonce|nonce]] is incremented. See [[Proof of work]] for more information.

=== The Difficulty Metric ===
The [[Difficulty|difficulty]] is the measure of how difficult it is to find a new block compared to the easiest it can ever be. The rate is recalculated every 2,016 blocks to a value such that the previous 2,016 blocks would have been generated in exactly one fortnight (two weeks) had everyone been mining at this difficulty. This is expected yield, on average, one block every ten minutes.

As more miners join, the rate of block creation increases. As the rate of block generation increases, the difficulty rises to compensate, which has a balancing of effect due to reducing the rate of block-creation. Any blocks released by malicious miners that do not meet the required [[Target|difficulty target]] will simply be rejected by the other participants in the network.

=== Reward ===
When a block is discovered, the discoverer may award themselves a certain number of bitcoins, which is agreed-upon by everyone in the network. Currently this bounty is 6.25 bitcoins; this value will halve every 210,000 blocks. See [[Controlled Currency Supply]].

Additionally, the miner is awarded the fees paid by users sending transactions. The fee is an incentive for the miner to include the transaction in their block. In the future, as the number of new bitcoins miners are allowed to create in each block dwindles, the fees will make up a much more important percentage of mining income.

== The mining ecosystem ==

=== Hardware ===
[[File:Usb-fpga module 1.15x-hs-800.jpg|thumb|right|FPGA Module]]
Users have used various types of hardware over time to mine blocks. Hardware specifications and performance statistics are detailed on the [[Mining Hardware Comparison]] page.
==== CPU Mining ====
Early Bitcoin client versions allowed users to use their CPUs to mine. The advent of GPU mining made CPU mining financially unwise as the hashrate of the network grew to such a degree that the amount of bitcoins produced by CPU mining became lower than the cost of power to operate a CPU. The option was therefore removed from the core Bitcoin client's user interface.

==== GPU Mining ====
GPU Mining is drastically faster and more efficient than CPU mining. See the main article: [[Why a GPU mines faster than a CPU]]. A variety of popular [[Mining rig|mining rigs]] have been documented.
==== FPGA Mining ====
FPGA mining is a very efficient and fast way to mine, comparable to GPU mining and drastically outperforming CPU mining. FPGAs typically consume very small amounts of power with relatively high hash ratings, making them more viable and efficient than GPU mining. See [[Mining Hardware Comparison]] for FPGA hardware specifications and statistics.
==== ASIC Mining ====
An application-specific integrated circuit, or ''ASIC'', is a microchip designed and manufactured for a very specific purpose. ASICs designed for Bitcoin mining were first released in 2013. For the amount of power they consume, they are vastly faster than all previous technologies and already have made GPU mining financially.

==== Mining services (Cloud mining) ====
[[:Category:Mining_contractors|Mining contractors]] provide mining services with performance specified by contract, often referred to as a "Mining Contract." They may, for example, rent out a specific level of mining capacity for a set price at a specific duration.

=== Pools ===
As more and more miners competed for the limited supply of blocks, individuals found that they were working for months without finding a block and receiving any reward for their mining efforts. This made mining something of a gamble. To address the variance in their income miners started organizing themselves into [[Pooled mining|pools]] so that they could share rewards more evenly. See [[Pooled mining]] and [[Comparison of mining pools]].

=== History ===
Bitcoin's public ledger (the "block chain") was started on January 3rd, 2009 at 18:15 UTC presumably by [[Satoshi Nakamoto]]. The first block is known as the [[genesis block]]. The first transaction recorded in the first block was a single transaction paying the reward of 50 new bitcoins to its creator.

== Staking ==

Staking is a concept in the [[Delegated proof of stake]] coins, closely resembling pooled mining of proof of work coins. According to the [[Proof of Stake|proof of share]] principle, instead of computing powers, the partaking users are pooling their ''stakes'', certain amounts of money, blocked on their wallets and delegated to the pool’s staking balance.

The network periodically selects a pre-defined number of top staking pools (usually between 20 and 100), based on their staking balances, and allows them to validate transactions in order to get a reward. The rewards are then shared with the delegators, according to their stakes with the pool.

Although staking doesn’t require lots of computing power as mining, it still needs very stable and fast Internet connection in order to collect, verify and sign all transactions in the queue within a small timespan, which can be as short as one second. If a pool fails to do so, it doesn’t get the reward, and it may be shared with the next pool in order.

A lot of [[altcoin]]s are using staking. Staking is often marketed as a much more efficient alternative. Unfortunately staking has the potential to not be much different than politics. A good example is that it's easy for a big actor to take over the network by simply buying enough coins. This actually happened in 2020 when TRON's Justin Sun took over the Steem "forum" network and then did some things that made some people unhappy.

==See Also==

* [https://99bitcoins.com/beginners-guide-to-mining/ Beginner's Guide to Bitcoin Mining]
* [https://www.zpool.ca Bitcoin Multipool]
* [https://www.bitcoinmining.com Bitcoin Mining]
* [http://codinginmysleep.com/bitcoin-mining-in-plain-english Bitcoin Mining in Plain English] by David Perry
* [https://www.weusecoins.com/en/mining-guide/ Getting Started With Bitcoin Mining]
* [[Automatically mine when computer is locked|Tutorial to automatically start mining when you lock your computer]]. (Windows 7)
* [http://bitcoinminer.com Bitcoin Miner]
* [http://www.bitcongress.org/bitcoin/best-bitcoin-mining-hardware/ Bitcoin Mining Hardware Comparison]
* [http://www.reddit.com/r/Bitcoin/comments/18q2jx/eli5_bitcoin_mining_xpost_in_eli5/ Simplified Explanation of Bitcoin Mining] by reddit user [http://www.reddit.com/user/azotic azotic]
* [https://bitcoinchain.com/pools Bitcoin Mining Pools Comparison]
* [http://www.bitcoinmining.com/best-bitcoin-cloud-mining-contract-reviews/ Research, Review and Compare Cloud Mining Contracts]
* [https://www.youtube.com/watch?v=GmOzih6I1zs Video: What is Bitcoin Mining?]
* [http://yogh.io/#mine:last Mining Simulator] ([https://github.com/JornC/bitcoin-transaction-explorer GitHub source])
* [http://bitcoindaily.org/bitcoin-guides/what-is-bitcoin-mining/ Bitcoin Mining Explained]
[[ru:Mining]]
[[Category:Mining]][[Category:Vocabulary]]

Mining

2022-11-23T17:55:16Z

Kamariks:

[[File:Quick-and-dirty-4x5970-cooling.jpg|thumb|right|A home-made "[[Mining rig|mining rig]]"]]
== Introduction ==
'''Mining''' is the process of adding transaction records to Bitcoin's public ledger of past transactions (and a "[[Mining rig|mining rig]]" is a colloquial metaphor for a single computer system that performs the necessary computations for "mining".
This ledger of past transactions calls itself the [[blockchain]] as it is a chain of [[block|blocks]].
The blockchain serves to [[Confirmation|confirm]] transactions to the rest of the network as having taken place.
Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual [[blocks]] must contain a [[proof of work|proof of work]] to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the [[hashcash]] proof-of-work function.

The primary purpose of mining is to set the history of [[transactions]] in a way that is [[Irreversible Transactions|computationally impractical to modify by any one entity]]. By downloading and verifying the blockchain, bitcoin [[full node|nodes]] are able to reach a consensus about the ordering of events in bitcoin.

Mining is also the mechanism used to [[Controlled supply|introduce Bitcoins]] into the system:
Miners are paid any [[transaction fees]] as well as a "subsidy" of newly created coins.
This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.

Bitcoin mining is so-called because it resembles the mining of other commodities:
it requires exertion and it slowly makes new units available to anybody who wishes to take part. An important difference is that the [[Controlled supply|supply]] does not depend on the amount of mining. In general changing total miner hashpower does not change how many bitcoins are created over the long term.

== Difficulty ==
=== The Computationally-Difficult Problem ===
Mining a block is difficult because the SHA-256 hash of a block's header must be lower than or equal to the [[Target|target]] in order for the block to be accepted by the network. This problem can be simplified for explanation purposes: The hash of a block must start with a certain number of zeros. The probability of calculating a hash that starts with many zeros is very low, therefore many attempts must be made. In order to generate a new hash each round, a [[Nonce|nonce]] is incremented. See [[Proof of work]] for more information.

=== The Difficulty Metric ===
The [[Difficulty|difficulty]] is the measure of how difficult it is to find a new block compared to the easiest it can ever be. The rate is recalculated every 2,016 blocks to a value such that the previous 2,016 blocks would have been generated in exactly one fortnight (two weeks) had everyone been mining at this difficulty. This is expected yield, on average, one block every ten minutes.

As more miners join, the rate of block creation increases. As the rate of block generation increases, the difficulty rises to compensate, which has a balancing of effect due to reducing the rate of block-creation. Any blocks released by malicious miners that do not meet the required [[Target|difficulty target]] will simply be rejected by the other participants in the network.

=== Reward ===
When a block is discovered, the discoverer may award themselves a certain number of bitcoins, which is agreed-upon by everyone in the network. Currently this bounty is 6.25 bitcoins; this value will halve every 210,000 blocks. See [[Controlled Currency Supply]].

Additionally, the miner is awarded the fees paid by users sending transactions. The fee is an incentive for the miner to include the transaction in their block. In the future, as the number of new bitcoins miners are allowed to create in each block dwindles, the fees will make up a much more important percentage of mining income.

== The mining ecosystem ==

=== Hardware ===
[[File:Usb-fpga module 1.15x-hs-800.jpg|thumb|right|FPGA Module]]
Users have used various types of hardware over time to mine blocks. Hardware specifications and performance statistics are detailed on the [[Mining Hardware Comparison]] page.
==== CPU Mining ====
Early Bitcoin client versions allowed users to use their CPUs to mine. The advent of GPU mining made CPU mining financially unwise as the hashrate of the network grew to such a degree that the amount of bitcoins produced by CPU mining became lower than the cost of power to operate a CPU. The option was therefore removed from the core Bitcoin client's user interface.

==== GPU Mining ====
GPU Mining is drastically faster and more efficient than CPU mining. See the main article: [[Why a GPU mines faster than a CPU]]. A variety of popular [[Mining rig|mining rigs]] have been documented.
==== FPGA Mining ====
FPGA mining is a very efficient and fast way to mine, comparable to GPU mining and drastically outperforming CPU mining. FPGAs typically consume very small amounts of power with relatively high hash ratings, making them more viable and efficient than GPU mining. See [[Mining Hardware Comparison]] for FPGA hardware specifications and statistics.
==== ASIC Mining ====
An application-specific integrated circuit, or ''ASIC'', is a microchip designed and manufactured for a very specific purpose. ASICs designed for Bitcoin mining were first released in 2013. For the amount of power they consume, they are vastly faster than all previous technologies and already have made GPU mining financially.

==== Mining services (Cloud mining) ====
[[:Category:Mining_contractors|Mining contractors]] provide mining services with performance specified by contract, often referred to as a "Mining Contract." They may, for example, rent out a specific level of mining capacity for a set price at a specific duration.

=== Pools ===
As more and more miners competed for the limited supply of blocks, individuals found that they were working for months without finding a block and receiving any reward for their mining efforts. This made mining something of a gamble. To address the variance in their income miners started organizing themselves into [[Pooled mining|pools]] so that they could share rewards more evenly. See [[Pooled mining]] and [[Comparison of mining pools]].

=== History ===
Bitcoin's public ledger (the "block chain") was started on January 3rd, 2009 at 18:15 UTC presumably by [[Satoshi Nakamoto]]. The first block is known as the [[genesis block]]. The first transaction recorded in the first block was a single transaction paying the reward of 50 new bitcoins to its creator.

== Staking ==

Staking is a concept in the [[Delegated proof of stake]] coins, closely resembling pooled mining of proof of work coins. According to the [[Proof of Stake|proof of share]] principle, instead of computing powers, the partaking users are pooling their ''stakes'', certain amounts of money, blocked on their wallets and delegated to the pool’s staking balance.

The network periodically selects a pre-defined number of top staking pools (usually between 20 and 100), based on their staking balances, and allows them to validate transactions in order to get a reward. The rewards are then shared with the delegators, according to their stakes with the pool.

Although staking doesn’t require lots of computing power as mining, it still needs very stable and fast Internet connection in order to collect, verify and sign all transactions in the queue within a small timespan, which can be as short as one second. If a pool fails to do so, it doesn’t get the reward, and it may be shared with the next pool in order.

A lot of [[altcoin]]s are using staking. Staking is often marketed as a much more efficient alternative. Unfortunately staking has the potential to not be much different than politics. A good example is that it's easy for a big actor to take over the network by simply buying enough coins. This actually happened in 2020 when TRON's Justin Sun took over the Steem "forum" network and then did some things that made some people unhappy.
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==See Also==

* [https://99bitcoins.com/beginners-guide-to-mining/ Beginner's Guide to Bitcoin Mining]
* [https://www.zpool.ca Bitcoin Multipool]
* [https://www.bitcoinmining.com Bitcoin Mining]
* [http://codinginmysleep.com/bitcoin-mining-in-plain-english Bitcoin Mining in Plain English] by David Perry
* [https://www.weusecoins.com/en/mining-guide/ Getting Started With Bitcoin Mining]
* [[Automatically mine when computer is locked|Tutorial to automatically start mining when you lock your computer]]. (Windows 7)
* [http://bitcoinminer.com Bitcoin Miner]
* [http://www.bitcongress.org/bitcoin/best-bitcoin-mining-hardware/ Bitcoin Mining Hardware Comparison]
* [http://www.reddit.com/r/Bitcoin/comments/18q2jx/eli5_bitcoin_mining_xpost_in_eli5/ Simplified Explanation of Bitcoin Mining] by reddit user [http://www.reddit.com/user/azotic azotic]
* [https://bitcoinchain.com/pools Bitcoin Mining Pools Comparison]
* [http://www.bitcoinmining.com/best-bitcoin-cloud-mining-contract-reviews/ Research, Review and Compare Cloud Mining Contracts]
* [https://www.youtube.com/watch?v=GmOzih6I1zs Video: What is Bitcoin Mining?]
* [http://yogh.io/#mine:last Mining Simulator] ([https://github.com/JornC/bitcoin-transaction-explorer GitHub source])
* [http://bitcoindaily.org/bitcoin-guides/what-is-bitcoin-mining/ Bitcoin Mining Explained]
[[ru:Mining]]
[[Category:Mining]][[Category:Vocabulary]]