OK I get the theory. But consider this (and correct me if I'm wrong).
- A lot of different independet people (or pools) are trying to generate blocks
- blocks are chained together
- the longest block chain is the valid one
consider the scenario:
I'm on my own. I generate a block. Now another block is created by someone else. Doesn't that make my block usesless as I have to add my block to the just generated block?
If so: the longer it takes to create a block (i.e. the smaller the pool is), the more likely it is that I do a lot of useless work I do an the lesser profit I get.
I most certainly missing something, but in my head this example makes sense.
Not quite. Each block relies on inputs from the previous block.
That way you can't 'work ahead', so to speak. As soon as someone else finds a block, the whole network learns, and starts over on a brand new block.
On the off chance two blocks are found simultaneously, two block chains are started. Next block will make one block chain longer, and thus winning.
OK so regarding this example, wouldn't working on a larger pool make more sense as the chances are higher that another block is discovered during the calculations?