Quote from: leifg on June 07, 2011, 06:38:52 PM

Quote from: sirky on June 07, 2011, 06:23:01 PM

Quote from: leifg on June 07, 2011, 05:42:20 PM

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?

But it doesn't really matter, because as soon as they do find another block, everyone learns about it.

You will get paid more often in a larger pool, because they should find blocks faster. But each payout will be less because you will be contributing less to their effort.

Make sense?