Does Mike Rounds Support Crypto?

Mike Rounds

@SenatorRounds

In short, the more miners there are, the harder it is to mine bitcoins. Since the best way to mine is to simply use more computations, there is an incentive to pool as much effort into mining as possible, simply to make sure your pool has an advantage over other miners.

2021-05-27T19:51:07.000Z · via Twitter

Somewhat Anti-Crypto

Mike Rounds

@SenatorRounds

So how does this relate to Colonial Pipeline? Bitcoins only exist as data. They can be tied to digital wallets rather than a specific person’s identity, which means people believe they can receive and spend them anonymously- perfect for secret transactions like ransoms.

2021-05-27T19:51:07.000Z · via Twitter

Mike Rounds

@SenatorRounds

The first person to win a block gets a prize of bitcoins. Since the second step in forming a block is essentially up to chance, the most effective way to mine is simply to throw more computation at the problem, verifying as many blocks as possible as fast as possible.

2021-05-27T19:51:06.000Z · via Twitter

Mike Rounds

@SenatorRounds

The interesting thing is that you can make it easier or harder to form new blocks if you make the nonce higher or lower. And for bitcoin, the difficulty is adjusted every 2016 blocks so that the rate of formation of new blocks is constant.

2021-05-27T19:51:06.000Z · via Twitter

Mike Rounds

@SenatorRounds

Despite the randomness, it's more like they’re getting paid a fee to maintain ledgers than mining or creating bitcoins. Miners provide proof that they’ve done work to contribute to the chain in exchange for compensation (in bitcoins), rather than making bitcoins themselves.

2021-05-27T19:51:06.000Z · via Twitter

Mike Rounds

@SenatorRounds

In short, mining a new bitcoin is a two-step process. First, you need to verify a block’s worth of transactions, then you need to guess a hash (a number). Your guess is compared to a target (called a nonce) and if your guess is below the nonce then you form a block.

2021-05-27T19:51:05.000Z · via Twitter

Mike Rounds

@SenatorRounds

Since #bitcoins are decentralized, there isn’t a government or bank to maintain the system, which means there needs to be a different way. People who verify transactions are bitcoin miners, and the process of verification is fundamental to how they make (or mine) new bitcoins.

2021-05-27T19:51:05.000Z · via Twitter

Mike Rounds

@SenatorRounds

This blockchain of transactions forms a distributed ledger that is difficult to modify and easy to verify (in theory); a ledger that is maintained collectively on a network with specific protocols to verify each new block in the chain, meaning that bitcoin exchanges are secure.

2021-05-27T19:51:04.000Z · via Twitter

Mike Rounds

@SenatorRounds

These protocols revolve around cryptography (for computers, this is the use of math to code information) hence “crypto”currencies. However, someone needs to actually verify each new block in the chain to keep the system running smoothly.

2021-05-27T19:51:04.000Z · via Twitter

Mike Rounds

@SenatorRounds

Using bitcoin as an example: bitcoins exist in digital ledgers, but to prevent fraudulent exchanges, transactions are recorded in encrypted blocks. Each block points at the previous block and has a timestamp. Go where each block points and you get a chain, called a “blockchain”.

2021-05-27T19:51:04.000Z · via Twitter

Somewhat Anti-Crypto

Mike Rounds

@SenatorRounds

Some people decided that, if the commodity backing a currency doesn’t matter, then why should money need to be a physical object and why should you need a government (or bank) to back money? From there, some programmers started developing cryptocurrencies (CCs).

2021-05-27T19:51:03.000Z · via Twitter

Mike Rounds

@SenatorRounds

Software developments, however, mean that they don’t need to bother with masks and voice modulators. They can issue a ransom and request payment with a cryptocurrency (CC) (like bitcoin) rather than exchange a briefcase full of cash.

2021-05-27T19:51:02.000Z · via Twitter