How Monero’s proof of work works • Hacker News Board

Re: How Monero’s proof of work works

#41

Post by AureliusMA » Mon, May 04, 2026, 4:09 PM UTC

Hilliard_Ohiooo wrote: post #13

j4cobgarby wrote: post #5

I never quite understand this stuff, maybe someone can help. Are cryptocurrencies supposed to be a potential replacement for real life cash? This was my understanding of the motivation behind Bitcoin, at least. If so, why does it make sense that people can "generate" cash by proving some amount of work done? This of course cannot be done with normal cash. Is the main functionality of these cryptocurrencies supposed t…

yes, Bitcoin was hijacked by the company, Blockstream and they injected the SegWit and RBF attacks to kill it as a currency, Bitcoin Cash still functions as Bitcoin however. Monero is similar to Bitcoin Cash, a useful replacement for cash in most cases.

Bitcoin Cash's value begs to differ.

Re: How Monero’s proof of work works

#42

Post by victorbjorklund » Mon, May 04, 2026, 4:13 PM UTC

earnesti wrote: post #19

j4cobgarby wrote: post #5

I never quite understand this stuff, maybe someone can help. Are cryptocurrencies supposed to be a potential replacement for real life cash? This was my understanding of the motivation behind Bitcoin, at least. If so, why does it make sense that people can "generate" cash by proving some amount of work done? This of course cannot be done with normal cash. Is the main functionality of these cryptocurrencies supposed t…

> This of course cannot be done with normal cash. Normal cash is just printed out from thin air by those who have the power. In that sense (some) cryptocurrencies are better because at least the process is open.

Is it not printed out of thin air by those that have compute power ?

Re: How Monero’s proof of work works

#43

Post by Tr3nton » Mon, May 04, 2026, 4:13 PM UTC

lern_too_spel wrote: post #40

ArchieScrivener wrote: post #22

Earlier quoted context omitted.

Yes, Bitcoin is a replacement for central banking currencies. Its the first few lines of the white paper. This is how money works. If you use a medium of exchange and unit of account for goods and services then that medium must increase at the same rate as the increase in goods and services otherwise you get second and third order effects such as inflation, contraction, rising unemployment, etc., directly impacting i…

> Wall Street got ahold of it and now Bitcoin is primarily acting as a Store of Value for the purpose of speculative investments Insomuch as beanie babies are a store of value. Speculative assets only have value as long as there are more greater fools to buy in. When you've exhausted the supply of greater fools, there is no more reason to buy the speculative asset because its price won't go up, so it will fall to its…

You can't send a Beanie Baby to someone on the other side of the planet instantly.

Re: How Monero’s proof of work works

#44

Post by AureliusMA » Mon, May 04, 2026, 4:14 PM UTC

latchkey wrote: post #35

dale_glass wrote: post #28

Earlier quoted context omitted.

A transaction fee of what? To take a fee from a transaction there has to be a transaction to take a fee from, which needs some sort of "coin" that came from somewhere. Somebody has to create a money supply and distribute it somehow. When the network first comes into existence, nobody has any money, so where does it come into being from? Mining is what generates the coins. And you need mining because otherwise you nee…

It is subtle, but PoW mining itself doesn't generate coins. It isn't like someone is digging a hole in the ground and extracting gold. PoW miners are rewarded for correctly validating transactions, with newly minted coins. The whole proof of work thing is that you proved that you validated a transaction by expending energy, and the network pays you for that security service. Miners then need to sell those coins on th…

Agreed with your explanation.

I would add a different way to make sense of it.

Proof of work allows for what Keynes called "Bancor". BTC is succesful because unlike fiat central banks, the money supply isn't dictated by interest rates (and thus loans) but by the effort of participants. The price of BTC is almost irrelevant, BTC itself is a paradigm shift.

Regarding the fixed supply, it's only fixed because participants agree to the consensus algorithm that fixes it. Many cryptocurrencies have different tokenomics, such as ETH's rules under PoS. BTC miners could vote onchain for a hard fork to change the 21M cap - or another solution.

Re: How Monero’s proof of work works

#45

Post by xorcist » Mon, May 04, 2026, 4:15 PM UTC

j4cobgarby wrote: post #5

I never quite understand this stuff, maybe someone can help. Are cryptocurrencies supposed to be a potential replacement for real life cash? This was my understanding of the motivation behind Bitcoin, at least. If so, why does it make sense that people can "generate" cash by proving some amount of work done? This of course cannot be done with normal cash. Is the main functionality of these cryptocurrencies supposed t…

Before a new currency exists, it doesn't exist. Someone has to mint it. It has to be inflated into existence, in the monetary sense. How is this done?

For a state or central bank the answer is obvious: The state or bank itself prints it.

For a private actor the technical means is perhaps less obvious, but the actor behind the currency obviously gets to decide.

For a decentralized open source project, it is less clear. You could do it so every node in the system gets a piece of every newly printed unit of currency, but if it is free to run a node everyone could just run a billion nodes and take all the currency for themselves.

Bitcoin solved the problem with Proof of Work, which is elegant because both the double spend problem and the minting problem is solved together. Every node has to prove it has run a unit of useless computation and inflation is spread evenly across worker nodes. This led to a split between nodes and miners with the use of specialized hardware, but the basic premise still holds.

Crypocurrencies in general are very different. Ethereum, the second most popular, was created by a private actor and the that actor decided to print 72 M for themselves and promptly sold 80+% before the release of the software which gave rise to the term ICO which was very trendy for several years. After the initial release inflation continued according to the miner model.

Re: How Monero’s proof of work works

#46

Post by AureliusMA » Mon, May 04, 2026, 4:16 PM UTC

Aeroi wrote: post #7

[flagged]

You would be surprised at how efficient cryptocurrency mining is compared to other ways of storing value. And most improvements happen to reduce the overall cost of securing value (PoS, PoST, etc)

Re: How Monero’s proof of work works

#47

Post by serial_dev » Mon, May 04, 2026, 4:17 PM UTC

j4cobgarby wrote: post #5

I never quite understand this stuff, maybe someone can help. Are cryptocurrencies supposed to be a potential replacement for real life cash? This was my understanding of the motivation behind Bitcoin, at least. If so, why does it make sense that people can "generate" cash by proving some amount of work done? This of course cannot be done with normal cash. Is the main functionality of these cryptocurrencies supposed t…

You can't "generate cash" for doing some amount of random work. You are getting paid for securing the network and keeping it decentralized, and this payment is done in the native token of the network. It's an incentive mechanism, it's a reward for the people who provide the infrastructure for the network.

Re: How Monero’s proof of work works

#48

Post by AureliusMA » Mon, May 04, 2026, 4:18 PM UTC

dgellow wrote: post #27

Hilliard_Ohiooo wrote: post #10

Earlier quoted context omitted.

You'll get nothing but up votes here on HN, a lot are still angry they missed the boat. But solving the problem of how to transfer value trustlessly and anonymously, instantly anywhere in the world is one of the biggest breakthroughs since the Internet. Amazing how in a few short years kids started growing up with Bitcoin and don't understand how it work or why it exists :(

It’s an interesting technical problem to solve. But after 15y still has no meaningful benefits for our societies. Other than gambling/speculation/illegal stuff. The transformative cryptocurrency shift didn’t happen

We are very far from 2140, the year the last bitcoin will be mined. 15 years is nothing, this is a very long term paradigm shift.

Re: How Monero’s proof of work works

#49

Post by 3form » Mon, May 04, 2026, 4:18 PM UTC

lern_too_spel wrote: post #40

ArchieScrivener wrote: post #22

Earlier quoted context omitted.

Yes, Bitcoin is a replacement for central banking currencies. Its the first few lines of the white paper. This is how money works. If you use a medium of exchange and unit of account for goods and services then that medium must increase at the same rate as the increase in goods and services otherwise you get second and third order effects such as inflation, contraction, rising unemployment, etc., directly impacting i…

> Wall Street got ahold of it and now Bitcoin is primarily acting as a Store of Value for the purpose of speculative investments Insomuch as beanie babies are a store of value. Speculative assets only have value as long as there are more greater fools to buy in. When you've exhausted the supply of greater fools, there is no more reason to buy the speculative asset because its price won't go up, so it will fall to its…

Roughly the same argument could be applied to gold, and yet it has been used as a value store for ages.

Can't say I like crypto, but I think better arguments can be made against it.

Re: How Monero’s proof of work works

#50

Post by mothballed » Mon, May 04, 2026, 4:19 PM UTC

lern_too_spel wrote: post #40

ArchieScrivener wrote: post #22

Earlier quoted context omitted.

Yes, Bitcoin is a replacement for central banking currencies. Its the first few lines of the white paper. This is how money works. If you use a medium of exchange and unit of account for goods and services then that medium must increase at the same rate as the increase in goods and services otherwise you get second and third order effects such as inflation, contraction, rising unemployment, etc., directly impacting i…

> Wall Street got ahold of it and now Bitcoin is primarily acting as a Store of Value for the purpose of speculative investments Insomuch as beanie babies are a store of value. Speculative assets only have value as long as there are more greater fools to buy in. When you've exhausted the supply of greater fools, there is no more reason to buy the speculative asset because its price won't go up, so it will fall to its…

1 Trillion of market cap can stay wrong longer than some random loud mouth on the internet can stay right about why everybody else is wrong. There is no 'intrinsic' value to most bits of information written on paper or disks, by some definition.