What is the waste ratio of the overall network?

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The answer to the question "Why do I have to wait 10 minutes before I can spend money I received?" in the FAQ of Bitcoin contains the sentence

"For example, if it takes miners 1 minute on average to learn about new blocks, and new blocks come every 10 minutes, then the overall network is wasting about 10% of its work."

But I couldn't get it... What I thought is that only one miner will be the creator the new block, so all the other miners who fail to be the creator have wasted their work. So the waste ratio of overall network should be huge.

Why am I wrong? Can you correct me? Thanks in advance!

Tom

Posted 2015-06-09T01:08:01.683

Reputation: 23

1Note that 1 minute is a pretty high estimate, in practice it's more on the order of seconds (or faster) for the majority of miners. This means the actual wasted work is far far less than 10%. – Jannes – 2015-06-09T09:20:52.130

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Also of note is Matt Corallo's High-speed Relay Network which helps to reduce this inefficiency.

– Christopher Gurnee – 2015-06-10T12:43:55.723

Answers

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The waste ratio you are talking about is different from the one mentioned there.

What you are talking about is the difficulty: if the network's total hash rate is X hashes/second, then the difficulty is set such that it requires 600*X hashes to create a block on average. This does not mean that separate miners are wasting their work, because if the difficulty increases, so does how much every block is "worth" in terms of contribution to the network. They are all simultaneously looking for the next block, and all of them have at every point the same chance. Every attempt to find the new block is independent from all others, and independent from how much time they or others have already spent on it.

What that page is talking about is loss of security. When blocks do not propagate immediately to other peers across the network, miners are effectively competing with each other rather than building on top of each other's work during that time (they are always competing for income, but here I mean competing to build the next best chain itself). Their work is wasted because the hashrate an attacker has to compete with is lower than the sum of the hash rates of the honest contributors.

Pieter Wuille

Posted 2015-06-09T01:08:01.683

Reputation: 54 032

2Another way to look at it: the normal work all miners combined do (even though only one "wins" a block at a time) makes it that much harder for an attacker to create malicious blocks, since the attacker would have to spend even more work. However the miners that work another "minute" before receiving the latest block will have (in hindsight) wasted their "minute" of work. – Jannes – 2015-06-09T09:18:54.283

Thanks a lot, Pieter and Jannes! I believe now I have a better understanding how Bitcoin works, thanks to your explanations. – Tom – 2015-06-09T16:58:53.743

Asked: 2015-06-09T01:08:01.683

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Active: 2016-03-16T11:02:00.607