Digital Currency Mining A quick guide
What is Digital Currency Mining?Mining is essentially a set of steps that requires digital token miners to compete with each other to produce a hash which meets a certain criteria.
How do I Mine Digital Currency?Miners use brute force to create the hash, a hash is the output of specific input parsed through an algorithm. For example, Bitcoin uses the SecureHashingAlgorithm-256 (SHA-256) algorithm comprising of 256 bits.
This encryption ensures the hash cannot be reverse engineered to reveal its secret and the computing power required to attempt to do so is very very significant.
What is Mining Difficulty?The criteria the hash would need to meet is set by the blockchain it participates within, the complexity of the format is normally termed the ‘difficulty’. This difficulty is determined by the number of machines required to replicate the expected hash and increases depending on the number of computers participating. If 10 computers focused on discovering the correct hash this would theoretically take 10 times longer than if 100 computers were used to carry out the same task.
Miners are expected to discover a hash by a certain period of time so as the number of participants increase the difficulty has to be adjusted in order for the expected timely discovery to occur. The more participants the greater the difficulty. The procedure is hit or miss but the nuances of the attempt are configured using a nonce.
Do Miners validate blocks?As all miners in a particular network (eg/ Bitcoin, Ethereum) search simultaneously for the same solution they generate a ‘proof of work’ in their attempts to discover the correct hash. This evidence is vital in determining the validity of a payment to a miner. You have to show your working out or you go to the bottom of the class.
What Are Mining Blocks?Meanwhile all successful and unsuccessful attempts update the blockchain with blocks. Blocks are basically grouped historical transaction data living on the ‘Blockchain’. There are different types of blocks that can exist.
What is the Genesis Block?The genesis block is the first block of a blockchain. The genesis block is normally hardcoded into software associated with utilising that particular blockchain. A genesis block is unique in that it does not reference a previous block in order for it to validate on a blockchain, it is the big bang of a blockchain. Due to its unique characteristics the genesis ‘block 0’ does not produce a spendable subsidy.
What is an Orphan Block?A detached or orphaned block meets the criteria of a blockchain but is not part of it. This can occur when unscrupulous individuals attempt to reverse a hash and reveal its transactions. Alternatively they can occur if two miners produce valid blocks for the same transaction group at very similar times, in such an event one would have to be discarded. The orphaned blocks are accepted by default on the network but may later be rejected if proof of a longer blockchain is received which doesn’t include that particular block.
What is the Uncle Block?The uncle block is exclusively associated with the ethereum blockchain. In Bitcoin terms it is an alternative valid block equal in position to your parent block but on a shorter chain, like an orphan block. Ethereum use the uncle blocks to incentivise the ethereum miners to include a number of them when they mine a block. It allows miners to be compensated for their efforts to mine by receiving rewards for blocks that may not necessarily be used but helped locally before being overwritten by the bigger pool which may have had propagation issues at the time. The uncle blocks help secure the chain by augmenting work on the main chain, therefore spending far less time on stale blocks.
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