STEEMIT CRYPTO ACADEMY WEEK 4
PROFESSOR - @besticofinder
HOMEWORK TASK: You need to do your own research and create an article discussing following topics,
(1) How crypto currency mining works ?
(2) What is Mining Difficulty ?
(3) What are the challenges for cryptocurrency miners ?
INTRODUCTION
This is my homework task entry for the week 4 course taught by the above mentioned professor. In this homework task, I'm going to be explaing cryptocurrency mining and with that, answer the questions asked by the professor.
WHAT IS CRYPTOCURRENCY MINING
Cryptocurrency mining is all about, verifying transactions, arranging them in blocks and adding each verified block to the blockchain. This pratice is not obtainable in all cryptocurrencies as not all cryptocurrencies are mined. However, whenever cryptocurrency is mined, this is what it's all about.
IMPORTANCE OF CRYPTOCURRENCY MINING
Cryptocurrency is quite important as its at the heart of crypto. For the cryptocurencies that are mined, mining is adopted for a number of reasons -
- It is how these cryptocurrencies are created
- Miners have to validate the transactions to ensure that the system remains free of fake transactions
- It serves as a means of payment to those who spend time and resources ensuring the smooth running the blockchain and protecting its trustworthiness.
- Mining helps cryptocurrencies to remain decentralized.
- The activities of miners checkmate the acticiof fraudsters
HOW CRYPTO MINING WORKS
After a transaction is carried out, a copy of the transaction details is sent to all the nodes on the network. Some of these nodes are miners and are referred to as miner nodes. The miner nodes gather this transactions and arrange them into a block.
Each transaction is then verified by solving complex mathematical equations. When all the transactions are verified, the block is then verified too by solving mathematical equations to get a result which must be below a specific value. This value is known as hashing difficulty.
If the result is valid, the miner who finds it first, send the newly completed block to the other miners on the network so they can validate it. Once this is done, the completed block is added to the blockchain.
WHAT IS MINING DIFFICULTY
Mining difficulty a measure of how difficult it is to arrive at a blockhash that must be lesser than the hashing difficulty. It will help to think of the block hash as the final verification result of a block.
This mining difficulty is adjusted by the blockchain protocol in order to ensure that the time required to complete a block remains constant.
As a result, if more miners join in the minimg, the mining difficulty is increased but if miners leave, the difficulty is reduced.
CHALLENGES FACING CRYPTOCURRENCY MINERS
Cryptocurrency miners are faced with a number of challenges. I'll go ahead to mention fewnpf them.
Cryptocurrency minimg requires a lot of electricity because it involves heavy duty equipments. The cost of electricity consumed in mining is high and this is a big challenge.
Cryptocurrency mining equipment are not just heavy duty but also cosstly. This makes it difficult for miners with a low budget to cope.
Cryptocurrency mining is tedious. It's very difficult for one person to do it successfully alone. This is why there are mining pools.
Thanks for reading.
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