Hi Steemians, this is my homework assignment by @besticofinder. A very interesting topic on Cryptocurrency Mining. I hope you enjoy it.
How Crypto Mining Works.
Crypto Mining starts with blockchain, which is an online decentralized accounts(ledger) that keeps the transactions in all the network. A block is a group of approved transactions that are joined together to create a chain, which comes the term Blockchain.
The aim of miners is to add individual blocks to this block chain by solving sophisticated mathematical problems, which requires a substantial amount of both electrical and mathematical power.
Miners always compete to add blocks to the blockchain, the miner that is faster in solving the problems will add the block with it's approved transactions to the blockchain, of which the miner will receive a reward in crypto currency.
The rate of this reward is cut in half every four years which is known as HALVING.
HALVING is precisely enforced to ensure a predictable and unalterable rate of introducing new cryptos into the existing supply and eliminating inflation concerns
What is Mining Difficulty?
This can be defined as the measure of how it is to maintain and add to blockchain. With bitcoin for example, miners are required to have a computer that runs the blockchain to be able to compete in solving a complex math problems, the first miner to solve the problem creates a new block which happens every 10 minutes.
However, the more the miners compete to solve the math problems, the faster blocks will be discovered. In order to keep block creation at a fixed rate, difficulty has to be adjusted periodically (after mining about 2,016 blocks in the network).
Also as the mining difficulty increases, the amount of work required to create a new block and earn the reward increases.
Common Challenges for Crypto Miners.
1. High Power Consumption.
Since personal computers can no longer compete, miners are now forced to use faster or specialized machine called Application Specific Integrated Circuit (ASIC). However, in order to increase their chances, miners will need to combine up to hundreds of ASICs to solve a problem, leading to higher power consumption, which translates to exorbitant electric bills.
2. Centralization Threat.
ASICs has proven to adapt well in crypto mining. They are so good that it's difficult to mine without one. This is becoming a threat because many miners are influencing how ASICs are being created/designed, and since there are few ASICs manufacturers, mining space may eventually be centralized.
However, this problem can be addressed by decentralizing the manufacturing process of ASIC and or put into effect a new hash algorithm that would wipe out all existing ASIC miners.
3. Hackers.
Hackers are growing in sophistication in somany ways. Example, they can hack into miners computers to remotely mine cryptos with ransomware like tactics etc.
Thanks to you @besticofinder for this opportunity.
Cc:-
@steemitblog
@steemcurator01
@steemcurator02
@besticofinder