In your own words, explain mining and block reward.
Mining is the process whereby computer programmers generate hashes by the use of complex computer algorithms to validate transactions and add them to a block on the crypto blockchain network and for their efforts are given new coins and the transaction fee which is also know as the gas fee as payment for the work done.
This idea is what makes the crypto blockchain decentralized since it is not one single body or organization that is allowed to validate transactions.
Since Bitcoin is the first cryptocurrency to surface most of my discussion will be about Bitcoin.
Initially when Bitcoin mining began which was way back in 2009, the miner(s) is given 50 BTC plus the transaction fee on that block as reward. And this encouraged other people to also venture into the mining work. Now, that was how new coins were released into the crypto market.
Just as traditional mining require special machines and skilled personnels, so is Bitcoin. Not just any computer can be used for Bitcoin mining, the system unit should have specialized circuits embodied into it. Example of such circuit used for mining Bitcoin is (ASIC) Application-Specific Integrated Circuit. It just doesn't end with just skilled personnels and special computers, it also consume alot of electrical power to the extent that China is shutting down Bitcoin mining in the country.
The number of coins that Bitcoin miners receive after validating transactions is halved after the generation of 210,000 blocks. Till now there have be only three halvings that has occurred and it takes about 4 years for the halving to take place.
| Period | New Coins Given |
|---|---|
| 2009 - 2012 | 50 BTC |
| 2012 - 2016 | 25 BTC |
| 2016 - 2020 | 12.5 BTC |
| 2020 - till as at time of writing this | 6.25 BTC |
What do you understand by the Bitcoin Halving?
For every currency to thrive very well and increase in its value it has to be scare or too much should not be released into the market, for this reason Bitcoin halving is used to reduce the number of new coins that are introduced into the market due to mining. This halving phenomena occur anytime 210,000 number of blocks are generated. From my studies on the halving I have realised that it take like almost 4 years for the number of blocks to reach 210,000 and for this reason there have being only three halving that has taken place since 2009, one occurred in 2012, another in 2016 and the last one till now occured in 2020. The next halving in line is expected to place in 2024.
| Start | End | New Coins Given |
|---|---|---|
| 2009 | November 27, 2012 | 50 BTC |
| November 28, 2012 | July 8, 2016 | 25 BTC |
| July 9, 2016 | May 10, 2020 | 12.5 BTC |
| May 11, 2020 | till as at the time of writing this | 6.25 BTC |
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As I said earlier the less Bitcoin released the more valuable Bitcoin becomes, this can be seen from the screenshot. The more the halving the more valuable a coin becomes.
What are the effects of the Halving on miners?
Although the number of Bitcoin coin that miners earn reduces anytime there is a halving it does it mean that they are not making any gains as they used to gain previously actually it is the other way round, when ever there is halving the worth of Bitcoin increases drastically so 30 BTC before the halving might even have less value than 10 BTC after the halving so this tells us that miners are not making loses because of the halving.
Although Bitcoin has a limit for the number of Bitcoin to ever be produced, we all can agree that there is going to be a time where there will be no Bitcoin given to miners but does it mean miners won't be rewarded? Certainly not, as stated previously miners receive both new Bitcoins and the transaction fee so when the time comes that no new Bitcoin is given miners will receive only the transaction fee and I am very confident that at that time the transaction fee will be worth the work that miners will do.
| Start | End | New Coins Given | value Before Halving | value After Halving |
|---|---|---|---|---|
| 2009 | November 27, 2012 | 50 BTC | not valuable | 16.00 USD |
| November 28, 2012 | July 8, 2016 | 25 BTC | 13.00 USD | 1100.00 USD |
| July 9, 2016 | May 10, 2020 | 12.5 BTC | 650.00 USD | 20,000.00 USD |
| May 11, 2020 | till as at the time of writing this | 6.25 BTC | 531.11 USD | 47,000 USD |
- Values are not exact but are approximations.
This shows that the value of Bitcoin really increase in worth as the halving occurs.
What is the current block height on the Bitcoin blockchain? How many more blocks before the next halving?(Screenshots and Full working)
.png)
21st August, 2021Source
As at the time the screenshot was taken the block height of Bitcoin is 696,882
Calculations to determine the number of blocks needed to be generated for the next Bitcoin halving to occur:
For the fourth Bitcoin halving to place there has to be
210,000×4 = 840,000 blocks
- The number of blocks needed to be generated is 840,000 - 696,882 = 143,118 Blocks
- 143,118 number of Blocks is needed to be generated for the next Bitcoin halving to occur.
Do you think Steem’s inflation rate reduction can affect other coins? Why?
Just as inflation on USD can affect the currency of other countries because of its dominance in the traditional trading market so is a crypto coin with that much dominance can affect other coins when there is a reduction on the inflation rate of that coin but unfortunately steem does not have that much dominance at the moment in the crypto market hence making it nearly impossible for the reduction in inflation rate for steem to affect other coins on the crypto market. So at the time being I would go with no and it is my hope that steem gets to have that much dominance so that such a thing can happen in the near future.
What is the current block height on the Steem blockchain? How many more blocks before the next 0.01% reduction?(Screenshots and Full working)
.png)
On 21st August, 2021. Source
Number of blocks generated is 56,563,387
Steem inflation reduces by 0.01% for every 250,000 number of blocks generated.
At the time the screenshot is taken there had been a reduction number of 226 which was calculated using the formula in the bracket (56,563,387 / 250,000 = 226.253548) reduction
The next reduction will take place when the number of blocks generated is ( 250,000 × 227 = 56,750,000)
This means that there has to be the generation of an additional (56,750,000 - 56,563,387 = 186,613 blocks).
186,613 blocks more needed before the next reduction.
Continuation of last week’s work
What is the current value of BTC on the day you are performing this task? If you made a purchase of $2,500 then,
a.) how many satoshis would you have?
b.) what is the value of a satoshi for that day?
(Show full working and correct to 3 s.f)
(1 satoshi = 0.00000001 BTC)
Value of BTC on 21st August, 2021, at 5:31pm is 49,600.00 USD (3sf)
.png)
What is the current value of BNB on the day you are performing this task? If you made a purchase of $30 then,
a.) how many Jagers would you have?
b.) what is the value of a Jager for that day?
(Show full working and correct to 3 s.f)
(1 jager = 0.00000001 BNB)
.png)
BNB value is 455.00 USD (3sf) on 21st August, 2021 at 5:31pm
I BNB = 454.7624 USD
Unknown = 30 USD
30× 1 = 454.7624 × Unknown
Unknown = 30 ÷ 454.7624
Unknown = 0.0659685145 BNB
30 USD will yield 0.0659685145 BNB
A. 1 jager = 0.00000001 BNB
Unknown = 0.0659685145 BNB
Unknown × 0.00000001= 1× 0.0659685145
Unknown = 0.0659685145 ÷ 0.00000001
Unknown = 6,596,851.45
30 USD will give 6600000.00 jagers (3sf)
B. If 1 jager = 0.00000001 BNB
I BNB = 454.7624 USD
I jager = 0.00000001 BNB
Unknown = 1 BNB
1×1 = 0.00000001 × Unknown
Unknown = 1/ 0.00000001
Unknown = 100,000,000 Jagers
Therefore
If 100,000,000 jagers = 1 BNB
100,000,000 jagers = 454.7624
100,000,000 jagers = 454.7624 USD
1 jager = Unknown
Unknown × 100,000,000 = 454.7624 × 1
Unknown = 454.7624 ÷ 100,000,000
Unknown = 0.0000045476 USD
Jager value today is 0.00000455 USD (3sf)
Thanks to @awesononso for this insightful lecture. See you next season hopefully.