Crypto Academy Week 4 Homework Post For @besticofinder || 1st March 2021 || Done By @preshdan

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Hi friends I guess you are doing great and keeping safe as demanded by circumstances. Am here to drop my week 4 assignment for @besticofinder.

Topic: Introduction To Cryptocurrency Mining

This encompasses How mining works, mining difficulties and challenges for Cryptocurrency miners.

Cryptocurrency mining is the process of collecting cryptocurrency as a recompensation for an accomplished task. Cryptocurrency mining ameliorates income and aids financial liberty.

A breakdown of Cryptocurrency Mining

CRYPTOCURRENCY MINING

Cryptocurrency mining can be said to be tha gaining of cryptocurrencies by providing or finding solution to cryptographic equations with the aid of computers which blend with blockchain.

Cryptocurrency mining is the act of conducting or carrying out business, an exchange or trade of money, and the process of funds transfer that use makes use of processors and cryptographic processes to perform intricate roles and input data to a blockchain.

Cryptocurrency market on its own is a substitute to the global banking system. Therefore, understanding the difference between centralized and decentralized systems will be a great help to understanding how crypto mining works.

THE CENTRALIZED & DECENTRALIZED SYSTEMS

The graphic below gives a pictorial explanations to centralized and decentralized systems of cryptocurrency

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The above graphic distinguishes between centralized and decentralized systems.
On the left hand side is the centralized system. The centralized system operates through the use of technologies, networks and computers that are possessed, operated and preserved by financial institutions. This makes every transaction pass through the bank.

On the right hand side of the graphic is the decentralized system which is operated using an interconnected devices that are owned, maintained and operated separately. Being interconnected allows for sharing of the responsibility of transaction substantiation, maintaining and at the same time keeping up-to-date superfluous versions of the ledger and and as well give out their resources for the creation of this decentralized network. In decentralized system, there is no Monopoly authority as regards the maintenance of a single ledger.

HOW MINING WORKS

Crypto miners, in order to be recompensed for their work in the form of cryptocurrencies, engage in authenticating the validity of exchange, deal or trade.
In order to comprehend the functionality crypto mining, the knowledge of it's processes and technologies is crucial. This may include the apprehension of blockchain and it's functions. However, there are two things that are most important to blockchain, the are:

• Public key encryption
• Arithmetic calculation

A blockchain is a sequence or stream of interconnected data blocks that contain indispensable pieces of data, including cryptographic hashes. These blocks are inherent to a blockchain, and are collection of data transactions that are added to the end of the ledger. Blockchain annexes a stratum of transparency, and also inflates people's self-importance when they see their transactions being chained to the blockchain. This, however, leads to the manifestation of pride and excitement.

THE ROLES AND PROCESSES WITHIN THE BITCOIN BLOCKCHAIN

The following are among the several important components and processes involved in the creation of a blockchain with regards to Bitcoin:

• Blockchain: The blockchain is a series of blocks that are listed in order of time from the earliest to the latest. Since formarly announced blocks can’t be altered after they’ve been added to the blockchain, transparency is provided.

• Nodes: Node refers to individuals and devices that are found within the blockchain.

• Blocks: Blocks here, are the single sections that compromise each overall blockchain. Each block contains a list of completed transactions as such, once verified, cannot be altered. Meanwhile, it is almost impossible to make changes on old blocks.

• Miners: The are definite individuals whose jobs are to prove unconfirmed blocks in the blockchain by substantiating the hashes. Once a block confirmed, it gets added to the blockchain. A cryptocurrency awarded to the first miner who promulgated to the rest of the nodes that they have found the solution to the hash.

• Consensus Algorithm: This is an official rules and guidelines within blockchain that aids different nodes within a dispensed network to come to terms for data verification.

• Transactions: Transaction is the exchange of cryptocurrencies between two parties. Transactions are joint, one to another, to form a list that is added to an unconfirmed block. Then each data block would be verified by the miner nodes.

• Hashes: A hash is an important part of every block in the blockchain that is generated by uniting the header data from the former blockchain block with a nonce.

• Nonces: A nonce is a non-repeating value that is added to the hash in each block of the blockchain which is the number for which the miners are finding solution.

A GLANCE AT CRYPTO MINING PROCESS

• Transactions Are Legitimately Verified By Nodes

Cryptocurrency blockchain is built on the basis of transactions.

• Individual transactions are chained to a list of other transactions to form a block

Once a transaction is verified, it is added to the blockchain which helps to prevent spending cryptocurrencies twice by keeping a permanent unamendable record.

• To the unconfirmed block, a has and other types of data are added.

Transactions alongside additional informations are added to the block as well as header data and hash from the former block and recent hash for the new block. In order to produce a new hash, the new block and a nounce are joint together. This newly generated hash is verified by a miner and added to the unconfirmed block.

• Block’s hash are substantiated by Miners for block legitimacy purpose.

Doing this, miners in the network inspect the accuracy and validity of the unconfirmed block which they do by carrying out examination on the hash.

THE DIFFICULTIES OF MINING

This indicates the complexity and the duration it takes to find the right hash for each block.

• The complexity of mining new units is directly or inversely proportional to time, influenced by the number of miners in the network
• It is a measurement unit used in Bitcoin mining process
• Indicates the level of cumbersomeness of providing solution to an intricate cryptographic puzzle

There is a great contest among miners over limited block prizes. Partakers and computing capability is directly proportional to the entire network. However, difficulty has to be modified regularly. Upward or downward rests on the quantity of participators in the mining network as well as their united hashpower.

Deu to the recurring complexity, miners unite forces in mining pool to work out the mathematical conundrum which demands colossal volume of reckoning power.

CHALLENGES FOR CRYPTOCURRENCY MINERS

There are challenges associated with crypto mining regarding the fact it is the procedure by which cryptocurrencies are discharged into a network through the accomplishment of a given prearranged mathematical reckoning which comes with unparalleled set of difficult task.

Miners engage in data verification, earning cryptocurrency as a prize.

Now lets consider some if the challenges faced by crypto miners:

CENTRALIZATION

This is disadvantageous, notwithstanding it's merits to great crypto industry, because the method and mode of action in which ASICs are invented is influenced by miners. Mining vacuum is centralized owing to the fact that there is scarcely existing manufacturers of ASICs.

SUSCEPTIBLE TO CRYPTO HACKING

No canonical answer to the problem of crypto hacking solution is within reach notwithstanding, ameliorating PoS that makes use of hybrid protocols on its blockchain platform can be a formidable way miners can use to prevent such spike or challenge.

HIGH ENERGY COSTS

To increase profitable mining opportunities, there is need to put together as much ASICs as possible to provide solution to one difficulty which may demand ultra high energy output which will lead to lofty electric charges or fees.

@besticofinder this my homework

Thanks a million times for reading through