Crypto Academy Week 4 Homework Task 3 For [@besticofinder] BY@azizulhassan
Assalamu Alaikum everyone how are you doing I hope that everyone is doing good since morning I have been trying to write this post and it took me so many hours to write this I had idea about how all this thing work but I just want you to gain more knowledge by being the searching since morning and now I have complete it the post Well I think the first topic I have explained a little bit long I am so sorry for that but I can't cut anything from that now because if I do you it will destroy the whole paragraph which I don't want so I wrote this big because I was writing this in Microsoft world and I didn't realise that it's that so that's it and now let's start if you don't understand anything you can write in the comments and I will try to reply you
(1) How crypto currency mining works ?
source
Bitcoin was created as a decentralized alternative to the banking system this means that the system can operate and transfer funds from one account to the other without any central authority with a central authority transferring money is easy just tell the bank you want to remove 50 dollars from your account and edit to someone else's account in this case the bank has all the power since the bank is the only one who was allowed to update the ledger that holds the balances of everyone in the system but how do you create a system that has a decentralized ledger how do you give someone the ability to update the ledger without giving them so much power that they'll become corrupt or negligent in their work well the rules of the Bitcoin system known as the protocol solves this in a very creative way I like to call who wants to be a banker in short anyone who wants to participate in updating the ledger of Bitcoin transactions notice the blockchain can do so all you need to do is guess a random number that solves an equation generated by the system sounds simple right of course this guessing is all done by your computer the more powerful of a computer you have the more guesses you can make per second thus increasing your chances of winning this game if you manage to guess right you earn bitcoins and get to write the next page of Bitcoin transactions on the blockchain here's a more detailed breakdown of the mining process once your mining computer comes up with the right guess your mining program determines which of the currently pending transactions will be grouped together into the next block of transactions compiling this block represents your moment of glory yes you have now become the temporary banker of Bitcoin who gets to update the Bitcoin transaction ledger known as the blockchain the block you've created along with your solution is sent to the whole network so that other computers can validate it each computer that validates your solution updates its copy of the Bitcoin transaction ledger with the transactions that you chose to include in the next block as you can imagine since mining is based on a form of guessing for each block a different miner will guess the number and be granted the right to update the blockchain of course the miners with more computing power will succeed more often but due to the laws of statistical probability it is highly unlikely that the same miner will do so every time after this stage is complete the system generates a fixed amount of bitcoins and rewards them to you as a compensation for the time and energy you spent in solving the math problem additionally you get paid any transaction fees that were attached to the transactions you inserted into this block so that's Bitcoin mining in a nutshell it's called mining because of the fact that this process helps mine new bitcoins from the system but if you think about it the mining part is just a byproduct of the transaction verification process so the name is a bit misleading since the main goal of mining is to maintain the ledger
(2) What is Mining Difficulty ?
now that you know what Bitcoin mining is you might be thinking cool free money so where do I sign up well not so fast Satoshi Nakamoto who invented Bitcoin crafted the rules for mining in a way that the more mining power the network has the harder it is to guess the answer to the mining math problem so the difficulty of the mining process is actually self adjusting to the accumulated mining power the network possesses if more miners join it will get harder to solve the problem if many of them drop off it will get easier and this is known as the mining difficulty so why on earth did Satoshi do this well he wanted to create a steady flow of new bitcoins to the system in a sense this was done to keep inflation in check the mining difficulty is set so that on average a new block will be added every 10 minutes now remember this is on average we can have two blocks being added minute after minute and then wait an hour for the next block in the long run though this will even out to ten minutes on average as you can imaginethis type of self adjusting mechanism created some sort of an arms race to get the most efficient and powerful miners as soon as possible when Bitcoin first started out there weren't a lot of miners out there in fact Satoshi the inventor of Bitcoin and his friend Hal fitty were some of the very few people mining Bitcoin back at the time with their own personal computer using your CPU meaning your central processing unit or your computer's brain was enough for mining Bitcoin back in 2009 since the mining difficulty was low
(3) What are the challenges for crypto currency miners ?
1 electricity consumption
this one is the most easy one so all the miners they need electricity propose for computers unit electricity and when a when they are running for 24 hours and 7 days of the week then you need a lot of electricity and let me tell you it's not just one machine like not just a PC But you are running so many machines at the same time of course it will take electricity and in this case a lot of it and in many countries electricity is not cheapIf you are running you are machine for mining it will take a lot of electricity in that case you will get a huge amount of electricity bill so that's a challenge that all the miners have to face
2 over heating of systems
with the first pointed I made so if your computer is running for 24 hours and 7 days of the week then there are a lot of chances that it will overheat because not everyone have the facilities to put an air condition in the room or wherever you are storing your mining Rig and countries like us in all the Asian countries the weather is mostly heart like in Australia as well these are the countries with a lot of heat like if I give you a small example of mine whenever I am recording with my camera in summer times it overheats even my iPhone 6 you can say that it is a challenge
3 Expensive hardware
now in case if you ever had any issue with any one of your hardware like in mining rags GPU used are used and let me tell you they are not cheap and as much as people are creating into cryptocurrency mining they are getting expensive day by day because first people use to only use this for gaming and just for regular things but now they are using this to make money of course that's why they are really expensive and if you ever last one you will have to spend some really good cash and that is a challenge
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Hello @azizulhassan ,
Thanks for submitting homework task 4 ! You have explained what is crypto currency mining , mining difficulty and challenges for miners. Good work [7]
Thank you