Crypto Academy Season 3 Week 8|| Blockchain reward|| Assignment post for Prof. @awesononso by @cinnymartins
In your own words, explain mining and block reward.
What do you understand by the Bitcoin Halving?
What are the effects of the Halving on miners?
What is the current block height on the Bitcoin blockchain? How many more blocks before the next halving?(Screenshots and Full working)
Do you think Steem’s inflation rate reduction can affect other coins? Why?
What is the current block height on the Steem blockchain? How many more blocks before the next 0.01% reduction?(Screenshots and Full working)
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)
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)
(Screenshots of current value should be provided)
In your own words, explain mining and block reward.
What is mining?
Ordinarily, mining is the process of extracting raw materials from the Earth surface. Similar to what we have in the crypto world, mining is typical of adding up to the already circulating supply of a particular crypto asset. The mining process is decentralized in nature in the sense that anybody can become a Miner and once the miner installs the software into the system, it automatically connects with other systems and the mining process kicks off.
Just like the traditional mining of raw materials, the mining of cryptocurrencies is not a groovy process this is because, there are lots of computational puzzles in the process of mining. So to say, even though mining of cryptocurrencies is rewarding and beneficial, it is as well costly and accompanied by manifold complexities.
New coins are entered into circulation through the process of mining. A Miner gets rewarded based on the number of coins he or she was able to mine. In other words, the reward of the Miner is dependent on his output. Mining process comes with additional transactions to the pre existing Blockchain transaction. Mining involves the addition of new blocks to the Blockchain.
It would suffice to say therefore, that the mining process does not just involve the mere addition of a cryptocurrency into the Blockchain, it also include the verification of such addition in the Blockchain and the essence of this is to uphold the integrity of that Blockchain. To mine a cryptocurrency, a Miner need to invest in the special systems.
What is block reward?
As mentioned earlier, a Miner gets rewarded for mining a particular asset but this reward is dependent on his output. Let's take for instance, if mining 5 ETH gives a Miner 1 ETH as a reward and subsequently Miner A was able to mine 10 ETH, he automatically gets 2 ETH as his reward for adding to the circulation supply of ETH.
A block reward as the name implies is the reward a Miner gets for successfully adding a block to a particular Blockchain. That being said, whenever a block is mined and verified and added to the blocks existing already, the Miner gets a reward for the cryptocurrency he mined... This points to the rewarding but painstaking feature of cryptocurrency mining. Also, regarding the computational puzzles involved in the mining process, a prize in the form of block reward is attached to miners who who successfully mines a coin.
What do you understand by the Bitcoin Halving?
The word Halving is derived form Halve which means the reduction in the original amount of a thing. Having said this, Bitcoin Halving is the process by which the reward of successfully mined bitcoins are divided into two. That is too say, the rewards are splitted into two. This event goes a long way to affect the supply of Bitcoin in circulation and it's inflation rate.
Bitcoin Halving occurs after 210,000 blocks have been mined or after every four years.
1st Bitcoin Halving occurred late 2012 (November precisely). Prior to this, a reward for block mining was 50BTC but after the Halving, it was halved to 25BTC.
2nd Bitcoin Halving took place in 2016 after which it was splitted from 25BTC to 12.5BTC.
Recent Bitcoin Halving took place in mid 2020 (may) which was recorded as the last for the time being. Its reward was reduced from 12.5BTC to 6.25BTC.
This explains that as the Halving keeps rotating every four years, the reward for mining keep dropping and this circle will continue Bitcoin reaches it's 21,000,000 total supply.
What are the effects of the Halving on miners?
Ever since the inception of Bitcoin, it has witnessed three Halving and each of this Halving comes with a decrease in the reward of the miners.
The block reward is what determines the number of bitcoins in circulation. So, at the end of every Halving, there's always a reduction in the Miner's reward and this can also affect the price.
Bitcoin Halving is usually accompanied by a decrease in Bitcoin inflation rate. For instance:
The inflation rate of Bitcoin before the first Halving was 50% of which after the Halving, it dropped to 12% and to 4.5% after the second Halving and currently, Bitcoin inflation rate is 1.76%. These details explains that every Bitcoin Halving affects the Bitcoin value positively.
Worthy of note is the fact that Bitcoin is the first ever cryptocurrency and thus predominates the crypto market after which thousands of cryptocurrencies preceded its invention. So to say, Bitcoin takes the lead, and Altcoins follow.
Similarly, whenever Bitcoin takes its bullish trend, other coins tend to join the wave.
But this is not the case for miners simply because, Bitcoin Halving which takes place every four years comes with a wave in the reward of the miners which gets drastically reduced.
What is the current block height on the Bitcoin blockchain? How many more blocks before the next halving?(Screenshots and Full working)
The current height on the Bitcoin Blockchain as at the time this operation was carried out was 696484.
From what I have explained so far, you will understand that the next Halving to take place would be the fourth Halving and for having to occur means that 21,000 blocks has been successfully mined.
Let's do the maths:
210,000×4=840,000
Current Bitcoin block height=696484
840,000 -696484
=143,516
Remaining 143,516 for the fourth Halving to take place.
Do you think Steem’s inflation rate reduction can affect other coins? Why?
My answer for this is NO. Steem's inflation rate reduction cannot affect other coins and my reasons are as follows:
- Even though other tokens derive their value from steem value, the steem whitepaper recorded that steem inflation was meant to decrease evenly but the reality is so contradicting the report on the whitepaper.
- Another reason why I said NO is because steem is unlike Bitcoin and as such does not dominate the crypto market. That being said, its inflation rate cannot determine the fate of other coins.
What is the current block height on the Steem blockchain? How many more blocks before the next 0.01% reduction?(Screenshots and Full working)
Source
The current block height on the steem Blockchain as at the time this operation was performed was 56,496,030.
The inflation rate of steem falls by 0.01% for every 250,000 blocks.
Let's do the maths:
Current block height=56,496,030
Number of reduction=56,496,030/250,000=225.98
=226 (3.sf)
Calculating the block height for the next reduction.
We have 226×250,000
=56,500,000
No of blocks left for the next reduction
56,500,000-56,496,030
=3,970.
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 $2500, then
The current value of Bitcoin as at the time I carried out this operation was:
$44,489.27
Let's say I made a purchase Worth $2500
The maths:
2500/44,489.27
=0.05619332
Therefore, $2500 = 0.05619332 BTC
That is 0.0562 (3sf)
a.) how many satoshis would you have?
1 Satoshi = 0.00000001
You divide 0.0562 by 0.00000001
You have: 5,600,000 Satoshi
b.) what is the value of a satoshi for that day?
As at the day this operation was carried out, 1 Satoshi Is equal to 0.00000001
1 Satoshi=0.00000001
1 BTC=44,489.27
THEREFORE, 0.00000001×44,489.27
1 Satoshi=$0.00044489
To sf is $0.000445.
What is the current value of BNB on the day you are performing this task? If you made a purchase of $30 then,
The value of BNB as at the day this operation was carried out was $421.60
Assuming I make a purchase of $30,
Let's do the maths
1 BNB =421.60
30÷421.60
=0.07115749
THEREFORE, $30 worth would be:
0.07115749
Approximately 0.0712 BNB (3sf)
a) how many Jagers would you have?
1 Jager =0.00000001 BNB
THEREFORE, 0.0712÷0.00000001
=7,120,000 jagers.
b.) what is the value of a Jager for that day?
The value of 1 Jager as at the day this operation was being carried out was 0.00000001 BNB
Let's do the math:
1 BNB=$421.60
THEREFORE, 0.00000001×421.60
=$0.000004216
Approximately $0.00000422 (3 sf)
####Conclusion
It was indeed an eye opener as I mentioned in the beginning because in the course of attempting my assignment, I understood a lot on mining and the phenomenal behind the circulation supply of Bitcoin. I also got to understand that Bitcoin Halving has negative effect on miners and I want to really appreciate the professor @awesononso for being so detailed.
Thank you sir