Crypto Academy Season 3 Week 8 Homework Post for @awesononso - Blockchain Rewards
Just like mining has existed since the days when humans had to dig the ground to find gold and other natural gems, so does mining exist in the world of blockchain but with the blockchain, it has more meaning to it. While answering the question by @awesononso, I will be explaining a lot of blockchain mining, halving, and a lot more.
Blockchain Mining and Block Rewards
Since the blockchain is decentralized, it will be very difficult for one person to have complete ownership and authority over it. Remember that the blockchain is a decentralized, and immutable digital ledger organized in blocks and with this, there needs to be a consensus for data to be verified as authentic and stored in the platform and this process is referred to as Mining.
In simpler words, Mining is the process of validating transactions into blocks in a network by miners. Mining on the blockchain started with Bitcoin with the Proof-of-Work consensus and there have been several consensuses on several blockchains and they all involve validating transactions.
Block Rewards
While a set of people (nodes) decide to validate transactions on the blockchain, these people do not validate transactions without having to pay for a lot of things including capital to set nodes, electricity bills, data connections, and so on. In other to encourage these miners to do their selfless duty, the blockchain is designed to give miners a certain number of coins for successfully validating a transaction in a block. Bitcoin reward has reduced in previous years due to Halving (discussing in next subtopic) from 50 BTC in 2009 (here Bitcoin halving hadn't occurred and miners were rewarded), to 25 BTC in 2012 (the first halving), 12.5 BTC in 2016, and in May of 2020, 6.25 BTC.
Bitcoin Halving
The Bitcoin blockchain runs on nodes (computers) that have the Bitcoin software to help validate transactions. These nodes are responsible for whatever data is stored on the bitcoin blockchain network and they can either verify or reject transactions based on consensus after several checks to validate. While these transactions are validated, nodes are rewarded.
Bitcoin halving occurs after every 210000 blocks mined on the Bitcoin network which is approximately 4 years. This means that every 4 years, there is always a Bitcoin halving. The first Bitcoin halving occurred on 28 November 2012, followed by 9 July 2016, then May 11, 2020. The aim of Bitcoin halving is to tackle inflation. With each halving, the number of coins miners receive as rewards have dropped by half.
Halving Inplications
Bitcoin halving helps to reduce the rate at which new coins are mined/created by miners thereby creating a scarcity in the number of coins available in supply. This has proven to give Bitcoin an increase in price as the demand is getting higher than its supply. Once there is a halving in rewards of miners, there will be a halving in the number of coins that should circulate, there will be an increase in price as a result of high demand and lower circulation of coins. To miners, there is a reduced number of coins to be expected as a reward for mining.
What is the current block height on the Bitcoin blockchain? How many more blocks before the next halving? Screenshots and Full working)
As of the time of writing, Bitcoin's current block height is 696602 with the hash (0000000000000000000df3a48cd8c4301bb7508fe7c58b9b2f4d2d67dec38a55)
The next Bitcoin having should occur when 840000 blocks have been mined and there are 143,398 blocks to be mined before the next halving.
Mathematically
210,000 block = halving
There have been three halvings and so if there will be the fourth halving then 4 X 210,000 = 840,000
Current block height = 696602
Number of blocks to next halving = 840,000 - 696602 =143,398 blocks.
Do you think Steem’s inflation rate reduction can affect other coins? Why?
First, Steem is a coin with little or no dominance in the market due to its market capitalization. Unlike Tron which is paired with other coins, Steem isn't a pair coin which means it doesn't have an effect on major coins as they aren't paired to it (this might change if there will still be SMT tokens which would be paired to Steem but for now, the price of Steem doesn't have much impact).
What is the current block height on the Steem blockchain? How many more blocks before the next 0.01% reduction?(Screenshots and Full working)
As of the time of writing and taking screenshots the current block height on the Steem Blockchain is 56,516,361. Steem is programmed to reduce inflation by 0.01% at every 250,000 Blocks. there has been 226 reductions on the Steem blockchain, and the 227 reductions will occur on the 56,750,000 blocks. There will be 233,684 blocks before the next reduction.
Mathematically
0.01% reduction occurs at 250,000 blocks
To get number of current reduction times: 56,516,361 / 250,000 = 266.065 Apr 266
To get the number of block for the next reduction = 227 X 250,000 = 56,750,000
What is the current value of BTC on the day you are performing this task? If you made a purchase of $2,500
As of the time of writing this assignment, Bitcoin (BTC) is valued at $47,044.70 and when I made a purchase of $2500 worth of BTC, I got 0.053140 BTC. Screenshots to show the price of BTC and the number of BTC I got with 2500 is inserted below.
How many satoshis would you have?
If 0.00000001 BTC is equal to 1 Satoshi,
0.0000001 BTC is equal to 10 Satoshi,
0.053140 BTC will be equal to 5314000 Satoshi
What is the value of a satoshi for that day?
$2500 = 0.053140 BTC
0.053140 BTC = 5314000 Satoshi
Which means that $2500 = 5314000 Satoshi
To find the value of Satoshi, divide 2500 by the value of Satoshi
Value of Satoshi = 2500/5314000
Value of Satoshi = 0.0004704554
To 3 significant Figure = 0.000470.
What is the current value of BNB on the day you perform this task? If you made a purchase of $30
As at the time of writing, the value of BNB is $428.28 and $30 worth of BNB would be 0.0700 BNB. Screenshots are below.
How many jagars would you have?
If 1 Jagars equal to 0.00000001 BNB
0.0700BNB will equal to 7000000 Jagars.
What is the value of a Jager for that day?
If 1 Jagar = 0.00000001
10 Jagar = 0.00000010
$30 = 0.0700 BNB
Then 0.0700 BNB = 7000000 jagars.
$30 = 7000000 Jagers
Value of Jager as at the time of writing = 30/7000000
value of jagar = 0.0000042857
Value of Jagers= $0.00000429 (3 s.f)
Conclusion
Blockchain has opened a new world in technology just like the internet did when it was invented but this time, it is different as the blockchain is decentralized, and cannot be tampered with. The blockchain has been disrupting a lot of industries and in the near future, it would be a thing for everyone. Mining is very important in blockchain for validation and mining reward is a way to incentivize the miners. Although, anyone can be a miner not everyone can bear the cost of running a mining rig/ farm.