Steemit Crypto Academy [Beginners' Level] | Season 3 Week 8 | Blockchain Rewards by professor @awesononso
Weeks come and go and steemit keeps providing us with the privilege to learn new things about cryptocurrency with the effort of very smart professors providing us with lectures that will increase our confidence in the cryptocurrency space. This week’s lecture by professor @awesononso has yet given us another opportunity to learn again and of course an accompanied task to aid our knowledge about the topic.
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In your own words, explain mining and block reward.
Mining in a lay man’s term is the process of extraction used to extract minerals that are useful from the surface of the earth. The process of mining is usually not convenient, it takes a lot of stressful and energy consuming process to get these raw materials out of the surface of the earth. Examples of mined materials are: gold, ore and other useful minerals and these extracted minerals offers a great economic addition to the wealth of the nation.
Mining in cryptocurrency involves the generation of a new block but the process of cryptocurrency mining is not only limited to the generation of new blocks, it benefits however spreads to the creation of new tokens and a lot more other benefits that we will find out as we move further with this post.
Mining on the blockchain involves the effort of bitcoin miners to add bitcoin transactions to bitcoin public ledger, the blocks added to the ledger are connected to one another producing a long chain of network and it is securely backed up by blockchain miners. Transactions on the blockchain are verified on a decentralized system unlike what we have on a centralized platform, the verification process on a decentralized system is known as a mining process.
There is a limited number of bitcoins, only 21 million bitcoins will ever be created. Satoshi Nakamoto
The mining process entails the addition of transactions to the bitcoin blockchain, the addition of blocks to the bitcoin blockchain describes how transactions are processed and money is moved around on the blockchain, the action behind carrying out the mining process is carried out by the set of people known as BLOCKCHAIN MINERS.
The blockchain miners are rewarded in Bitcoin based on how fast they were able to complete a valid transaction. Speaking of the process of mining, miners will need to compete with their systems in order to find the perfect hash that will create a new block and the winner will be rewarded with a freshly mined bitcoin and the transaction fee associated with every transaction in that block (which I believe is worth the stress).
At the beginning of Bitcoin Block mining, each mined bitcoin block was worth 50 BTC and with every process of halving, the amount of reward is reduced. At the moment, the reward for every successful mined block is 6.25BTC and as more as blocks are mined the reward will be reduced the more. Definitely, the mining process is done by highly sophisticated computers, the speed of the computers are calculated in Megahas per second (MH/s) and the higher the speed of transaction, the higher the chance of getting the reward. Initially, a normal pc could do the mining job but now a more sophisticated instrument is needed with a lot of energy as well.
What do you understand by the Bitcoin Halving?
Bitcoin halving happens once in every four years and during this process the reward received by miners is halved into two, this was released in the white paper by Satoshi Nakamoto. The first halving process occurred in 2009 and then 50 coins were mined at every 10 minutes, after two successful halving’s, 12.5 bitcoins are disbursed after every 10 minutes and after the last mining process that occurred in 2020, the number of mined BTC has dropped from 12.5BTC to 6.25BTC. The mining process of Bitcoin will come to an end in the year 2140 and at that point the total mined coins in circulation will be 21 million coins.
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A lot of people often look forward to the process of Bitcoin halving basically because it is believed to result in a price increase, but the truth is no one can particularly predict the possibility of having a price increase or decrease after a successful halving process. The block rewards obtained from the process of mining helps to keep the network in order and every dishonest mining process will be greatly punished as well so miners try to avoid dishonesty.
The more computing energy directed towards mining process, the more difficult it will become for any process of attack to happen. The process of halving is a good way to reduce inflation because the method of having Bitcoin circulation in the market will be much slower now and most certainly result in an increased price of the token.
The halving process is a significant event on the blockchain that a lot of people look forward to expecting an increased price of BTC afterwards. Altcoins do not have any direct attachment with price increase but based on the fact that most Altcoins really on BTC, the increased price of BTC might result in their own increase as well.
What are the effects of the Halving on miners?
Miners usually compete with one another through the process of performing hash transactions (significantly around SHA-25 every second), the valuable hashed block will be recorded as the most significant and of course the miner will get rewarded in return. Miners are usually rewarded with block reward and also every transaction fee generated from that particular block.
During every halving process, the reward of miners is reduced to half. Right now, the worth of transactional fees is completely low and every time there is a halving process, the income of miners will significantly reduce. The process of mining requires highly sophisticated equipment’s which is expensive to operate and since miners want to make profit, it might be difficult for them to keep up with the maintenance of this sophisticated instruments.
What is the current block height on the Bitcoin blockchain? How many more blocks before the next halving? (Screenshots and Full working).
As at the time of writing this post, the height of mined block was 696,217 with the size of the mined block been 1,112,946 bytes.
Bitcoin halves every 210,000 blocks, the next halving that will occur is going to be the 4th one. Bearing this in mind, it will be easy to get our calculations correctly.
Therefore, the Block height for the next halving =210,000 x4 = 840,000.
The current number of block height =696,217 blocks.
Therefore, the number of blocks until the next halving will be =840,000-696,217 = 143,783 Blocks.
Do you think Steem’s inflation rate reduction can affect other coins? Why?
The information presented on Steemit’s whitepaper states that the inflation rate of Steem will reduce regularly. The inflation rate of steemit has been noticed to reduce by 0.01% on every produced 250,000 blocks, which is a good indication that the platform is keeping to its word. The inflation process is highly important as it helps control the amount of Steem available in circulation and it helps keep the value of steem as well.
Steem inflation rate has no effect over other coins because it operations are mostly independent unlike Bitcoin that has lots of Altcoins dependant on it. The system of steemit has its operations managed around the platform and has no significance to the price 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)
We have already figured out that that the steem inflation rate gets reduced by 0.01% on every 250,000 blocks produced.
The current block height as seen in the screenshot above = 56,442,297 blocks.
The number of reduction attained so far = 56,442,297/250,000 =225.76
From history, we know that so far on the steemit blockchain, there have been 225 reductions so far, so the next reduction will be 226th one.
Therefore, in order to get the block height for the next reduction:
Block height for the next reduction =226 x 250,000 =56,500,000
The number of blocks that we will have until the next reduction process will be;
56,500,000-56,442,297 =57,703 blocks.
Continuation of last week’s work:
1. 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 sf) (1 satoshi = 0.00000001 BTC)
As at the time of writing this post, the price of BTC was $54,549,00. I got my result from CoinMarketCap. If I make a purchase of $2,500, I will have these amount of Bitcoin:
The value of $2500 in 1 BTC (5454900) =0.054549 BTC
At this point I would have 0.054549 BTC.
(b) How many Satoshi will I have?
If 1 Satoshi = 0.00000001
100 Satoshi = 0.00000100
If $2500 = 0.054549 BTC and 0.054549 BTC = 5454900 Satoshi.
Then $2500 = 5454900 Satoshi
Value of Satoshi = X
X =$Value/Satoshi
X = 2500/5454900
X = 0.0004583035
X = $0.000458
The value of Satoshi as the time is $0.000458 3 s.f
###2. What is the current value of BNB on the day you perform this task? If you made a purchase of $30 then,
(a). How many jagars would you have?
(b). What is the value of a Jagar for that day? (Show full working and correct to 3 s.f) (1 jagar=0.00000001 BNB).
The value of BNB on the day of performing task $408.98.
$30 will give 0.0733BNB
1 jagar =0.00000001
0.0733BNB = 7330000 Jagar.
Value of satoshi as at the time of trade:
Calculation:
If 1 Jagar = 0.00000001
100 Jagar = 0.00000100
If $30 = 0.0733 BNB and 0.0733 BNB = 7330000 JAGER.
Then $30 = 7330000 JAGAR.
Value of Jagar =X
X = $Value / Jagar
X =30/7330000
X = 0.0000040928
X = $0.00000409 (3 s.f)
Conclusion.
The mining process on blockchain transactions is highly significant and the process of halving is something that a lot of people look up to. Definitely, we are all looking forward to the next Bitcoin halving because it might result in us having an increased Bitcoin price but I also feel it isn’t fair for miners who have their income reduced every time there is halving and I wonder what will happen if miners begin to back down on their responsibilities because of the reduced earning.
Thank you for the opportunity to learn on this platform.