Crypto Academy Week 4 Homework Post for [@besticofinder] How crypto currency mining works ? What is Mining Difficulty ? What are the challenges for crypto currency miners ?

The term cryptocurrency mining means getting cryptocurrencies by solving cryptographic equations by using computers. This process consists of validating data blocks and adding transaction records to a public record means to say to a ledger which is known as blockchain.

In other words, Cryptocurrency mining is just like a transactional process which uses computers and other cryptographic processes to solve different complex functions and the record data is added to a blockchain. There are many networks of devices that are involved in crypto mining and shared records to those blockchains.

Different Methods Of Cryptocurrency Mining

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There are many ways to mine cryptocurrency but here i am going to cover some most important and well-known methods for to mine cryptocurrency.

#1 - Cloud Mining:

Cloud mining is the most popular method to mine cryptocurrencies without having to lift a finger. Cloud mining is a process where you pay to others a specific amount of money and “rent out” their mining machine which is called a “rig”, and the process of mining itself.
Cloud mining has become so popular because those people who might not have enough money to buy their own rigs , can also mine cryptocurrency by this method.

#2 - CPU Mining:

CPU mining uses processors of your devices such as your PC processor to mine cryptocurrencies. It used to be a viable option back in the day, but at present, less and less people choose this method how to mine cryptocurrency daily.

#3 - GPU Mining:

GPU mining is very popular because it is cheap. GPU rigs uses graphics cards to mine cryptocurrencies. A rig is generally made out of a processor, a motherboard, cooling, rig frame and a few graphics cards.

#4 - ASIC Mining:

ASICs stands for Application-Specific Integrated Circuits are special devices that are designed to perform a single task, which in this case is cryptocurrency mining. ASICs produce huge amounts of cryptocurrency than the GPU and CPU.

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These are the some popular, important and more profitable methods to mine cryptocurrency right now. So if you want to mine cryptocurrency dear steemians you can consider these options.

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How crypto currency mining works ? A Complete Guide With A Lot Of Research | Everything that you need to know about the working of cryptocurrency mining.

A miner is a specific node in the network who collects small transactions and organizes them into blocks. When the transactions are made, all the network nodes receive these transactions and verify their validity. Then the nodes of the miner gather these transactions from a memory pool and begin to assemble them into a single block.

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The most first step to mine a block is to individually hash every transaction taken from the memory pool. But before the beginning of the process, the miner node adds a transaction where they send their the mining reward. This transaction is known as the coinbase transaction, which is a transaction where coins are created ‘out of thin air’ and, in most cases, is the first transaction to be recorded in a new block.

After each transaction is hashed, then all the hashes are organized into something which is called a Merkle Tree. It is also known as a hash tree which is formed by collecting the various transaction hashes into pairs and then again hashing them. Then the outputs of these hashes are collected into pairs and hashed again. This process is repeated again and again until it reached to the “the top of the tree” is reached. The top of tree is also called root hash. It is basically a single hash that represents all the previous hashes those were used to generate it.

The root hash and the hashes of the previous block and a random number called nonce . This is again placed into the block's header. Then the block header is again hashed to produce an output based on these elements:

• root hash
• previous block's hash
• nonce

The resulting output of these things is the block hash and it will serve as the identifier of the newly generated block which is known as the candidate block.

In order to be considered valid, the block hash must be less than a certain value which is specified by the protocol. In simple words, the block hash must start with a specific number of zeros.

The target value is also known as the hashing difficulty and it is adjusted by the protocol on daily basis, to ensure the rate at which new blocks are made remains constant and proportional hashing power given to the network.

However, all the time new miners join the network and hence the competition is increased every time. So the hashing difficulty is also increased to prevent the average block time from decreasing. But if the miners decide to leave the network. The hashing difficulty is decreased to keep block time constant.

The process of mining requires miners to keep the hashing block header over others again and again valid block hash is produced. When a valid hash is found, the founder of the node will send the block to the network.

The way toward mining expects miners to continue to hash the block header again and again, by emphasizing through the nonce until one in the network miner in the end delivers a legitimate block hash. At the point when a legitimate hash is discovered, the founder node will communicate the block to the network. Any remaining nodes will check if the hash is valid and, assuming this is the case, add the block into their copy of the blockchain and proceed onward to mining the following block.

But Sometimes it happens that two miners broadcast a valid block simultaneously and the network is ended with these two same valid blocks. Miners begin to mine the following block dependent on the block they got first. The battle between these blocks will proceed until the next block is mined dependent on both of the competing blocks. The block that gets deserted is called an orphan block or a lifeless block. The miners of this block will come back to mine winner block.

What is Mining Difficulty ?

The mining difficulty of any cryptocurrency such as Bitcoin shows the difficulty of finding correct hash for each block.

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• Mining difficulty is basically defined as a measurement unit which is used in the process of Bitcoin mining.
• Mining difficulty shows the difficulty to solve a complex and uneasy cryptographic puzzle.
• The difficulty of mining depends on the number of miners in the network.
• The Increases in the mining difficulty compulsory to keep the target block time.

Mining difficulty of the Bitcoin network is automatically adjusted after 2016 blocks those have been mined in the bitcoin network. An adjustment in the difficulty of the bitcoin network goes upwards or downwards. It always depends on the number of all the participants in the mining network and their combined hashpower throughout the Bitcoin Network.

What are the challenges for crypto currency miners ?

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As everyone knows that crypto mining is still profitable and many people are making a lot of profits from the cryptocurrency mining. But In reality there are many challenges that a crypto miner has to face to make profit from the crypto mining. Some of the main problems faced by the crypto miners are given below:

• High Energy Costs
• Vulnerability to Cryptojacking
• Centralization

High Energy Costs

Crypto mining is really very profitable but the most important factor which is a great difficulty for the crypto miners is High Energy Costs. It matters greatly in the mining process because you have to run your device all the time. Because a complete mining device is made by combining many ASICs so it requires a big output source. And if you are unable to run your device all the time you will not be able to mine your crypto and in this way you will not be able to make profit from your device. It is just like a bird without wings

Solutions Of High Energy Costs

According to my views, thoughts and research these are some of the ways to overcome this problem.

• Crypto Miners should buy their devices after research so that they can get a good device at low price.
• Crypto Miners should use modern devices for the mining which consume low energy.
• Crypto Miners should use those mining devices which works with the solar power system.

Vulnerability to Cryptojacking

It is another major Factor which is also a major challenge for crypto miners. As we know that our cyber security is becoming good all the time. But it is not right that we are safe and sound from every cyber attack. We cannot deny it. Now a days hackers are becoming more active and trying to use new ways to hack the crypto of the holders and the miners. If they are unable to withdraw all of our amount then they threat to the miner to give them crypto currency in the form of ransom.

Solutions Of Cyber Attacks

• You must use high security all the time for your devices.
• I will recommend you to use the insurance service for this.
• You should secure your wallet keys safe and sound from where no one can get them.

Centralization

ASICs have proven only mining a specific cryptocurrency. As it is a great development in the crypto world but it also has faced a problem. Because most of the crypto miners are affecting the way in which ASICs are being made or designed. As there are a few ASICs mafacturers so the mining has become centralized.

Solutions Of Centralization

There are two important ways to manage this challenge faced by the crypto miners. These are given below:

• We can overcome this challenge easily by making the manufacturing process of ASICs decentralized.
• We can also do it by putting a new algorithm which will wipe out all the existing ASICs miners.

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I have provided a complete step by step information related to the cryptocurrency mining that a newbie can learn it completely and easily.

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Words Of Appreciations For

@steemcurator01
@steemcurator02
@besticofinder
@steemitblog