CRYPTO ACADEMY WEEK 4 HOMEWORK POST FOR [@besticofinder]||05-03-2021|Introduction to Cryptocurrency Mining |steemCreated with Sketch.

in SteemitCryptoAcademy3 years ago (edited)

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Welcome to my homework post for week of the crypto class.I thank Professor @besticofinder to presenting such a good lecture.

MINING

Mining is the process of earning cryptocurrencies by using computer or machines to solve cryptographic equations.

It also involves verifying data blocks and adding the transactions to the blockchain.

HOW CRYPTOCURRENCY MINING WORKS
Mining of cryptocurrenicies follows the following steps before it could be recorded in the blockchain.

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NODES WILL VERIFY WHETHER TRANSACTIONS ARE LEGITIMATE

This is the first stage in the mining process.Nodes simply means computers used by miners
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So the nodes perform a verification process on the transactions so as to confirm the legitimately of the transactions.

NEW TRANSACTION IS ADDED TO THE LIST OF OTHER TRANSACTIONS TO FORM A BLOCKCHAIN

This is the second stage and the verification process.

Here the miner will bundle all transactions to a list which would as well be a new unconfirmed block data
This means that the new transaction will be added to the existing transactions/records on the blockchain.

HASH AND OTHER TYPES OF DATA ARE ADDED TO THE UNCONFIRMED BLOCK

Here is the third stage.After transactions are added to the block as in stage two.

However,header data,hash from previous blocks and a new hash is also needed.The new hash so generated is added to the unconfirmed block and it would be verified by a miner node.

A hash is simply generate by combination of header data from previous blockchain block with a nonce.

MINERS WOULD VERIFY THE BLOCK'S HASH TO MAKE SURE IT'S LEGITIMATE

This is the fourth stage.Here the other miners would verify the authenticity of the unconfirmed block by check it's hash.

BLOCK IS CONFIRMED

At this point the PROVE OF WORK(PoW) has been successful completed.The PoW is a proof that the miner had solved the hash correctly and is qualified to earn crypto for a successful mining.
Reference

SUMMARY

Now the mining process has been completed.For instance,if the transaction was transfer of crypto from one person to another,It means that the receiver would get the payment and the new block would be added to the existing blocks in the blockchain.

It is important to note that the main duty of miners to verify and process crypto currency transactions.

MINING DIFFICULTY

Mining Difficult cod be said to be a measure of how difficult and time-consuming it is to solve a crytographic equation to get the right or correct hash for that particular transaction inorder to add it to the blockchain.

Just as in normal life activities,the difficulties in mining increases or decreases based on the number of miners in the network.

If there are many miners,it means that there would be intense competition and less reward on the side of the miners.

It is important to mote that mining difficulty could be adjusted periodically.

For instance,After every 2,016 blocks had been mined on Bitcoin,the mining difficulty is adjusted automatically.It could be adjusted upwards or downwards depending on the number and hashpower of miners on the network.
Reference

CHALLENGES FOR CRYPTO CURRENCY MINERS

No doubt,everything has its own challenges.Crypto currency miners are not left behind.They encounter the following challenges.

MINING REQUIRES RESOURCES

Crypto mining requires a computer and a computer requires electricity.Paying for constant electricity supply is relatively expensive.

Mining also requires computing power inorder solve cryptographic equations and add the block to the existing blocks in the blockchain.

REDUCED RETURNS

The returns or rewards received for mining is always going down as years goes by.

For instance the reward for mining BITCOIN reduced by half every four years or after every 210,000 blocks mined.As at 2020,the reward is now at 6.25BTC Per block.It would reduce to 3.125BTC per block by the year 2024.

GEOGRAPHICAL LOCATION
This is another challenge in crypto currency mining.Some countries or locations prohibit inhabitants from mining crypto currency or crypto transactions.

Just like Nigerian government has banned banks from transacting or facilitating any crypto currency related transactions.

CRYPTO HIJACKING

This is a situation where fraudsters or hackers break into someone's computer and mine crypto currency from the victim's computer.The hackers use the victim's computer's power and resources to perform mining crypto currency or they can steal the persons wallet.

CONCLUSION

Mining of crypto currency involves solving cryptographic equations and processing crypto currency transactions and as such get reward for the workdone(mining).

It requires a miner using a node to get a hash for a transaction and then add the new transaction to the blockchain.

Thank you professor @besticofinder @steemcurator01 @steemcurator02

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Hello @samuel20 ,
Thank you for submitting homework task 4 ! You have discussed all the three topics with facts !

This is a situation where fraudsters or hackers break into someone's computer and mine crypto currency from the victim's computer.The hackers use the victim's computer's power and resources to perform mining crypto currency or they can steal the persons wallet.

Yes , for this hackers mainly target large servers of companies than individual pc's. And some mobile apps do this too.. It was a nice and informative read [7]
Thank you

 3 years ago 

Thank you Professor @besticofinder

Thanks for sharing @samuel20. This is very insightful. I wish you success with your homework.

 3 years ago 

Thanks a lot @onos-steve

Wow. I love the way you broke down cryptocurrency mining to a layman understanding. Thank you for sharing this piece of information.

 3 years ago 

Thanks a lot @reminiscence01 for visiting my blog.

Regards!!!

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