Crypto Academy Week 4 | Homework: Cryptocurrency mining and how it works [ Task 4, by @besticofinder]
Hello, crypto academy!
In the common economic system, governments and their central entities usually print the banknotes in the quantities they want so that they can reach the hand of whoever wishes, but in the case of cryptocurrencies, this is not the case, that's why our dear professor in his fourth week of class or lecture called Introduction to Cryptocurrency Mining | Steemit Crypto Academy | Lesson 4, explains clearly and precisely how new cryptocurrencies are reproduced or created.
To do the cover use this image, and a little help from picsart app.
In this fourth week with the professor, I have learned that the method used for the reproduction or creation of cryptocurrencies is known as "Mining", yes, cryptocurrency mining. When we hear the term "mining" we think of a pick, the shovel, flashlights, working men, caves inside a mountain, extraction of natural resources, and precious jewels. But cryptocurrency mining is very different, which in turn requires tools similar to pick and shovel, which are hardware and software designed for such work. The inventor of the father BITCOINS "Satoshi Nakamoto" chose this name or term to refer to the mechanism of "issuance" of new cryptocurrencies or in his case bitcoins, making a relationship or similarity to gold mining. Cool no?
In this new week, we understood what cryptocurrency mining is, who the miners are, what it takes to be a miner, the different means of rewards for miners (PoW and PoS), and we also got to know the so-called Mining Pool, and all this information can be found by visiting the fourth lecture by professor @besticofinder. At the end of the class the teacher left us the following homework:
Homework Task 4
You need to do your own research and create an article discussing the following topics,
(1) How cryptocurrency mining works?
(2) What is Mining Difficulty?
(3) What are the challenges for cryptocurrency miners? by @besticofinder
For this reason, today I come to talk to you a little about how cryptocurrency mining works, I will also briefly talk about the difficulties that miners will encounter when mining or Mining Difficulty, and as part of the task you will mention the challenges for cryptocurrency miners, which are many.
It will seem important to share what is known as cryptocurrency mining:
Briefly, I can tell you that it is the process used to guarantee the security of all cryptocurrencies and their network, and consists of verifying transactions (solving very difficult mathematical problems) to be added or incorporated into the public book of the blockchain
Cryptocurrency mining is the process in which transactions between users are verified and added to the blockchain public ledger. The process of mining is also responsible for introducing new coins into the existing circulating supply and is one of the key elements that allow cryptocurrencies to work as a peer-to-peer decentralized network, without the need for a third party central authority. Binance.com
How does cryptocurrency mining work?
The process is possible thanks to the miners since they use their specialized tools (hardware and software) to solve mathematical problems and incorporate the transactions into their block. And it works as follows:
Suppose that I want to make a transfer of 1 BTC to María, when completing the form and adding the data of María's address, it automatically becomes a transaction, and said transaction will go to a block, where there will surely be other transactions from other people like me who wish to make a transfer to anyone, then a miner or group of miners must solve the puzzle and decipher the hash "unique and unrepeatable identifiers for each block", and thus be able to incorporate this block to the blockchain or ledger. In the case of BTC, every 10 minutes a block is added to the blockchain.
Once the transaction is resolved or confirmed, the miner who has solved the puzzle will take the reward of the value of solving a block, in addition to small commissions charged for each transaction within the block, and Maria will also receive 1 BTC in her account.
In other words, the issuance of new coins occurs as more blocks are resolved and incorporated into the chain of blocks. In the next video from the Binance Academy, you will visually learn how mining works, so don't miss out.
Mining is essential as it allows the cryptocurrency ecosystem to be kept safe, and prevents someone from using the same coins more than once, or someone from incorporating fake coins into the ecosystem, or someone from trying to steal from another person.
The following video was published by the New York Times where he gives us an analysis and explains how cryptocurrencies work. You cannot miss it either.
What does mining difficulty mean?
You could say that it is a mathematical measure that indicates how difficult it is to maintain and/or add a block to the blockchain at a constant rate.
As time passes, people have become more interested in cryptocurrencies and their mining, causing many more “miners”, trying to solve the cryptographic puzzles for the creation and incorporation of a new block to the blockchain, creating a kind of competition between miners to solve and obtain limited rewards, causing the difficulty of mining to increase over time, thus increasing the amount of work required to create a new block to obtain the reward that as I said before is limited.
- Difficulty indicates how difficult it is to solve a complex crypto puzzle
- The difficulty of mining new units increases or decreases over time, depending on the number of miners in the network.
- Increases in difficulty are necessary to maintain target lock time. BitpPanda.com
In the following video you will be able to understand a brief explanation about the mining difficulty, thanks to the author “Simply Explained”
What are the challenges for crypto currency miners?
In addition to the competition and arrival of other miners, there are other challenges that we must review when mining, such as the high cost of electricity depending on the country where we are. Although the consensus (PoS) or proof of stake, is a protocol that allows consuming less energy when mining, also large-scale mining companies use their own source of energy, either fuel or hydroelectric, and try to locate their main offices in places where the temperature is lower, that is, a cold climate, and thus reduce electricity consumption due to heat dissipation.
One of the great challenges that will always be present will be the difficulty of acquiring mining equipment or devices in a short time or at an economical price since as the number of miners grows, it becomes difficult to acquire them.
And as can never be missing, people who want to be evil and try to steal the assets of others, that is, the possibility of crypto hacking will always be latent, given that hackers and cyber thieves are becoming more and more sophisticated when it comes to making their cheats. That is why every day many people work with greater effort to make the network or the blockchain ecosystem totally secure.
Conclusion.
There is no doubt that mining is essential in the blockchain, since, in addition to protecting the network and guaranteeing the security of all transactions, it also allows the creation of new currencies, thanks to the resolution of difficult mathematical problems, which they can only be solved in the time required by very sophisticated computations. As more miners join the activity and as time goes on it will be much more difficult to mine a cryptocurrency. It is said that by the year 2,140 it will no longer be possible to mine more bitcoins because it is estimated that by that date all possible bitcoins will have been extracted, and the rewards for miners will depend on the percentage charged for the transactions.
I hope that my participation in the class is to everyone's liking. bye-bye XOX.
CC
@besticofinder
@steemcurator01
@steemcurator02
@steemitblog
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Hello @saracampero ,
Thank you for submitting homework task 4 ! Nice work .. you have discussed the topics well and it was a really good read ! [7]
Thank you
Thank you very much for sharing your wisdom with us. Greetings.