Steemit Crypto Academy [Beginners' Level] | Season 3 Week 8 | Blockchain Rewards by @small-ville
What is Mining
In the early 2000's when you hear the word mining all you think about is the excavation, extraction and digging out of valuable resources from the earth which includes Gold, Diamond, Silver, LIthium and Coal, etc. Minning these valuable minerals from the ground has never been easy in ancient times they used pickaxes and small digging equipment to excavate these resources because they were not scarce that much but fast forward to the 21st century and you will find out that huge hectares of land and sophisticated equipment and a lot of manpower is needed to find and extract these valuable resources.
Just are these valuable mineral resources are mined so is also Cryptocurrency. Mining in cryptocurrency is the process of validating transactions in the block by miners. Bitcoin Blockchain is decentralized, P2P and immutable this means it cannot be altered by a third party. just as the Banks needs to verify your transactions so does the miners.
Bitcoin for example is mined by validating blocks of newly introduced transactions, this verification is done when a dinner verifies a transaction by solving complex mathematical problems using heavy computational equipment and electricity. when it has been verified by the miner, then they(miners) reach an agreement in regards to that particular block before it is added back into the network. Minning of mineral resources has proven to be bad for the environment due to the impact on the earth geographical structure, also so does the mining of bitcoin affect the earth's ecosystem because of the heavy electrical and computational demands. As you pay the Banks transaction fees to verify your transactions so do the miners and in doing so they receive what is called block rewards, which are in form of cryptocurrency.
What are Block Rewards
For very successful mining that has occurred in a blockchain the miner receives rewards in cryptocurrency, but where does it come from?. Since the creation of Bitcoin in 2009 by Satoshi Nakamoto, an already created code is there to issue out a certain amount of Bitcoin which is been minted to any miner who has successful validated a block of transaction and has been able to put it back into the network, also for every transaction made a user of a bitcoin pays what is called a transaction fee these fees plus the issued Bitcoin are called the Block Reward. Mining Bitcoin is not an easy job because of the expensive computational and electricity demands that are why these rewards are issued to the miners to encourage them financially.
What do you understand by the Bitcoin Halving?
Before I would talk about Bitcoin halving I would talk about inflation, which is the increase in the quantity of an asset over a while. The constant minting of new currencies make the value of that currency diminish but it is relative to the amount that is been minted. scarcity of a particular asset makes the value of that asset increase, for example when less fuel is produced or imported into a country the price of fuel tends to always increase.
Bitcoin Halving is a process of reducing the amount of newly minted Bitcoins that are given as block rewards to miners. only 21 million Bitcoin were created in 2009.
It takes 10 minutes before a single block is created, and for a halving to occurs about 210,000 blocks needs to be approved, this means it would take at least four years before a Bitcoin halving would occur. since the mining of Bitcoin started the block reward was at 50 Bitcoin but since then it has been reducing from 50 in 2009, to 25 in 2012, to 12.5 in 2016 and 6 in the year 2020. This makes it more scarce because the rate at which it is being minted will be reduced.
What are the effects of Halving on miners?
Currently, the Block reward for every successful mining is 6 BTC this is very small compared to the amount given in 2009 which was at 50BTC. Bitcoin halving seriously affects miners because it reduces the rewards which they would receive, and this reward will always be reducing every four years. But the good news is that the price of Bitcoin will also keep increasing because of reduced inflation, but the halving process would verily discourage new miners who do not have Bitcoin already because as the days go by the computational requirement for mining would also increase. The main question that will now be asked after all the Bitcoins has been successfully mined by around 2140 is what will the miners receive as rewards. Do not forget that transaction fees are still among the Block rewards given to miners, but this would be very small.
What is the current block height on the Bitcoin blockchain? How many more blocks before the next halving?
source
Bitcoin Halving occurs every 210,000 blocks, and the next halving would be the 4th.
Therefore to calculate the block height remaining before the next halving I will be calculating it using the information above on the screenshot;
Therefore 210,000 x 4= 840,000 is the Block height for the next having.
The current Block height is = 696,650.
Therefore, Blocks remaining before the next halving will be = 840,000 - 696,650= 143,350 Blocks.
Do you think Steem’s inflation rate reduction can affect other coins? Why?
I do not think that Steem inflation rate reduction can affect other coins because Steem has a very low market cap which is just above 200 million dollars, this makes its dominance in the market is very low compared to Bitcoin which has a market dominance of about %42 and a market cap of over 800 billion dollars. Also, the Inflation rate reduction can barely affect the price of Steem because of the already minted quantity, I also think that demand is very low compared to other top Altcoins.
What is the current block height on the Steem blockchain? How many more blocks before the next 0.01% reduction?
source
The Steem inflation rate decreases by 0.01% every 250,000 blocks as per the
Steem Whitepaper
To find number of reductions so far: 56,523,500/250,000 = 226.094(3 sf)
Therefore the block height for next reduction = 226 x 250,000 = 56,500,000
Therefore the number of blocks until next reduction
= 56,523,500 - 56,500,000 = 23,500 Blocks
6). What is the current value of BTC on the day you are performing this task? If you purchased $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 s.f)
(1 satoshi = 0.00000001 BTC)
The current value of Bitcoin is $47,073.19
source
If I purchased $2,500 then,
a.) how many satoshis would you have?
The value of 1 SAT = 0.00000001, therefore to calculate how many I would have if I bought it for $2500, I would calculate how many Bitcoins it can buy for me, to do that I will divide it with the current Bitcoin price.
Therefore amount in Bitcoin= $2500/ $47,073.19 = 0.053108786551325
Therefore to convert it to SAT =0.0531 / 0.00000001 = 5,310,888.809 SAT (3s.f)
b.) what is the value of a satoshi for that day?
The value of 1 SAT = $0.00000001
The value of Bitcoin =$44,764.68
Therefore to calculate the current value of SAT= $47,073.19 * $0.00000001= $0.0004707319
Therefore the current value of 1 SAT = $0.000471(3 s.f)
7). What is the current value of BNB on the day you are performing this task? If you purchased $30 then,
a.) how many Jagers would you have?
b.) what is the value of a Jager for that day?
(Show full working and correct to 3 s.f)
(1 jager = 0.00000001 BNB)
The current value of Binance is $424.91
source
The value of 1 jager = 0.00000001 BNB, therefore to calculate how many I would have if I bought it for $30, I would calculate how many Binance coins it can buy for me, to do that I will divide it with the current Binance price.
Therefore amount in Binance= $30/ $424.91 = 0.070603186557153
Therefore to convert it to jager =0.070603186557153 / 0.00000001= 7,060,318.656 (3s.f)
b.) what is the value of a satoshi for that day?
The value of 1 jager = $0.00000001
The value of Binance =$424.91
Therefore to calculate the current value of jager= $424.91 * 0.00000001= 0.00042491
Therefore the current value of 1 jager = 0.000425(3 s.f)
Thank you professor @awesononso for this great lecture, I was able to understand more about bitcoin having and its effect on the value.