Crypto Academy Week 4 Homework Post for (besticofinder) - Cryptocurrency Mining

Hello Steemit Crypto Academy Community,

The world we live in has started to become a new place after the development of the internet. With the development of the internet, the world started to get smaller. The world has become global and most of our daily transactions have begun to go digital. With everything going digital and completing its revolution, there was much left to complete the money revolution, which we use the most in daily life. Money is about to complete its revolution through cryptocurrencies. In a way that no one could have imagined 20 years ago.

P

Here in this homework we will talk about mining cryptocurrencies.

(1) How crypto currency mining works ?

P

There is an increase in the number of cryptocurrencies every day. Therefore, there are various types of mining in cryptocurrencies. There are two most common forms of cryptocurrency mining. Proof of Work and Proof of Stake.

Most people know the mining of Proof of Work, which is valid for bitcoin mining, but Proof of Stake is also a form of mining.

Proof of Work: It is the method used in Bitcoin mining. In this type of mining, it is the mechanism that provides, validates, validates financial transfers and enables new bitcoin generation. Bitcoin is produced under a concept called mining by very powerful computers and hardware that generate processing power. Bitcoin miners approve transactions on the network and record these transactions in blocks. During this time, they earn Bitcoin as a reward. The Proof of Work protocol used in the Bitcoin network is a system in which miners who hold most of the processing power have more say in the network and therefore gain more returns.

Proof of Stake: It is a protocol developed by Sunny King and Scott Nadal in 2012. In this type of protocol, network power does not distribute based on processor power. The generation of the next block in Proof of Stake can be carried out by operators performing several combinations at the same time. There are multiple types of the Proof of Stake protocol. In the Proof of Stake protocol, users who want to be able to verify transactions and get a share of the revenue must lock their cryptocurrency assets to be used for verification. This locking process is called staking. The Ethereum network will migrate to this protocol along with Ethereum 2.0. In this locking process, which is called staking (getting a share from the income), the amount to be used for this transaction in the wallet cannot be withdrawn from the wallet until it is unlocked and is marked as the user's share on the network.

(2) What is Mining Difficulty ?

P

Cryptocurrency miners compete with each other to create blocks, using computers developed for this job. Whenever a miner finishes digesting the block, it will be rewarded with a 6.25 BTC block reward. The blockchain is updated and all network participants are aware of it. The difficulty of cryptocurrency mining can vary depending on a few criteria. For example, when the hash rate in the network increases, if the blocks start to be found in less than 10 minutes, the difficulty level of the Bitcoin network increases. In this case, the bitcoin network is in its most reliable period. Miners are in competition with each other. With the competition, the network becomes more secure. Conversely, if the time of finding the blocks increases to more than 10 minutes, the difficulty level of the bitcoin network decreases and new blocks are easier to extract. Miners are not competing enough with each other in this situation. The credibility of the Bitcoin network decreases in this case.

(3) What are the challenges for crypto currency miners ?

P

High energy consumption:
One of the biggest problems faced by miners who are mining with the Proof of Work protocol is high energy consumption. Energy consumption begins to rise as mining competition increases. Miners are not in a position to save energy. However, they may prefer countries with lower energy prices. Energy costs are low in most Asian countries.

Variability of crypto currency prices:
Variability of crypto money prices: The prices of cryptocurrencies are constantly changing. When cryptocurrencies are in a downward trend, cryptocurrency miners are losing money. If crypto money prices were stable, a more suitable environment would have been created for crypto money miners.

Tax:
In some countries, taxes have started to be taken from cryptocurrencies. Cryptocurrency miners have also begun paying taxes. Cryptocurrency miners had many expenses. With the collection of taxes, crypto money miners started to have difficulties.

Hacker danger:
No matter how well we try to keep your assets safe, hackers are always a danger to us. Crypto money miners may face with the loss of crypto money they have accumulated to hackers.

Cc:
@steemitblog
@steecmurator01
@steemcurator02