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Blockchain, a chain of interests

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A miner from Minecraft.

Why is there a miner involved in this? The word mining got adopted because it is a laborious work minting new coins, think about it hitting a rock with a pickage hoping to find a precious mineral is for sure a challenge, the work that happens within a cryptocurrency that is called mining comes from the Proof of work, it’s worth noting there are other alternatives to this, it is a mathematical puzzle that in the case of Bitcoin takes approximately 10 minutes to complete, in which whoever miner manages to solve it first gets to create a new block in the chain, but why is anyone bothering doing this you might wonder, it is because whoever manages to create the next block gets a reward called block reward, hence the precious mineral found, in the form of a determined amount of cryptocurrency, your reward for the laborious work that involves solving the puzzle before every other miner working on the network does.

How does this make sense? Every coin from any cryptocurrency was at some point mined, it didn’t sporadically materialize, someone took the effort to solve the mathematical puzzle and whoever solved it first, created the next block, and this new block came with this incentive to the miner for their hard work. You might be wondering so there is an infinite amount of coins? Not really each Creator made a strategy particular for whatever their vision was, in the case of Bitcoin, The Creator of it Satoshi Nakamoto decided to only make it possible to be in total 21,000,000 bitcoins, then you must be thinking so there are currently 21,000,000 in circulation, not at all, all coins to be must be mined first, this makes the peer-to-peer network function because it creates an incentive for multiple parties in many parts of the world to mine, hence anyone owning over 50% of the entire network is not easy, so what Satoshi Nakamoto relied on was simple arithmetics, if every ~10 minutes a new block can be made, and the goal is to have a controlled supply hence avoiding inflation, and you want a clear total of coins ever to exist, he decided to start the reward being 50 bitcoins per block found, and made it so every 210,000 blocks the rewards get cut in half, which is about every 4 years, with the last coin rewards happening somewhere around the year 2140.

So what is actually happening? Approximately every 10 minutes a bitcoin miner discovers a new block, they discover this by working on a cryptographic puzzle, each block comprises a set of transactions that were previously waiting on the bitcoin memory pool, the transactions that usually get chosen first are the ones with the greatest transaction fee, it’s worth noting that in any transaction you can leave behind a tip for the miner to earn plus the block reward.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://egonfiedler.medium.com/blockchain-a-chain-of-interests-7951d2a1cf3?source=rss——-8—————–cryptocurrency

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