Homework on Mining and Proof of Work - Questions

Blockchain and Bitcoin 101
#243

ah ok ,got ya, thanks

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#244
  1. Why is it important to make sure that miners spend money (on electricity) while mining?

When miners spend money on electricity it incentiveā€™s them to stay stay honest. If a miner were to do something malicious they could potentially lose money from all the electricity they must pay for while mining.
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  1. Why would it be very difficult for someone to go back change a previously added block?

If someone change one block that would then break all the previous blocks before it. They would then have to re-mine all of those blocks plus catch up with the current block-chain. This would require massive amounts of computer power which would be very expensive.

  1. How does the network regulate mining difficulty?

Hash power is lowered and raised based on the hash power of the network. The hashing rate is raised and lowered so that blocks are created every 10 min.

#245

*Difficulty TARGET is lowered or raised based on the hashpower of the network. The more hashpower (more miners) the lower the target has to be to keep an average of 10 minute blocktime

#246

  1. Making miners spend money on electricity results in them realising losses if invalid blocks are rejected by consensus. Consequently there is a greater incentive to follow the rules, produce valid blocks and claim the rewards thereby ensuring the security of the network.

  2. Changing a block invalidates its hash and the hashes of all subsequent blocks, meaning the blockchain is invalid. To validate their fork of the blockchain the person would need to re-mine all the invalid blocks as well as those added to the original blockchain in the mean time. The cost of re-mining would likely exceed any reward and a person acting alone would never solve all the hashes in time to catch up with the valid blockchain.

  3. A target is used to adjust the mining difficulty and the lower the value of the target, the more difficult mining becomes.

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#247

[quote=ā€œivan, post:1, topic:8439ā€]
Homework on Mining and Proof of Work - Questions

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    This is important as it creates incentive to keep the transactions secure and honest

  2. Why would it be very difficult for someone to go back change a previously added block?
    It will change the hash on previous and current blocks. They will then need to be re mined. It will take many years and money to do this

  3. How does the network regulate mining difficulty?
    The more miners there are the more the difficulty rate goes up to solve the cryptographic puzzle.

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#248

  1. It is important for the whole security of the network and make sure they play by the rules and then they will be rewarded with bitcoin plus fees.

  2. It is very difficult because if any small changes in the transaction input it will result in changing the hash or digital fingerprint link to the next block and the next one. If that happens it will also takes longer time for that person to catch up with the new blocks being created.

  3. The network has a special way of regulating the mining difficulty in order to make it viable such as lower target equal higher difficulty. It has to solve a puzzle which hash nonces randomly many times over to find the lower target before appended to the next block.

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#249
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    Because if they spend money they are incentivised to play by the rules to earn the block reward.
  2. Why would it be very difficult for someone to go back change a previously added block?
    Because if you change an earlier block it will change the blocks going forward and previous block which would then take too long to re-mine all the blocks again
  3. How does the network regulate mining difficulty?
    Depending on how many miners there are at any one time. It there are a lot of the miners then the target is made lower to increase the difficulty or target can be increased if there are less miners to make it easier.
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#250
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
  • So they are invested to keeping the blockchain running to get back there money invested + intresest
  1. Why would it be very difficult for someone to go back change a previously added block?
  • Takes X amout of time and power to remine everything to the current block.
  1. How does the network regulate mining difficulty?
  • By lowering the target, resulting in a smaller list of numbers to hit
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#251

1- Incentive to make $$

2- Because not only do you have to change that block but every block mined after that

3- Difficulty of target

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#252
  1. It is to ensure that the network is safe and the miners will play by the rules. If they will try to cheat, they will lose money.
  2. It requires an enormous amount of hash rate to do so since every block contains a hash from a previous block. This means when the content of one block is changed, the next blockā€™s content has to change as well. This person would have to recreate the whole chain with newly created blocks, as all blocks are connected.
  3. Mining difficulty in the network is adjusted automatically after 2016 blocks have been mined in the network. The difficulty goes either up or down depending on the number of participants and their combined hashpower.
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#253
  1. In the bitcoin ecosystem you must play by the rules of the protocol to receive incentives from block rewards. In order to make money as a miner you must spend money on electricity cost to find the mathematical computation needed to find the nonce within the pacified target to hash the next block and receive the block reward.
  2. It would be difficult because you would need to re-mine the blocks you changed plus all the blocks that came after, so you are playing catch-up with the longest chain. You will also need 51% of the hashing power do roll back the blockchain which is very expensive and nearly impossible.
  3. To regulate mining difficulty if there are increasing numbers of miners joining the network the difficulty of hashing a block within the so called target gets increasingly harder as more people try to mine.
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#254
  1. When miners have skin in the game, i.e. they have a monetary investment, then they are then highly incentivized to follow the rules.
  2. If anything is changed in a previously mined block, it will change the hash of that block. Since all subsequent blocks are based on the hash of the previous block, changing the hash anywhere in the chain breaks all subsequent chains.
    3.Blocks are set to be mined approx. every 10 minutes. If there are more miners, the degree of difficulty is raised. Conversely, if there are fewer miners, the difficulty is lowered so as to ensure that the 10 minute interval between block rewards is maintained.
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#255
  1. To incentivize miners to be honest
  2. Beucase they would have to change all the blocks that follow
  3. More hashpower, more difficulty
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#256
  1. So they are incentivized to do their best in being rewarded next block
  2. Because it is mathematically and physically hardly impossible. It would cost them too much time and money while other miner concentrates in mining new blocks
  3. The difficulty increases with the number of miners. The difficulty decreases when there are less miners
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#257

It is important that mining costs participants because it adds value/security to the network. Miners are positively incentivized to find new blocks and deterred from trying to cheat by the cost of trying to change a block. The cost of reversing a transaction would be having to remine all subsequent blocks and therefore just isnā€™t worth it (too expensive). If you use the example of gold, if it was cheap to find or make it wouldnā€™t have the same value. The cost of mining is baked into the price of bitcoin giving it security and value.

Mining difficulty is regulated to keep block times approximately every 10 minutes. If a lot of hash power is on the network the difficulty adjusts upwards making it harder to find the nonce that meets the target to get the block reward. Likewise if the hash power drops and block time increases the difficulty is reduced making it easier to find a qualifying nonce.

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#258

  1. It is important because then they are incentives to play by the rules. If they would play by the rules all there spend money would be gone, because the hole network (notes) have to insure that the block that was mine is I.O, if it is not the block would not be added to the chain.

  2. you can do so but then all the links from the block you changed would be broke. So then you have to solve the new puzzel (remind) and the puzzel for all the blocks that came after the changed block. Also you have to catch up with the new block and every 10min there is a new one.Because the network takes alawys the longes chain (it has the most POW).
    You can only do that if you would have a Hashrate of 51%, and then you could double spend.

  3. Mining difficulty is set by the Target. The Target is just a number and the lower the target is the difficulty increase. So if if have a skale from 0 - to infinity and our targent is somever between. The closer the Target to 0 is the harder is to be acepted.

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#259

  1. To incentivise them to stay honest.

  2. Because the hash of that block will change and so will the hash of all subsequent blocks - All subsequent blocks will have to be remined until the ā€œnewā€ blockchain reaches the longest chain. This requires an immense amount of computational power.

  3. By changing the target hash value. Effectively increasing or decreasing the amount of nonceā€™s which will give a hash value below the target.

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#260
  • Why is it important to make sure that miners spend money (on electricity) while mining?
    To get the incentives and fees from the block to pay for electricity and make a profit.
  • Why would it be very difficult for someone to go back change a previously added block?
    Because of the unique finger print (hash function).
  • How does the network regulate mining difficulty?
    There has to be a consensus from the network which establishes proof of work.
#261

Why is it important to make sure that miners spend money (on electricity) while mining?
It is important that the miners have invested a lot of resources into creating blocks so that the cost to replicate the blocks in an alternative chain is made prohibitive compared to the potential gain of changing the blocks.

Why would it be very difficult for someone to go back change a previously added block?
Since all blocks have an inherit link with the previous block by having to include the previous blocks hash in the message used to create the new blocks hash any change to a previous block would then invalidate all of the following blocks. Meaning a miner would have to rehash these blocks as well before any new blocks are also created. This is considered to be near impossible.

How does the network regulate mining difficulty?
The successful hash of a new block has to be below the current target. The target is the number of zeros which have to be at the start of the successful hash. Increasing the number of zeros increases the difficulty of finding a successful hash.

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#262

  1. The miners spend electricity and contribute by strengthening the network, and they are incentivized to do so because they will be rewarded with the newly mined bitcoins and transaction fees.

  2. If a previous block gets changed, all subsequent blocks would need to be changed because the hash value of every new block is based on the hash value of the previous block. And if a change is made, the miner would either have to re-mine all the new blocks or fork the chain.

  3. The network changes the target value to match the hashrate. The higher the hashrate, the lower the nonce value, and the lower the hash needs to be for the new block.

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