Homework on Mining and Proof of Work - Questions

Blockchain and Bitcoin 101
#4319
  1. To maintain the integrity via proof of work (POW), utilizing lots of electricity to guess the nonce.
  2. difficult due to the hash and the unique footprint that is created in the previous block
  3. Utilizing a target when low, then the difficulty is high
1 Like
#4320

1.If we make sure that miners spend money for mining, they are incented to get their investments back. The only way to make money in the system is to play by the rules and to support the system. The way blockchain is constructed it is impossible to outrun the system and to manipulate it, if you do not have more than 50% of CPU Power. To be exact the even more than 50% won’t be enough you need to have probably 90% of the CPU Power to manipulate successful. But if you have that much CPU Power and electricity costs it will pay you more to run the system and get rewarded than to rewrite blocks in the past of the chain to double spend. It is to much work to find the nonce and hashs.

  1. Even with majority of CPU power under control you trying to catch up from the past, with a system that keeps running away from you. The costs involved for recalculating the hashs and nonces is to big compared to work with the system. The protocal as it is sets the odds against this.

  2. If more miners are in the system, the system reduces the length of the hash that is accepted as a successful result. Therefor the number of possible successful outcomes is reduced the more the length of the accepted hash is reduced, that raises the difficulty to solve the hash function exponentially.

1 Like
#4321
  1. Making miners spend electricity on mining will sets up an incentive. As its very costly to remine the whole blockchain if electricity is used.
  2. when changing a previously added block, the connection to the next block will break as the hash will change. Thus requiring re-calculating the hashes of all the subsequent blocks along with the new upcoming blocks. Which is infeasible and futile as well as inefficient.
  3. With the increase in miners the hashing power will also increases. Hence the difficulty to guess the nonce is increased by lowering the target, such that guessing of the nonce is approx. 10 min apart
1 Like
#4322
  1. It functions as a colateral. If the miner comes up with a block containing transaction errors, the block wil be rejected and he won’t recieve any reward. It’s an incentive to make miners follow the rules.
  2. Changing a previous block invalidates all following blocks, as their hashes are based on the hashes of previous blocks. So to change a previous block you need to change all following blocks.
  3. The more people mine, the lower their hash has to be for their block to be accepted. This in turn means more time spent finding a hash which is low enough.
1 Like
#4323

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

Constructing blocks takes alot of electricity and is one of the requirements to get incentives as miners have to solve a crypto graphic puzzle in order for their block to be accepted to the Bitcoin blockchain as long as they follow the rules. They then get rewarded with block rewards / inflations and all transaction fees that goes to their blocks.

2. Why would it be very difficult for someone to go back change a previously added block?

Each block that has data transaction will create a hash and nonce that gives it a unique fingerprint, then it creates links to new blocks from previous blocks. If you were to go back and change the previous data transaction in one of those blocks, then a new hash and nonce will be created and that will change the links to the following blocks that is connected with each other. This will require the miners to re mined everything all over again to catch up with the changes and can take a long time to fix or even impossible to fix.

3. How does the network regulate mining difficulty?

Miner has to use one of the blocks and its data to guess the hash target in order for their block to be added to the blockchain. The more miners compete for the target the lower the target number is making it very difficult and time consuming to solve the correct Nonce.

1 Like
#4324
  1. Miners are incentivized to keep within the rules as they are spending their money on electricity for the mining process.

2: Any change in the output of the previous block will break the link to the following blocks.

3: The more miners there are, the difficulty of guessing the nonce is increased, thus lowering the target.

1 Like
#4325

  1. Miners have significant upfront cost (i.e., electricity cost) to mine a block and the whole system is incentivized – they get rewarded for doing fair work. Therefore, it is to miners advantage to play the fair game since unfairness can have an astronomical cost for them.

  2. It is infeasible for someone to change the previous block since each block in the blockchain database is interconnected with the hash of the previous block. Also, block hash is based on two things: (a) data (b) hash of the previous block. Therefore, if someone were to change the data/TX in a block, it would then completely change the block hash, which, in turn, will change the hash of the previous block and likewise thereafter. This will make all the blocks in the blockchain invalid.

  3. Mining difficulty depends upon the number of miners in the network. There is a direct relation between the number of miners in the network and mining difficulty, i.e., more miners = higher difficulty. And higher difficulty means the target hash/number will be lower

1 Like
#4326

  1. They have to spend money before hand so that they are incentiviesed to follow the rules so that they get rewarded to get back their expenses plus rewards.

  2. All the block are based on eachother, if you change a previous block that invalidates all other block, it all the following links and blocks because they are all based on the previous ones.

  3. The network regulates mining difficulty by adjusting the target, if there are more miners it gets more difficult, therefore it sets the target lower. So the number that has to be guessed has to be below the target.

1 Like
#4327
  1. It creates an incentive for miners to be honest. They would lose money if they don’t follow the rules.
  2. Because the present block also depends on the previous blocks. It would be practically impossible.
  3. The more miners the more difficult it is to solve the cryptographic puzzle, as the target gets lower.
1 Like
#4328
  1. it insures integrity of the chain. if miner tries to accept bad transactions they would lose all money spent on electricity.
  2. if they change anything in a block it would invalidate all the blocks and force them to remine them.
  3. difficulty increases based off hashrate.
1 Like
#4329
  1. To have an incentive for reward and follow rules.
  2. Because then all the blocks afterwards would be changed.
  3. The more people mining the higher the difficulty of the target, which means the target number is lower.
1 Like
#4330

  1. The cost of electricity spent is a collateral to ensure the miners follow the rules of the blockchain.

  2. One would need to re-establish all the blocks in order to change a previously added block which would require impractical amounts of time and hash power.

  3. Higher mining leads to higher nonce number, lower mining leads to lower nonce number. Which in turn regulates the mining difficulty.

1 Like
#4331
  1. Why is it important to make sure that miners spend money (on electricity) while mining : Electricity cost is the proof of effort that a miner has applied to mine a specific block, so a miner would pay a allocated amount of fees towards the kWh used for mining the specific transaction and he will earn in the process Transaction Fees and Block Inflation Fees.
  2. Why would it be very difficult for someone to go back change a previously added block : If a previous block in the blockchain is changed, all the subsequent links to consecutive blocks will be broken and the miner will have to remine all the next blocks to be able to repair the block links.
  3. How does the network regulate mining difficulty : The network has a certain target hash number which has to be met for a block to be appended to the blockchain. The more miners there are that is actively mining, the lower the target is.
1 Like
#4332
  1. Having miners spend money on electricity while mining incentivizes them to follow the rules to get a return on their physical investment
  2. For some one to go back and change a previous block, they would have to re-mine that block and every proceeding block in the chain (which is not feasible)
  3. Mining difficulty (how low the hash target is) is determined by how many miners are currently trying to solve the hash
1 Like
#4333
  1. To incentivize them to play by the rules. If the try to change any previous transactions or break the rules all their electricity spent will be for nothing. If the actually amass enough hashpower to execute a 51% attack they would probably make much more money just mining bitcoin rather than attempting a double spent. In addition if they are successful at attacking the bitcoin blockchain, then the price would probably collapse and all the bitcoin they got from the double spend would lose value (and their ASICs as well)…
  2. Network participants always accept the longest valid blockchain as the source of truth. If someone were to go back and change older blocks, they would also have to change all blocks after that, because they are linked through their hashes. This would require them to re-mine old blocks faster than everyone else minign new blocks, so their fork of the blockchain becomes the longest. This would require at least 51% of the hash power in the network, hence the name 51% attack
  3. A block of the blockchain is composed of the list of txs, the hash of the previous block and the nonce. The nonce is a random numbers, which miners are trying to guess. The hash of the entire block needs to be smaller than the target. The target gets smaller as difficulty increases. tHis makes it harder for miners to guess a nonce that makes the hash smaller than target. Difficulty is regularly revised by the bitcoin protocol based on block times.
1 Like
#4334

Miners want to make money and be rewarded (incentivized). Must play by the rules, no censorship, no double spend, and no altering of any transactions.

Every previous block in the blockchain is effected therefore unlinking every one of them. Then after correcting they would have to try to catch up to the new blocks created, which is an impossible task.

The blockchain always chooses the longest chain. It rejects any hash above the target and there can never be any changes or reversal of transactions on the blockchain.

1 Like
#4335

1 - If the set up cost for a mining “rig” is high, the incentive is to overcome the cost and make profit by mining and thus turning a profit.

2 - Two reasons, the first being the nonce situation where it would be costly using up all that time and electricity trying to guess or calculate the on nonce on the remaining blocks which they will have to change. Second, there are constantly new blocks being added to the chain, trying to keep up would be too demanding

3 - Adjusting the mining target, the more miners that are in the network, the lower this number is and the more difficult it will be to guess the nonce.

1 Like
#4336
  1. So that the are incentivized to mine by the rules so that the rewards pay back their losses in Electricity bills and give them profits.
  2. The would need more than 51% of the network’s Hashpower:
    a) to remine all the affected blocks from that one forward.
    b) to catch up with other miners creating new blocks at the end of the chain
    c) to create the longest chain that can be accepted by the network.
  3. The network regulate mining difficulty by checking the number of active miners on the network and their power. If there is more miners, the target number is lowered to give the miners competition and opportunity to prove that they spend electricity calculating the right hash. if the number of miners is less, the target rises.
1 Like
#4337

  1. Having a block rejected after having paid for electricity is costly therefore the miners are incentivized to follow the rules of the blockchain network to make profits.

  2. Each block and link between blocks would have to be re-mined while keeping up with new blocks, the difficulty of this puzzle is proportional to the network hash/rate. The amount of energy and time required is not currently feasible. If an actor was to have the capabilities to reverse the chain, he would be incentivized to honestly mine the network with said capabilities due to the the profits being greater when playing by the rule.

  3. The more miners competing for the blocks the higher the difficulty and the lower the target the miners hash has to be.

1 Like
#4338

Why is it important to make sure that miners spend money (on electricity) while mining?
makes sure the system stays fair. With cost of electricity it’ll cost miners to changed blocks
already processed.

Why would it be very difficult for someone to go back change a previously added block?
if they did the hash would change thus invalidating the blockchain from that point on.
they would have to remine all the blocks going forward which would use massive amount of electricity
and cost of electricity. All this while the blockchain is still carrying on would also make
changing a previously added block even tougher.

How does the network regulate mining difficulty?
We try to mine a block every ten minutes. The more miners there are compteting for block rewards
the more difficult the mining competition. And vice versa.

1 Like