Homework on Mining and Proof of Work - Questions

Blockchain and Bitcoin 101
#4400

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    This is the incentive for Miners. Miners spend money UPFRONT for the electricity to solve the cryptographic puzzle (i.e., guessing/hashing the NONCE, such that the Hash of current Block is ultimately the lowest number below the TARGET number).
    Their objective is to recoup their losses (upfront money spent on electricity) and make additional profit by receiving Block Rewards and Transaction Fees.

  2. Why would it be very difficult for someone to go back change a previously added block?
    This is why a Blockchain is very secure.
    Going back in time to revise earlier Blocks becomes exponentially more difficult.
    If you change something in an earlier Block, all the links from that Block going forward will be broken. All NODES will see that this Blockchain is invalidated because it doesnā€™t make sense. The only way to remedy this situation in the revised Block is to solve the new puzzle.
    It is physically impossible to cheat by revising one of the Blocks as it would take you a great deal of resources (time and computational power) to solve the new cryptographic puzzles, create the new links, and eventually catch up with the current Blocks that other Miners are competing to add their new Block.

  3. How does the network regulate mining difficulty?
    The network uses a low number for the TARGET, as this will increase the Minerā€™s difficulty level to high (they have to guess alot).
    Miners (1)Use HASH of Previous Block (2)Use All Transactions in Current Block (3)GUESS A RANDOM NUMBER called ā€œNONCEā€. Minerā€™s objective is to HASH these 3 components of the current block, such that it mathematically is LESS than a special number called TARGET. TARGET is a number that depends on the difficulty of the Blockchain/Bitcoin network. The MORE Miners there are on a Blockchain network, the LOWER number this TARGET will be. The LOWER the TARGET number is, the more difficult it becomes for the Miners to guess the NONCE.
    In order for the Miners to deduce the NONCE, they repeatedly keep guessing/hashing, guessing/hashing, guessing/hashing, guessing/hashing, guessing/hashing, etc.

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#4401
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
  • By spending money on mining, miners are interested to earn money (block rewards and transaction fees) by acting according the rules. Otherwise, the network will reject their blocks and the money (on electricity) has been spent for nothing.
  1. Why would it be very difficult for someone to go back change a previously added block?
  • A change of a block information leads to a change of the block hash. As the block hash changes, it breaks the link to the following block. This needs to be re-build. The network proceeds with the production of blocks and new blocks are added to the blockchain while the miner trying to recalculate the correct block hash needs also to catch up with the current blocks. This consumes a huge number of resources with no warranty that the network will accept the new blocks.
  1. How does the network regulate mining difficulty?
  • The network defines a number called target to specify a limit a hash needs to fall below to be accepted by the network. The more miners try to mine blocks, the lower is the target and the more difficult it is to guess the right nonce to produce a block hash which is lower as the target.
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#4402

  1. It is important to make sure that miners spend money on electricity while mining so as to incentivise them to act honestly on the network and recoup their expenses by being rewarded transaction fees and block rewards - itā€™s much more financially viable to act in accordance to the rules set by the network, rather than try to hack it

  2. It would be very difficult for someone to go back and change a previously added block because any change made to previous blocks will effect the later blocks and void the chain

  3. The network regulates mining difficulty by lowering or raising the target - e.g. if more miners are added to the network, the difficulty increases by lowering the target

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#4403

  1. It is important that miners spend money (on electricity) so that they have ā€˜skin in the gameā€™ and thus are more likely to adhere to the rules, otherwise the money spent will not be recouped and nor will they earn a reward for mining and related fees.

  2. To go back and change a previous block is an onerous prospect as that would invalidate all subsequent blocks and the miner would need to incur massive cost in remining ALL successive blocksā€¦ and in the process said miner would never make up ground in catching up to all new blocks added in the meantime. To change a previous block is thus a major disincentive.

  3. The network regulates the mining difficulty by lowering or raising the Target of which the Nonce has to be less than. The more miners competing the lower the Target, the less miners competing the network than raises the Target.

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#4404

1.) Its important because when they spend electricity its mean they paid to mine a block, when they wantn to cheat the have lost the money for the cheating block. it makes clear that all miners are cool and working fine.

2.) Because of the high hashrate, he must go back and mine the block new what takes a lot of time and then he had to mine also the blocks that comes to the chain while he mines the block he would change.

3.) He regulate it by the numbers of miners, more miners means its more difficult to mine.

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#4405
  1. Why is it important to make sure that miners spend money (on electricity) while mining?

This requires miners to spend their own money and play by the rules to receive the incentivized rewards. This process helps to ensure blockchain security.

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

Each chain and block in the blockchain would become broken if any information from previously added blocks are mutated. These broken blocks would have to be hashed again in which the process would take too long to keep up with newly added blocks.

  1. How does the network regulate mining difficulty?

The target for miners is lowered as more miners compete from within the network, thus increasing the mining difficulty rate. This is done in an effort to keep blocks 10 minutes apart.

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#4406
  1. Because the miner needs to be incentivized to work honest. If the miner would not play by the rules he would not receive any reward therefore make loss.
  2. The hash of a block is based on the previous block so a change will break the link to subsequent blocks.
  3. Its regulating by setting the target value of nounce. Higher difficulty means lower target, lower difficulty means higher target.
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#4407
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    This ensures that there are no spam bots doing the work, ensures only legitmate PoW is completed
  2. Why would it be very difficult for someone to go back change a previously added block?
    Because all future blocks would change and need to be re-mined (essentially impossible to keep up with constant changes to keep up with added blocks.
  3. How does the network regulate mining difficulty?
    By making the target lower and lower with time, working in tandem with also lowering Block Rewards given to miners and making BTC more valuable
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#4408

Homework on Mining and Proof of Work - Questions and Answers

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    Answer. In order to incentivize good behavior/trust, per the fact that miners must pay upfront with electricity costs prior to receiving their block reward and transaction fees.
  1. Why would it be very difficult for someone to go back change a previously added block?
    Answer. They would need to re-mine, more importantly, solve the puzzle for all blocks starting from the block in which a change was made to the most current block, all by themselves.
  1. How does the network regulate mining difficulty?
    Answer. The greater the number of current miners attempting to solve the puzzle the lower the target is numerically, and vice versa, the lower the number of current miners the higher the target.
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#4409
  1. Before they get incentives they are already spending money on electricity which now leads the miners to want the incentives so they pay the electricity they just wasted by mining and the only way to get incentives is by playing by the rules.
  2. Because every block is formed by the previous hash of the previous block so if you change anything in a previous block you would have to re-mine every block.
  3. The higher the difficulty the lower the target and the lower the target the higher the amount of miners.
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#4410

  1. So they can get incentives by sticking to the rules.

  2. Than they would also have to solve all previous hashes and catch up to the current block. This would take a huge amount of hashpower which makes it nearly impossible

  3. By adjusting the target. The lower the target the the more difficult is it to get the correct nonce

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#4411
  1. Why is it important to make sure that miners spend money (on electricity) while mining?

Itā€™s the incentive to make them not cheat. Because if they cheat, the block they produce will be rejected. No rewards for them, but the the electricity they have already spent and have to pay for.

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

They would have to re-mine the block they wanted to change, and all the connections and blocks that was made after this block up to the blockheight the chain is on at the moment. In the mean time the other miners is working on adding blocks to the chain that is currently valid. To do this alone would require over 51% of the hash rate working on the system

  1. How does the network regulate mining difficulty?

By lowering or increasing the target that the hash must be under. The lower the target, the more difficult it is.

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#4412

  1. If the mine already spent the money on electricity, they have to be honest and keep the all the mining work correct in order to be incentivized to cover the cost.

  2. First, the miner can not go back in time; second, if anything is changed in the previous block, all hashes in the blocks after will be invalid and rejected, which the mine will lose all the rewards and transaction fees earned.

  3. When more miners come to the bitcoin network, the target will get lower that will create a narrower range between the hash and the target and make it more difficult to come up with a correct nonce.

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#4413

  1. it is important for miners to spend money on electricity to incentivize good behavior

  2. it would be very difficult to change a previous block because you would need to re hash the entire network and achieve the longest chain so that it gets accepted by other nodes.

  3. The network regulates mining difficulty by adjusting the target based on the network hashrate

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#4414
  1. To have incentives to follow the rules
  2. If you change a previous block, all the chain will change.
  3. Equilibrating the dificulty each 2 weeks.
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#4415
  1. pow
  2. cause they have to solve that nonce and all the links would be broken. thus need for resolving all the following blocks
  3. the more miners lower the target, thus making the puzzle more difficult to solve.
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#4416 
1. It is important that miners invest in the mining process. They have operating costs. For unfair, harmful work, they are punished, rewarded for proper work.
2.  Because block contains a reference hash to the previous block. Change in the block would break chain hashes foreword of change. And someone have to re-mine all subsequent blocks.
3. How does the network regulate mining difficulty?

More miners in the network, the lower target is set (higher difficulty )

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#4417
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    So that they have sunk costs that they need to recoup, which incentivizes them to operate the right way, so that they can win the block reward. If htey dont, they will be rejected by the nodes, and then they will have done all the work for nothing.
  2. Why would it be very difficult for someone to go back change a previously added block?
    Because all blocks are linked ot each other cryptographically. In order to change a transaction 10 blocks back, they would then need to solve the puzzle for all future 10 blocks, and all the blocks that have been added since. Given the complexity, this would take tons of money and time, so it doesnt make sense for anyone to do. The system has blocked out bad actors based on incentivizes power by physics/math.
  3. How does the network regulate mining difficulty?
    It adjusts/increases it, dependign on average solving poewr, gradually, to make sure that it is not too difficult
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#4418

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    Because that cost them money and in that way they are invested and interested in trying to recover their investment by producing a valid block in the fastest way possible to reap the rewards.

  2. Why would it be very difficult for someone to go back change a previously added block?
    Because every new block is dependent on the previous block hash, which means that if something is changed in a previously mined block, that hash changes and therefore the miner thatā€™s trying to do that must be able to mine the old block, plus all the new blocks that have been mined until that point in time (something that is technically impossible ā€“ unless -Theoretically- thereā€™s a mining pool with more than 51% of the network hashing capacity).

  3. How does the network regulate mining difficulty?
    It adjusts the difficulty automatically every 2016 blocks (currently it takes exactly two weeks to adjust it at the current rate of one block every 10 minutes). Thereā€™s a target that is adjusted and when the target for the nonce gets lowered, it is harder to guess the nonce (thus increasing the mining difficulty/requiring more computing power/making the network more secure).

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#4419

  1. This reward structure forces the miners to put their own money upfront before they can attempt to get their reward. Since their own money is on the line it decreases the probability that they will attempt to break the blockchain.

  2. Because if they did this then they would have to also re-mine the broken blocks and catch up to the network. This would take so long that it is next to impossible.

  3. Mining difficulty is regulated by the network setting a nonce that the miners need to guess. As the hash rate increases the nonce becomes smaller. The smaller the nonce the more difficult it becomes to guess. The network regulates the difficulty by aiming to produce 1 new block on the chain every 10 min and changing the difficulty every 2016 blocks (which if everything goes right should be every 2 weeks approx.)

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