Homework on Mining and Proof of Work - Questions

Blockchain and Bitcoin 101
#4480

  1. this ih how blockchain incentives miners,and make sure they spend money while solving the puzzle in order to get awarded after with bitcoin and transaction fees.

  2. because one changed block is changing all other blocks in system,making things very difficult to readjust.

3.more miners - lower targets

1 Like
#4481
  1. Spending in electricity puts them at a loss until they recuperate the money invested in solving the puzzles by earning the mining reward as well as the transaction fees of the new block. I would also add that the electricity is only the variable expenditure they have, they also need to invest in the hardware required to be competitive as miners. Thirdly, they also face of the cost of every additional block they tried to mine but did not win versus other miners, so that also accumulates over time. And to finish with, they also will have to put the time, human knowledge and man hour effort in programming their mining gear in such a way that they maintain and increase their “winning” rate versus other miners competing with them. So it is a bit more than just the electricity.
  2. In order to retrofit a past added block, one would theoretically have to rerun the previous blocks previous transactions and nonce and target for that particular block and, in addition, to do the same for every additional block added from that point forward in the blockchain, and to it all correctly. But if that were not difficult enough, one would need to convince the majority of the node validating network that this piece of chain were the true one, something which while theoretically possible, would require to have the longest chain for the network to accept validating it, showing valid Proof of Work (POW). So, long story short, no single node or miner, would have the computational power or the ability to associate with others to convince the rest of the network to validate such blocks. And in doing so, it would lose massive amounts of money in electricity, damage their reputation as well as lose the rewards for having done the work honestly in the first place.
  3. Mining difficulty is regulated by the available hashrate (computational strength) of the mining network, which is a function of number of miners participating and the equipment they dedicate to mining purposes
1 Like
#4482
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    To ensure if a miner follows the rules of the blockchain network. If the rules are not followed the block created will not be accepted and there is no reward to compensate for the money spent and the sought after profit on top.
  2. Why would it be very difficult for someone to go back change a previously added block?
    When changing an older block it will break the link to the next block and all the links to the blocks after. To have the change accepted all the other blocks have to be re-created/re-mined. This takes such a long time and so much energy that it will be super difficult to do.
  3. How does the network regulate mining difficulty?
    The more miners there are the lower the hash target, the more difficult to guess the nonce that creates a low enough hash output, the more energy needs to be spent.
1 Like
#4483
  1. By spending money they receive incentive to mine succesfully and by the rules, so they get their money back + make some profit on top of it.
  2. Because all blocks are chained to each other, therefore all following blocks would also have to be mined again. He would have to do all of that while meanwhile other miners are adding new blocks on top. (basically endless catch-up game).
  3. The mining difficulty adjusts depending on how fast blocks are mined. If blocks are added quickly (more miners are active), the target get lowered, which increases difficulty
1 Like
#4484

1- it is inevitable since process uses elemental resources, it also provides a regulation among miners to make sure they follow rules, not building irrelevent Tx blocks.
2- it is not possible, deleting attempt of a block will be another fault, and will be rejected by other nodes. to complete building a block a hash linking the previous block.
3- when a miner build a block against the rules, it already pay upfont by consuming so much electricity during solving the “puzzle”. After finisihing the block build, miner broadcast it to a node on the network, and the node shares it with other nodes. Since the network is governed by PoW incentives, nodes disagreee about the block that is faulty and ignore it. as a result the miner can’t receive any reward from the high cost block. This condition makes sure miners follow the rules in order to continue their presence.

1 Like
#4485

  1. by spending money and incurring costs, miners will be even more incentivized to follow the rules with the hope to make money from mining new bitcoins.

  2. not only would it be extremely difficult to go back change a previously added block due to the need to overpower the majority of nods in the network, but this would require to change and rehash all the subsequent blocks as well.

  3. the target number to guess the nonce can be lowered to increase the complexity (or increased to lower the complexity) to make sure that it takes about the same time to mine a block even if there are more (or less) miners joining

1 Like
#4486

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

  • To prove that they put in the work to guess the nonce, to solve the cryptographic puzzle, in order to get the mining incentives such as a block reward and transaction fee.

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

  • A change in any block will invalidate all of the following blocks, they will all need to be mined again to get the correct hashes. In order to change previous blocks you would need 51% of the hashrate (known as 51% attack).

How does the network regulate mining difficulty?

  • When there are more miners, the target threshold is lower which makes it more difficult so that the miners spend more energy to prove they did the work to guess the correct nonce.
1 Like
#4487

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

Requiring miners to use much electricity (and often much money) to mine BTC, increases the degree of incentive for miners to do their job and to follow the BTC network rules. This way. if they do their proper work, and follow the rules, they get valuable BTC. If they fail to properly do their work and if they do not follow the rules, they risk losing their invested resources of electricity, and for many miners (if they do not have a free source of electricity) this results in them losing money. Since miners are likely to want to gain money instead of lose money, the requirement of using a lot of electricity provides good incentive.

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

Because they would need to not only change that block, but also change every block which came after the changed block. This would require mining all these blocks again, which would be very expensive. It is also not likely to happen in the real world, unless they controlled the majority of the BTC network. A single computer, with today’s technology would require very much time to mine all the new blocks again. Also, the BTC network chooses the longest blockchain as the correct one. This makes the task of replacing the blockchain even more difficult, since the majority of miners continue to add to the same chain as before, and as the blockchain becomes longer, there are more and more blocks to replace.

How does the network regulate mining difficulty?

When there is more computer power, or more active miners, on the BTC network, the level of difficulty is increased by requiring block hashes to be lower and lower, in comparison with a target number (which becomes lower to increase difficulty). Since there are few numbers between zero and a particular low number, this low number provides fewer correct answers available for solving the BTC mining problem. Mining computers guess again and again, and many hashes are higher than the low target number. Therefore mining computers generally need to provide more guesses about the correct nonce, to get a hash which is low enough to be less than the target number.

1 Like
#4488

Why is it important to make sure that miners spend money (on electricity) while mining?
Because it is a proof of work.
This ensures miners play by the rules as they need incentives to compensate the money spent as well as some profit.

Why would it be very difficult for someone to go back change a previously added block?
Because all next and following blocks would need to be changed too as they are all cryptographic related.

How does the network regulate mining difficulty?
More miners, more difficult the puzzle.
This is done by using a target, so only hash numbers less than this target would be accepted by the network.

1 Like
#4489
  1. Why is it important to make sure that miners spend money (on electricity) while mining?

Because the proof of work keeps them accountable to do the right thing and not try to cheat the system. If they lose money while they’re mining it incentivizes them to try and get back what they put in, and the only way to do that with the least amount of effort is to mine according to the protocols.

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

If somebody changed a transaction in the previous block it would break the chain of hashes that were appended to the current block and all other blocks being solved ahead of the block where the transaction you’re trying to change resides. It would not be worth the effort and would likely take thousands of years and success is far from guaranteed.

  1. How does the network regulate mining difficulty?

The network makes the target value lower when there is more competition between miners trying to solve the puzzle.

1 Like
#4490

  1. It is important to make sure that miners spend money (on electricity) while mining because having a vested interest and investment is a good deterrent from not following the rules. The financial incentive of Block Reward and TX fees for doing the right thing encourages miners to protect and secure the network for their own benefit.

  2. It would be very difficult for someone to go back and change a previously added block because that block links sequentially forward in the chain so links forward would be broken thereby compromising the integrity of the block.

  3. The network regulates mining difficulty by utilising the hash rate which determines the difficulty of the cryptography puzzle to be solved every 10 minutes which is the time it normally takes for a block to be added to the chain. It is literally impossible to solve on your own as it would take 100s of years.

1 Like
#4491
  1. So that they perform the proof of work process to provide the award incentive.
  2. Once block data is changed the changed block’s hash value would change as well as the hash values of all blocks that come after it on the blockchain and this would cause all of these blocks to be invalidated.
  3. It regulates mining difficulty by reducing the value of the “Target” number based on how many miners are currently running on the network. The more miners the lower the target number miners have to guess to create a valid “nonce” or “number only used once” value for the block which needs to be lower than the target number. The difficulty of guessing the target number goes up as the value of the target goes lower.
1 Like
#4492

Homework on MIning and Proof of Work - Answers:

  1. That gives to the miners an incentive to follow the rules of the bitcoin network.
  2. Changes of the previously added block will cause the need to calculate the hashes of this and all subsequent blocks, which will take an infinite amount of time, since in parallel other miners will add more and more new blocks.
  3. The more miners in the network, the more difficult it is to calculate the hash.
1 Like
#4493

1.By spending money it makes the miners commit and honest about the affairs of the network.

2.its difficult to go back from output to input because once you alter anything on the block it would break the chain link so it’s practically impossible.

3.the network lowers and increase the target value depending on the mining activities at a particular time. With this it helps to regulate the mining process.

1 Like
#4494

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    To incentivize them to only do honest works on the network, because they have spent money on electricity they want their work to be accepted by the chain – and the only way it’s accepted by the blockchain is if the hashes and nonces check out with one another.

  2. Why would it be very difficult for someone to go back change a previously added block?
    Because, changing the previous block meaning having to re-solve the puzzle to link to the next block, and so on and so forth. And not to mention, they have to catch up to be the longest chain to be accepted by the network.

  3. How does the network regulate mining difficulty?
    The more transactions happen, the more difficult mining gets. The less transactions there are, the easier it gets.

1 Like
#4495

Increase in transaction doesn’t make mining difficult, in-contrast it benefit the miners because users will compete to get their transactions into the next block by including higher and higher fees as miners prioritizing the ones with higher fees.
The difficulty of mining Bitcoin is programmed to rise or fall depending on the number of miners competing to mine the next block. When there are more miners competing to find the next block, the speed at which blocks are mined increases, which in turn triggers the blockchain to make them harder to solve and maintain a consistent block addition rate to the blockchain of about one every ten minutes and vice versa.

#4496

  1. So they are incentivized to play by the rules, because if not the block they produce will be rejected by the network and they will not recover what they have spent. The only way for them to win, earn and recover their costs is by playing by the rules.

  2. Because the hash of that block will change and this would make the hashes of all the following blocks also change - the only way they could get away with it is to mine again all those blocks before the next block is added. The network always selects the longest chain as valid, so they would need to catch up which is almost impossible. Theoretically they would need to have more than 51% of the computer power of the network in order to get away with it.

  3. It is based on how many computers are mining - if there are many difficulty increases, if the “hash rate” falls then the difficulty would be lower to adjust.

1 Like
#4497
  1. Requiring an investment strengthens the financial incentive to secure the network
  2. The modified earlier block would no longer produce the same result when hashed, requiring you to also falsify all blocks after that, but even if you did that, it would never catch up to the real blocks being generated by the network, and therefore could never be selected as the genuine history
  3. By setting the target lower, the likelihood of guessing a nonce that results in a lower value decreases
1 Like
#4498

Hi @Maki thanks so much for correcting and clarifying, now I get which understanding I missed :slight_smile:

1 Like
#4499
  1. Why is it important to make sure that miners spend money (on electricity) while mining?

It is important for miners to outlay this electricity to have some form of investment themselves as an incentive to secure the integrity of the network. They stand to make a loss if they insert a malicious/incorrect transaction into a proposed block, but at the same time are incentivized to validate and maintain the consensus model and ensure all transactions are correct.

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

Due to the hashing of each block being made up partly of the hashing functions of previous blocks would make inserting false transactions into past blocks impossible without changing all fingerprints of future blocks in the change, therefore breaking all succeeding/future links in the blockchain, therefore invalidating it.

  1. How does the network regulate mining difficulty?

The network regulates mining difficulty based on the hash rate (collective CPU power of the bitcoin network). On a sliding scale it increases the difficulty of the proof of work algorithm by lowering the threshold of the “target”, the target being the the guessed hash of the cryptographic puzzle (made up of TX list, “nonce” and hash functions of previous blocks).

1 Like