Homework on Mining and Proof of Work - Questions

Blockchain and Bitcoin 101
#4620
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    [Ans] This is to ensure that the miner has a stake involved in the process. If they do any fraudulent activity that can be identified easily by other nodes and process of blockchain. Then their chain is rejected and they lose on the Block-Reward as well as Transaction-Fee. Eventually, they end up losing more money. The whole process becomes more rewarding to do things legitimately rather than using fraudulent methods.
  2. Why would it be very difficult for someone to go back change a previously added block?
    [Ans] All blocks in the blockchain are linked with previous ones to form a chain. The linking is based on the hash of the previous block(i.e. Content). Any changes to the previous block require to re-mine all the subsequent blocks as well. Also, news blocks will get appended while someone re-mines previous blocks. It becomes impractical to match the rate as only the longest and legitimate chain is accepted. Also, the amount of computation and electricity one has to spend doesn’t justify the outcome of something which is impractical
  3. How does the network regulate mining difficulty?
    [Ans] Blockchain process inherently adjusts the target value so that the number of success possibilities reduces compared to the invalid results. By lowering the target values the number of successful results reduces so the chances of getting a successful hash becomes less and hence difficulty increases.
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#4621
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    The potential loss of funds miners spend on electricity acts as their incentive to behave as good actors who ensure the blockchain is accurate and obeys the rules.
    Attempts to be dishonest result in a loss of money (spent on electricity), whereas honest behaviour results in receiving block rewards and transaction fees.
  2. Why would it be very difficult for someone to go back change a previously added block?
    Changing a previous block would require the bad actor to also change every subsequent block accurately, which is near impossible to do.
  3. How does the network regulate mining difficulty?
    The network will raise or lower the target hash. To adjust difficulty upwards the target is moved downwards, and vice versa to decrease difficulty. Lowering the target means there are fewer possible hashes which will be below the target, making the process of guessing a nonce which results in a hash below target more diffcult.
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#4622

  1. Making miners spend money on electricity will incentivise them to remain truthful as they would want to get their block accepted completely

  2. Because changing the one block will mean all other blocks prior and after would also need to be adjusted and mining each one individually will take pretty much infinity to do. Even if they somehow had all the hash in the world apart from one miner, that miner would find the next block before they would be able to adjust all other blocks

  3. The network regulates mining difficulty based on total hash rate of the network (all miners total hashes added) at the given adjustment time which is every 2 weeks and adjusted accordingly.

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#4623

  1. cause the money spent is lost if the miners are not able to recover the cost by mining new valid block and get paid the block rewards and fees. This is a deterrent against bad actors and may be an incentive to run mining more efficiently (reducing cost vs probability of mining a block).

  2. Cause resolving the puzzle for the block may require huge amount of time and even if completed all the subsequent blocks will have to be minted again. So there would be a completion between the miners trying to re-mine old blocks and the miners working on the current chain and this could only be won over time if the first group has more hashing power than the second group.

  3. By setting a lower target for the block hash

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#4624
  1. They need an incentive, with no incentive it would lead to bad consequences.
  2. Every block is hashed by the data inside the block.
  3. After 2,016 blocks mining difficulty is adjusted. The adjustment difficulty depends on the number of participants.
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#4625

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    Spending money on energy to mine is an upfront cost that incentivizes miners to play by the rules as they are trying to solve for next blocks - they will only receive rewards to cover the cost of the invested energy if they solve blocks accurately.

  2. Why would it be very difficult for someone to go back change a previously added block?
    New blocks in the chain are contingent on former blocks, so editing a previously added block would disrupt/invalidate the subsequent blocks and then there would be an unreasonable amount of work to solve for multiple blocks that would need to be re-solved while the rest of the miners in the network are already working on the next one block at the end of the chain.

  3. How does the network regulate mining difficulty?
    The target is higher when difficulty is low, making it easier to solve blocks. When difficulty is high, the target is low making it harder to solve blocks.

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#4626
  1. Why is it important to make sure that miners spend money (on electricity) while mining?

If they spend money they will be incentivized to make their money back and make a profit and disincentivized to brake the rules.

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

Because it would take more computational power than is available globally to do it making it effectively impossible.

  1. How does the network regulate mining difficulty?

When there are not so many people mining the probability that they will win the block is high, when there are a lot of people mining the probability is very low and takes a lot more resources to do it.

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#4627

Homework on Mining and Proof of Work - Questions:

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    To ensure security and make sure the miners will follow the rules strictly to get incentives.

  2. Why would it be very difficult for someone to go back change a previously added block?
    Because this person will have to re-mine all blocks since this added block while new blocks get created and that only the longest blockchain gets validated.

  3. How does the network regulate mining difficulty?
    By monitoring the hash rate and defining the target for which the nonce must be lower.

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#4628
  1. For miners to insert a block to the blockchain, they have to compute the mathematical puzzle, and for that he/she has to have a good infrastructure. In this race, the miner who has best in class infrastructure, will obviously spend money in electricity to run the systems continuously. Invest prior in the form of electricity to get the reward as bitcoin on successful completion of inserting a new block to the blockchain.
  2. Blocks are chained using the data, nonce and previous block hash, if some changes the data, the the subsequent blocks in the blockchain will be invalid.
  3. More the miners in the network increase the difficulty by lowering the target value.
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#4629
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    This essentially keeps miners honest so that they are properly incentivized.

2.Why would it be very difficult for someone to go back change a previously added block?
If a hash is changed all subsequent hashes would have to be re-hashed, along with any new blocks added to the chain. This apparently would take a very long time.

  1. How does the network regulate mining difficulty?
    The random number, nonce, a real word by the way(I had to look it up), ranges to make mining easier or more difficult. A lower nonce makes mining more difficult and vice versa
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#4630
  1. They spend money to mine so they must follow the rules to get the rewards.
  2. If there is any change in a previous block it will change everything and break the link to the next blocks,
  3. More miners mean the difficulty to guess the nonce is increased by lowering the target
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#4631
  1. So that they are incentivized to be honest and not cheat.
  2. Because it is not enough for them to change the previous block. The entire network has to accept the change and that is difficult and expensive
  3. By changing the number of leading zeroes in the hash (puzzle)
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#4632
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    Because money spent is the source of block rewards, it is important.
  2. Why would it be very difficult for someone to go back change a previously added block?
    Because of each block hash is based, partially on previous hash block, he would have to change all the blockchain for the one little change done.
  3. How does the network regulate mining difficulty?
    The more miners are on the network, the more target number is, the more the difficulty is.
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#4633

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    To incentivize them to follow the rules and profit from their mining, the electricity used is their investment in their mining process.

  2. Why would it be very difficult for someone to go back change a previously added block?
    Not only would changing a single block require the entire block be completely solved again, but every block that had been published after that block would also require re-solving, since such a change would break every block released prior to the original change.

  3. How does the network regulate mining difficulty?
    Hash difficulty (target) is based on the number of miners attempting to solve the block, therefore, the more miners, the lower the target will be, and greater the solution difficulty.

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#4634
  1. It is important to make sure miners are spending money on electricity so that they are incentivized to make profit to recoup their losses from what they spent on electricity.
    2.Going back and changing something from a previous block would undo all the blocks attatched to the block you changed. Then having to remine all the blocks by yourself would take thousands of years and by that time you would have hundreds of more blocks you need to mine to catch up since the block chain always uses the longest chain.
  2. The network regulates difficulty by picking a number between 0 and infinity for miners to guess and the closer that number is to zero the higher the difficulty. The network regulates difficulty based on how many machines are mining at a given time.
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#4635
  1. So they are staying honest and not cheating
  2. Because it would be very costly and they would never be able to catch up to the front block.
  3. By making the target number very low so the puzzle is harder to solve
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#4636

Homework - mining

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

They have to spend money to get something in return, because the miner wants to make money and having to spend first makes him obey the protocol rules otherwise he would have spend money and gets nothing in return.

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

Because if a previous block gets changed it will also change the hash protocol, which is linked to the next blocks. Meaning he has to change the blocks after too and that will only cost a lot of electricity and gets rejected by the other nodes.

How does the network regulate mining difficulty?

It’s regulated by the amount of miners active at that particular moment. The more miners are active means the lower the number of the hash rate has to be. This makes it harder for the miner to guess the number.

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#4637

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    Because it forces the miners to put some skin in the game. If it was free to mine BTC there would be no value to BTC or the network. The network would lose its immutability and security as miners would be able to go back and change transactions with no cost to them

  2. Why would it be very difficult for someone to go back change a previously added block?
    If they changed a previous block they would have to go back and update every block that came after the block they changed. This would be extremely expensive

  3. How does the network regulate mining difficulty?
    Every 2,016 blocks (every two weeks) the network determines whether the miners activities have reduced or increased the time it takes to mine a new block. This ensures that no miners ever fully “crack the code”. It essentially resets the rules to an extent every few weeks which forces miners to adjust

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#4638

Why is it important to make sure that miners spend money (on electricity) while mining?
=> So that they are invested in solving the cryptographic puzzle. I.e. so that they have an incentive to recover these incurred costs.

Why would it be very difficult for someone to go back change a previously added block?
=> Because this person would have to mine all blocks that are more recent than the one that was changed whilst the rest of networking is producing new blocks every 10 minutes. And mining demands heavy computing power so the miner would have to beat the computing power of the rest of the network (what could be done with a 51% attack)

How does the network regulate mining difficulty?
=> The more computing power the network has, the lower the target for the block hash. The target is adjusted every 2016 blocks (roughly every 2 weeks)

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#4639

  1. Miners spending money on electricity while mining ensures that there is incentive to being honest.

  2. Because it would change the hash of each succeeding block in the chain, requiring you to rework each block after it. In this time, miners will be adding new blocks and the longest chain of blocks is always accepted.

  3. Network regulates mining difficulty by setting a target hash. The more mining power on the network, the lower the target. The lower the target, the less amount of acceptable hashes.

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