1 because it is their skin in the game, they put energy up front to maybe get a reward.
2 because they would need enough energy and computing power to override the current energy and computing power spent by the network
3 by adapting the target level
1.) They will have to spend money in electricity to Mine and if not done by the rules they lose money.
2.) They will have to start from the beginning and mine again until the next block appears and it becomes nearly impossible.
3.) It depends on the target. Lower the target more the difficulty increases because there are lower possibilities of guessing the nonce.
Why is it important to make sure that miners spend money (on electricity) while mining?
A: electricity is the actual representation of energy spent on mining blocks and in a sense it grounds the work to the physical world. Miners who spend the electricity then get rewarded with the Block Reward and Transaction feeâs
Why would it be very difficult for someone to go back change a previously added block?
A: Because of the cascading effect that would make the links connecting each block thereafter invalid. Essentially this cascading effect will occur because the block that was modified will have itâs hash # change and thus any block after it will notice the hash has changed and will sever the connection. The person would then have to re-mine every block thereafter which will be impossible because they wouldnât be able to catch up to the longest chain which would keep getting longer as long as miners keep mining.
How does the network regulate mining difficulty?
A: By the target which is a number that depends on the difficulty of the bitcoin network
Making miners to spend electricity incentivizes then to be honest to collect rewards. If a miner decide to alter transactions his block will be invalidated making him lose money.
The consensus algorithm will always take the longest chain as the truth. If a miner decide to change the past he will need to mine again all the block to the current day. But this is impractical in a very competitive space like bitcoin because other miner will keep expanding the chain. This way the consensus algorithm will always chose the other chain making the dishonest miner to lose money.
The network has a estimated time of 10 minutes per block. In case the estimated time goes lower due to a high hash rate power the network will establish a lower target for the has function making it more difficult for miners to go below the target. This ways time do mine blocks will go up again.
1. Why is it important to make sure that miners spend money (on electricity) while mining?
Paying for the electricity gives miners the incentive to calculate hashes quickly and keep the blockchain going (without tampering with it).
2. Why would it be very difficult for someone to go back and change a previously added block?
That someone would have to re-mine that block and all subsequent blocks. This makes no sense from a time perspective (they would never catch up as more blocks are being produced approximately every ten minutes) and it is also dishonest.
3. How does the network regulate mining difficulty?
Difficulty is regulated by the target number. The more miners are working, the lower the target number becomes and the more difficult it is to arrive at the correct hash. Fewer miners make for a higher target number and less difficulty calculating an acceptable hash.
Itâs important to make sure that miners spend money on electricity while mining because that way they are incetivised to mine by following rules to make enough money to gain profit.
It would be very difficult for someone to go back and change a previously added block because the further back we go in the the blockchain history the difficulty of making profit by making that change expontionaly grows. New blocks are created every 10 minutes andso not only we need to spend large amount of electricity to get back to the starting block, we need spend expontionaly more electricity to catch up to the new blocks. Our mining power needs to be at atleast 51% of the hash rate of the blockchain in order to catch up.
The network regulates mining difficulty by lowering the target range for the hash if the amount of miners is large, and raising it if the amount of miners invested at that time is small.
Homework on Mining and Proof of Work - Questions
Why is it important to make sure that miners spend money (on electricity) while mining?
By spending money through electricity the miners are rewarded with incentives for following the rules.
Why would it be very difficult for someone to go back change a previously added block?
It will compromise the integrity of the previous block and play catch up twice as much due to a broken block.
How does the network regulate mining difficulty?
More miners, more difficult the target nonce will be. Less miners, it will be easier.
It incentivises the miners to play by the rules. Miners spend a lot of money on electricity. The only way they can recoup that cost and make a profit is by playing by the rules and trying to win the block reward and transaction fees.
It would change the hashes of all subsequent blocks. That means all those links would be broken. A person would have to remine that and all subsequent blocks, that would take a long time. Even if someone could do that, their blockchain would be shorter as other miners wouldâve been working on more recent blocks in the meantime. The nodes in the network would accept the longer blockchain.
If the number of miners drops, the nodes raise the target. This increases minersâ chances of finding a hash below the target to get their block in the blockchain. Miners need to make less guesses and spend less on computing power. If the number of miners goes up, the nodes decrease the target, this decreases minersâ chances of finding a hash below the target. They have to guess more and use more computing power.
A// because by that way we make sure they are following the rules and the protocols so they really desserves the block rewards.
A// it would be very difficult for some one to go and change and added block because it will change all the hash in all the blocks and he will need to memorize all the nonce of each block.
PoW uses electricity to generate, and its another way to ensure that Miners are incentivised to NOT cheat. Cheating will cost them more in hardware and electricity, so it makes more sense to play by the rules.
The hashes of all blocks will change from that point going forward.
It there are more miners then the TARGET gets set to be a lower number. This means that it gets more difficult to generate a HASH that is lower than the TARGET.
Spending money to create blocks is part of the incentive structure that ensures honesty.
All blocks are linked through hashes. If data of a previously mined block was altered, all other blocks that come after it would need to be re-mined which is virtually impossible.
When the difficulty is high (i.e. there are many miners), the target number for the nonce becomes lower. This means there are fewer nonce possibilities and miners need to work harder to find the nonce.
Answer: Because there is no central authority on the blockchain, network participants have to have some kind of reassurance that others are playing by the rules. What can be better proof than investing lots of your own money before you can make any. This is exactly why miners are incentivized not to cheat, they do not want their investments go to waste. They want to earn incentives that come with mining a new block.
Answer: each block has a unique hash that is generated based on the transactions data in this block and hash of the previous block. Therefore, if you change any transaction in the previous block, the link between two blocks breaks. Theoretically speaking, you can remine the block. But while you do that other participants continue adding blocks and you wonât be able to catch up with them.
Answer: in order for miners to add their block to the blockchain, they have to solve a complex mathematical puzzle - they have to guess a nonce that is then becomes part of the block and will be generated together with TXs list and previous hash to give a new block a hash. However, nonce has to be guessed in such a way that a new block hash is below a certain target. Target is a number dependent on the difficulty of the BTC network. The more miners are participating in mining, the lower the target would be, making it harder for miners to guess the nonce.
Homework on Mining and Proof of Work:
The money spent on electricity during mining provides the incentive of following the rules to earn back the lost currency and/or making a profit. Therefore, without the major amount of electricity used, miners wouldnât have as much of an incentive to complete their work correctly and efficiently.
The link and hash to every block is based off the previous block. Meaning, if there is a minuscule alteration in any transaction, the rest of the hashes and links will be invalidated. It would be nearly impossible to re-mine every single affected block, making the task of alteration extremely difficult.
The target value will decrease or increase, increasing or decreasing difficulty, depending on the amount of miners within the network.
spending money makes the incentive to make money stronger which makes miners be honest when mining since that is the best way to make money while mining.
changing anything in a block will change the hash, which will change every block after it since the previous blocks hash is used to make the new blocks hash. to fix this every block would need to be re-mined as well as the new blocks which would take so much computing power that it would be more profit able to simply mine honestly.
mining difficulty is decided by the amount of miners mining on the chain, more miners means
higher difficulty.
It is the incentive mechanism. When they spend energy solving the puzzle repeatedly, the opportunity cost of following the rules is higher than trying to cheat the network because they have already given something for this trade to get rewards.
Because when you make a tiny change on the previous block all hashes of the later blocks would be different. Itâs practically impossible to catch up with the current block.
When miners increase, the difficulty of the network increases because the target number gets smaller.
It is important because it incentivizes them to verify correctly, otherwise they are wasting their time, energy and money. This is a great model
It is virtually impossible to go back and change a previous block because then you will have to update every block that is linked to the one you are attempting to change. This is because every block is hashed according to the data on the previous block!
The network regulates mining difficulties with extra incentives for blocks that are harder to verify based on the target. Some are much more difficult to mine and guess depending on the hash difficulty.
It gives the miners the incentive. The more money they spend on electricy the more they will try to find the next block, to compensate their loss.
The new block hash goes off of the last blocks hash. So changing a previous transaction (function) will break the chain that comes after the current block that is being changed.
The increased number of miners makes guessing the lower target number even more difficult.
Because they keep loosing money while doing so (spending it on electricity) so they are incentivized to keep playing by the rules and win blocks & fees, thereby making a profit.
Because all blocks following the changed one would need to be changed as well, including their hash links. This is very energy (electricity) and time consuming for an intruder, let alone that all other honest miners will continue building the unchanged blockchain so the intruder would even need to catch up with those minors (of which there are many nodes).
Based on the number of miners. The more miners, the lower the target. Lower target corresponds to a narrower range in possible correct hashes for the next block.