Homework on Mining and Proof of Work - Questions

Blockchain and Bitcoin 101
#4760

Homework on Mining and Proof of Work - Questions

  1. It’s important because miners are encouraged to play by the rules since they’ll be firstly spending money (electricity) in order to make money (getting the block they created inserted into the blockchain and it being accepted by all the network).

  2. Because every subsequent block that goes on in the blockchain was created based on the hash of the previous block. So, if you change anything at all at a previous block, all the other subsequent blocks would have to be mined again… And, of course, it would have to be accepted by every other node too.

  3. It’s based on how many miners are mining at the moment. If the quantity of miners is high, the target number becomes lower, and the nonce, which is this random number that the miners have to guess, has to be lower than this target number.

#4761
  1. Why is it important to make sure that miners spend money (on electricity) while mining?

Miners must follow the rules of the blockchain network to not alter history, censorship, double spend. Investment on hardware computers CPU power to have a higher hash rate, more competition and better chance of solving the puzzle for the next block before other miners.

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

The block and link will be broken.Nodes will see that the transaction is invalid and have to solve a new puzzle for the next block.

  1. How does the network regulate mining difficulty?

The more miners you have on the bitcoin network. The less target of difficulty will go up to to solve the puzzle.

#4762
  1. Miners spending money on electricity makes it costly and difficult for attackers to rewrite the blockchain or double-spend transactions.
  2. Changing a previously added block is very difficult because it requires changing the hash of that block and all subsequent blocks, and would be immediately detected by other nodes in the network.
  3. The network adjusts mining difficulty every 2016 blocks, based on the total computational power of the network, to ensure a consistent rate of block additions.
#4763
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    secure the network
  2. Why would it be very difficult for someone to go back change a previously added block?
    its impossible because you can not cheat the system
  3. How does the network regulate mining difficulty?
    if its low than its harder
#4764
  1. So they will be incentivized to recoup the money spent from electricity usage.
  2. Because it will change subsequent hashes which will require nonce’s to be guessed again.
  3. Through the usage of target numbers.
#4765
  1. It is important to make sure that miners spend money on electricity while mining because this is what incentivizes them to participate in the mining process and maintain the integrity of the blockchain network. When miners spend money on electricity, they are essentially competing with each other to solve complex mathematical problems in order to validate transactions and add new blocks to the blockchain. The miner who solves the problem first is rewarded with newly minted cryptocurrency, which they can then sell on the open market. Without this incentive, miners would have no reason to participate in the network and the blockchain would not function properly.
  2. It would be very difficult for someone to go back and change a previously added block because doing so would require them to solve the mathematical problem associated with that block and all subsequent blocks in the chain. This is because each block contains a unique cryptographic hash that is based on the contents of the block and the hash of the previous block in the chain. If any part of the block is changed, the hash will also change, which would make it invalid. In order to change a block, an attacker would need to have enough computational power to re-solve all of the mathematical problems associated with that block and all subsequent blocks before any other miners on the network. This is known as a 51% attack and is extremely difficult and expensive to pull off.
  3. The network regulates mining difficulty through a mechanism called the “difficulty adjustment algorithm”. This algorithm is designed to ensure that new blocks are added to the blockchain at a consistent rate, regardless of changes in the amount of computational power being used by miners on the network. When there is more computational power being used, the algorithm increases the difficulty of the mathematical problems that miners must solve in order to add new blocks. Conversely, when there is less computational power being used, the algorithm decreases the difficulty of the problems. This ensures that the blockchain remains secure and stable over time.
#4766

  1. The reason why it is important for miners to spend money on electricity while mining is to ensure that they have a financial incentive to participate in the network and to discourage any malicious behavior. When miners expend resources, such as electricity, in order to mine, they are essentially investing in the security of the network. This investment gives them a stake in the success of the network and provides a financial incentive for them to act in the best interest of the network.

  2. It would be very difficult for someone to go back and change a previously added block because of the way the blockchain is designed and secured through cryptography.

Each block in the blockchain contains a unique cryptographic hash, which is a mathematical algorithm that takes the contents of the block and produces a fixed-length string of characters. This hash is based on the contents of the block, including the transactions within it, the previous block’s hash, and other metadata. Even a small change in the contents of the block will result in a completely different hash.

  1. The network regulates mining difficulty through a process called “difficulty adjustment.” The goal of difficulty adjustment is to maintain a consistent rate of block production, regardless of changes in the amount of mining power on the network.
#4767

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

    To incentivise the miners to play by the rules. If miners didn’t have to pay any money to mine, they could play as bad actors without having to pay anything in the meantime. Miners pay money upfront to be rewarded later if they play honestly.

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

    You can theoretically go back and change a previous block, but this would change its hash. As a consequence, all the hashes of subsequent blocks will be changed. Hence, you would need to re-hash all the subsequent blocks and you would also need to catch up with the new blocks being created in the meantime. This is impossible to do.

  3. How does the network regulate mining difficulty?

    By changing the target for the nonce approval. The lower the target the higher the mining difficulty. My changing the target the network can regulate itself.

#4768

question one: Ensuring that miners spend money on electricity while mining Bitcoin is crucial for maintaining the integrity and security of the Bitcoin network. Here’s why it’s important:

  1. Security through Proof of Work: Bitcoin relies on a consensus mechanism called Proof of Work (PoW), where miners compete to solve complex mathematical puzzles. The miner who successfully solves the puzzle gets to add the next block of transactions to the blockchain and is rewarded with newly minted Bitcoins. This process requires a significant amount of computational power, which in turn requires a substantial expenditure on electricity. The cost of electricity acts as a deterrent against malicious actors attempting to attack the network by overwhelming it with their computing power. The economic investment in electricity ensures that miners have a vested interest in maintaining the network’s security rather than attempting to undermine it.

  2. Protection against 51% attacks: A 51% attack occurs when a single entity or a group of colluding entities controls more than 50% of the network’s mining power. In such a scenario, they can potentially manipulate transactions, double-spend coins, or disrupt the network’s normal functioning. The cost of electricity acts as a barrier against such attacks because acquiring and maintaining a majority of the network’s mining power would require an enormous investment in hardware and electricity. The expense acts as a deterrent, making it economically impractical for any individual or group to control the majority of the network.

  3. Incentivizing network participation: Bitcoin mining is a competitive process, and miners invest significant resources, including electricity costs, to earn rewards. The electricity expenses act as an incentive for individuals and organizations to participate in mining, thus ensuring a decentralized network with multiple participants. This decentralized nature is crucial for the resilience and long-term viability of the Bitcoin network, as it reduces the risk of a single point of failure and enhances overall network security.

  4. Difficulty adjustment mechanism: The Bitcoin network has a built-in mechanism that adjusts the difficulty of the mining puzzles approximately every two weeks. This adjustment is based on the total computational power dedicated to mining. If miners suddenly stop spending money on electricity, the network’s computational power would decrease, and the difficulty adjustment mechanism would kick in, making mining easier. This adjustment ensures that the average block time remains around 10 minutes, regardless of changes in network participation. Maintaining a consistent block time is essential for the reliability and smooth operation of the Bitcoin network.

Overall, the expenditure on electricity by miners plays a vital role in maintaining the security, integrity, decentralization, and stability of the Bitcoin network, making it resistant to attacks and ensuring the continued trust and adoption of the system.

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

the blockchain structure, the PoW consensus mechanism, the decentralized nature of the network, and the economic incentives involved collectively make it extremely difficult for someone to go back and change a previously added block in Bitcoin mining. The system’s design and the distributed consensus ensure the security, immutability, and integrity of the blockchain, providing trust and reliability to the Bitcoin network.

question 3: 1. How does the network regulate mining difficulty?

The Bitcoin network regulates mining difficulty through a mechanism known as the Difficulty Adjustment Algorithm (DAA). The DAA is designed to maintain a consistent block time of approximately 10 minutes, regardless of changes in the network’s computational power. Here’s how it works:

  1. Difficulty calculation: The difficulty of mining is determined by a 256-bit target value, which is derived from the hash of the previous block. The target value represents the level of difficulty a miner’s hash output must meet to be considered valid. The lower the target value, the higher the difficulty.

  2. Target adjustment: The DAA adjusts the target value every 2016 blocks, which is roughly every two weeks. The adjustment is based on the time it took to mine the previous 2016 blocks. If the blocks were mined faster than the targeted time of 10 minutes per block, the difficulty increases. Conversely, if the blocks took longer to mine, the difficulty decreases. The adjustment aims to maintain a stable block time by adapting to changes in the network’s computational power.

  3. Difficulty retargeting: The adjustment process involves comparing the actual time taken to mine the previous 2016 blocks with the targeted time. If the actual time was shorter, indicating increased computational power, the DAA increases the difficulty by lowering the target value. This makes it harder for miners to find a hash that meets the new, more stringent criteria. Conversely, if the actual time was longer, suggesting a decrease in computational power, the DAA raises the target value, reducing the difficulty and making it easier for miners.

  4. Smooth difficulty transitions: The DAA includes mechanisms to ensure smooth transitions between difficulty levels. It utilizes a weighted average of the last 2016 blocks to calculate the adjustment, which helps mitigate sudden changes caused by short-term fluctuations. This prevents rapid swings in difficulty and promotes stability within the network.

  5. Self-correcting mechanism: The DAA continuously adjusts the difficulty every 2016 blocks, making the system self-correcting. If there is a sudden increase in mining power, the difficulty will adjust upwards to maintain the target block time. Conversely, if mining power decreases, the difficulty will adjust downwards, encouraging miners to continue participating.

By dynamically adjusting the target value based on block times, the Bitcoin network’s DAA ensures that the mining difficulty adapts to changes in the network’s computational power. This mechanism helps maintain a predictable block time, ensuring the network’s stability and the consistent issuance of new Bitcoins.

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#4769

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    Incentives help to keep miners honest and the blockchain honest.

  2. Why would it be very difficult for someone to go back change a previously added block?
    Because it would change the hash affecting all blocks that follow.

  3. How does the network regulate mining difficulty?
    An increase in miners increases the hash and lowers the target

#4770

[quote=“ivan, post:1, topic:8439, full:true”]
Homework on Mining and Proof of Work - Questions

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    So they stay honest and dont cheet. If not used resources, than any bad actor can change blocks with no deducation.

  2. Why would it be very difficult for someone to go back change a previously added block? Because it will take crazy amount of time and effort to check preduced hashes, witch are conected from previous blocks(transaction, previous transaction, conection link hashes)

  3. How does the network regulate mining difficulty?
    It uses a so called target. If target is low than difficulty is high. Target is framed, if you may say, and difficulty is basicly determined of amount of miners.

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#4771

1 Why is it important to make sure that miners spend money (on electricity) while mining?So they are incentivized to play by the rules in order to make back the money they spent on electricity.
2 Why would it be very difficult for someone to go back change a previously added block? Because the hash for every block depends on the hash of the previous block.
3 How does the network regulate mining difficulty? Difficulty increases with an increase in miners.

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#4772
  1. It is important for miners to spend money on electricity to incentivize accuracy so that they can recoup costs if they get the block reward. If there was no cost to mine, then there is no backing of the network. It is basically the gold to back the dollar (even though fiat doesn’t work like this anymore). Without a cost there is no value to the network.
  2. It would be extremely difficult, if not impossible, to change previous blocks because it makes every block mined thereafter invalid. By changing a previous block you negate all blocks mined since that particular block. The mining network always chooses the longest chain of blocks, and therefore your own chain of blocks will not correspond with the longest chain, and automatically be invalidated.
  3. The network regulates mining difficulty by adding a lower taget number based upon the overall hash power of the network. The higher the hash power, the lower the target and the lower the target, the more difficult it is to guess the nonce.
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#4773

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    -> Part of the Game Theory in Bitcoin’s design. Thus the cost of not playing by the rules results in exceedingly high loses if they move from the mining process

  2. Why would it be very difficult for someone to go back change a previously added block?
    -> Because the of the Hash algorithm which entails that going backwards would be cryptographically impossible due to the interlinked keys of each block. So in theory going back you’d need to know the genesis seed which is almost impossible and to try do so would in turn break the chain and compromise the integrity of the entire blockchain

  3. How does the network regulate mining difficulty?
    -> The in-built protocol lowers and raises the difficulty of the target to keep blocks as close to 10 min apart as possible

1 Like
#4774

1. Why is it important to make sure that miners spend money (on electricity) while mining?
Bitcoin forces miners to solve puzzle by comparing current hash(made up of previous block hash, current block transactions, and random nonce) to 0 – Target#, This process forces miners to use electricity.

2. Why would it be very difficult for someone to go back change a previously added block?
Any changes made to previous block transactions changes the current block’s previous hash… which in turn change all blocks hash in a blockchain.

3. How does the network regulate mining difficulty?
The more miners in the network, the nonce target is lowered; thus, increasing the miner’s difficulty in mining the current block hash against the 0 – target#.

#4775

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

    1. This incentivizes miners to not cheat.

  • Why would it be very difficult for someone to go back change a previously added block?
    2. Because the entire chain is holistically tied together with a “hard to fake” number.

  • How does the network regulate mining difficulty?
    3. Network difficulty is regulated by the ratio of current difficulty verses the first block’s difficulty.
    The target is lowered to increase difficulty.

1 Like
#4776
  1. It’s important for miners to spend money on electricity because it ensures the safety and robustness of the network. PoW is powered by electricity. The computational power it takes to store the Bitcoin ledger in its entirety and the ongoing attempts to mine the next block require large amounts of electricity. Miners are incentivized to spend this amount of money on electricity up front by the potential of a future payout which is obtained by mining the next block, winning the block reward, and collecting the transaction fees.

in other words, it’s important that they spend money because then they have “skin in the game”.
By spending this money they are keeping the network operational, and safe from attack.

  1. The possibility of changing a listed transaction in a previous block in the blockchain is practically impossible. Essentially, they would have to start a new chain that contains every previous block in the blockchain. Because the bitcoin protocol always recognizes the longest chain as the right one, the miner would need the computational power and electricity to change the whole of the blockchain which, at this point in time, would take thousands of years. And since there is a new block mined around every 10 minutes, this is impossible.

  2. The network adjusts difficulty approximately every two weeks or 2016 blocks. If the previous 2016 blocks were mined faster than 10 minutes on average, the difficulty increases proportionally. If the previous 2016 blocks were mined slower than 10 minutes on average, the difficulty decreases proportionally.

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#4777

  1. Miners spending electricity to engage in the mining process ensures they participate in securing the network through the pursuit of incentives. The miners’ spending on electricity incentivizes them to follow the rules in order to reap the rewards, which in turn secures the network.

  2. Because every subsequent block is based on the hash of the previous. This means that any change to a block will break all blocks in front of it. It is theoretically possible that you could re-mine the blocks in front of the altered one, however, because the network always chooses the longest chain, you would have to be mining 2 or more blocks faster than everyone else is mining one. This makes changes to the network theoretically possible, but practically impossible.

  3. A new block will only be accepted if the hash of that block is below the target determined by the network. The target changes based on the hashrate, which is indicative of the number of people and the amount of processing power engaged in mining. If there are more people mining, the target gets lower, making it more difficult to guess the nonce and mine the block. Vise versa, if there are few people mining, the target gets higher, making it easier to mine a new block and gain the incentives for doing so.

#4778

By having the miners invest upfront by paying for electricity, they are incentivized to play by the rules and to get the rewards (Bitcoin block rewards and transaction fees).

If a miner attempts to change any of the transaction data from a previously based block it actually changes the hash from all the previous blocks and disrupts the entire chain. You would essentially have to do a 51% attack on the network which even countries are not able to do.

Mining difficulty is changes by changing the nounce number. A nounce is a random number that is included in the hash function. The hash function consists of transactions + previous hash + nounce. The nounce can be designated a number from 0 to infinity and when the nounce number is closer to zero the the mining difficulty is very hard.

#4779

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    This incentives the miners to play by the rules of the network and not cheat, as since they’ll receive a compensation and else would have a monetary loss.

  2. Why would it be very difficult for someone to go back change a previously added block?
    This would force you to re-mine all previous blocks that came after, while new blocks are created which one would have to catch up to. While this may be possible in theory, it is not in reality. It would also cost an immense amount of resources, which would much further incentives someone to instead continue mining at the current block as they would gain a higher monetary benefit from it.

  3. How does the network regulate mining difficulty?
    When there is more miners, the difficulty increases by making the target lower. With less miners the difficulty will become lower. It regulates this in a way so that a new block is mined every ~10 minutes