Homework on Mining and Proof of Work - Questions

Blockchain and Bitcoin 101
#667

Q1: This ensures the miners will play by the rules by forcing them to spend money before they are rewarded for their mining efforts.

Q2: When one block is changed this changes the hash or digital fingerprint of all other blocks before it and the ones to come so it makes it close to virtually impossible to alter any blocks and enforces miners to play by the rules.

Q3: The more miners on the network actively mining causes the target to lower making it more difficult for miners to guess the NONCE needed to claim their rewards.

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#668

  1. Miners need to spend electricity during mining to satisfy the proof of work (PoW) and play by the rules before getting block rewards and transaction fees. This ensures security and immutability of the blocks.

  2. It is infeasible to go back and change a previous block because in doing so, you will change the hash of all previous blocks and future blocks. To then solve the puzzle and find the target hash will be impossible.

  3. The network regulates mining difficulty by the number of miners in the network. The lower the hash target, the higher the mining difficulty.

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#669
  1. Why is it important to make sure that miners spend money (on electricity) while mining? It is important so that the miners will play by the rules. It keeps integrity in the network by incentivizing the miners for their hash power.
  2. Why would it be very difficult for someone to go back change a previously added block? They would have to change every block before that as well. That is impossible. On top of that, they would have to catch up to the blocks already being mined.
  3. How does the network regulate mining difficulty? The target for guessing the nonce is low when there are more miners on the network. The hash of the new block should be below the target.
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#670
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    the miner have an incentive to follow the rules since the are spending money on the mining process
    2.Why would it be very difficult for someone to go back change a previously added block?
    if you change anything you to the previous block the next block will no link and blocks after that
3.How does the network regulate mining difficulty? the nonce is increased by lowering the target ,as more miner join the network
#671

1:
Incentives.
Miners want to earn money by securing the network
TX fees and Block Rewards (BR)|
Miners loose money if the break the rules of the protocol|
PoW – Proof of work – Consensus algorythem . One single version of the truth

2:
Links between blocks are very special – Based in information in the previous block|
If changes are made in a earlier block the link will be broken, then all above links will be broken
All nodes will see that the given block is invalid
The network will always choose the longest chain (PoW) and therefore not a broken chain

3:

  • Each block has a hash = digital fingerprint
    • Hash of the block is based on all TXs in the block
    • Based on the hash in the previous hash
    • Based on a nonce (random number)
  • Hash is just a number
  • Miners must guess a number that is less than target. To guess the nonce number

That is the puzzle and made so that miners spend money on electricity and this is the incentive to do the mining = BR and TX fees.

Target is low when difficulty is high. The more miners on the network the lower the target will be = more difficult to guess the nonce.

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#672

  1. Its important that the miners invest. Sow you get proof of work, is they not follow the rules they lose money.

  2. If there is a change somewhere in the previous block, everything will change. It would break the line too the next block.

  3. More miners means that the difficultly will be higher. Its harder to make the puzzle.

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#673
  1. Spending money is the Proof Of Work that the miner solved the puzzle
  2. The hash is a mashup of the previous hash, current transactions, and the nounce. Changing a transaction breaks the cryptographic link between the previous block and all future blocks. To re-mine all the blocks it mathematically impossible given time constraints.
  3. More miners = lower target = more difficulty = higher costs = less profit
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#674

To make sure that the miners spend money, you ensure that the miners following to rules of mining. Namely, incentives to the miner “making” the right new block by following the rules. You ensure negative consequences to have a block rejected.

If you change something in a previously block everything “after it” (which means all the blocks that have been added since that particular block also will change). This is because all new blocks consist of “information” of the previous block, not just the transactions. Then if you go back in time and change a previously block, you need enough time/power to reproduce all the blocks that was later than the block you change, but also keep up with the new blocks added to the blockchane (which happens every 10 minutes). This all is basically impossible.

By a target number. A lower target number (harder) when it is more miners, and higher target number (“easier”) with less miners.

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#675

1: It ensures they follow the rules or they will be wasting money.
2: It would require huge amounts of hash power and time.
3: By lowering the nonce

#676
  1. Incentives [to get reimbursed for their mining work] are the key and for the miners .
  2. It would not only be immensely time consuming and costly, it is also impossible to do in a normal life time. So it is a useless activity. It also changes the puzzle for everything.
    3.By regulating the target and difficulty of the nonce.
#677

  1. It is important for miners to be incentivised. Not only by giving them money (fees + block reward) for doing good, but also by loosing money (electricty and equipment spent) when doing not good - and by rejecting their block.

  2. It would be very difficult to go back and change a block since when you change a block, it invalidates all the blocks after. In order for the blockchain to be valide, you need to have all blocks valid. This means that you would need to mine each block one by one after making a change so that all blocks are valid. It get even harder as while you do this, the real chain keeps on getting longer by addind new blocks so that makes even more block to mine for you if you make a change.

  3. The network regulates mining difficulty according to number of miners and hash rate. The higher the hashrate, the higher the difficulty (and the lower the nonce). The less miners, the lower the difficulty.

#678

It is important cause then they are incentivised to “recover” the money spent on electricity by behaving correctly with mining activity by following the “rules”, in fact they would lose the Block rewards and the transactions fees if they try to put “fraudulent transactions” or not act “properly”.

Changing a previously added block would mean had to re-mine all the following blocks as the hash of each following block will change entirely , anyway this operation is infeasible as require an immense amount of computational power and would require too long time that doesn’t make it worth it.

The miners try to find the nonce that produces a hash with a value lower than or equal to that set by the network difficulty. The difficulty is regulated by reducing or increasing the target Lower is the target, most difficult the mining will be.The difficulty is adjusted every 2016 mined blocks (every 2 weeks), if the hashrate is increasing in this period the mining difficult will increase as well for the following 2016 blocks.

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#679

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

  • Because if miners invest money they are more likely to follow rules, since they are inside the mining process and moreover they will gain more mining like rules than trying to find any kind of shortcut

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

  • Because every change in a block changes its hash: so the hash of the following block will be different, further following block will have a different hash and this process keeps going

How does the network regulate mining difficulty?

  • Changing the highness of the target: lower targets mean smaller probability to guess the right nonce to get an hash accepted, because there are less findable hashes
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#680
  1. The miners can accept it because they can earn money (under the form of transaction fees and block rewards) that can cover for the electricity costs. For the network, however, it’s crucial to confirm so far unconfirmed transactions in the mempool. Indeed, the miners need to play by the rules, follow the protocol, to make sure that they earn money. They are incentivised.
  2. You’d change the hash of that block, thus the following block’s hash and so on which breaks lots of links, which need to be recreated, which takes easily an exponential amount of time since other miners keep on adding to that chain. So your new chain can never be made fast enough. a) You’d compete with so many other miners. b) You would need tremendous amount of electricity to recreate the whole chain to begin with. c) the network only accepts long chains (they contain proof of work!)
  3. Lots of miners will lower the target so that the puzzle gets more difficult. If no miners are there though the target will be set very high again so that the puzzle is easy and it is easy to make money again. This will attract miners.
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#681

  1. Miners are incentivized to follow the rules because mining costs money. If Mining was free, they would have nothing from preventing them from attempting to double spend in previous blocks.

  2. If a miner went back and changed any of the transactions in a previous block, it would change the hash of that block as well as all hashes from all blocks placed afterward. The miner would have to compete to find the nonce of the block they changed and then “catch up” to the other blocks that had been mined by other miners who were following the rules. It is virtually impossible,

  3. The more miners there are on the network, the lower the target is. Miners will guess a nonce that, when combined with the previous had and the transactions in the block, create a hash that is lower than the target. The lower the target is, the more guesses it will take to find a hash below the target.

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#682
  1. Making sure that miners spend money on electricity is the basis for PoW blockchains. Guessing the correct nonce takes computing power. If this wasn’t required there would be no incentive for the miners to follow the rules of the blockchain, and more transactions would be changed (double spend, take-backs) and the integrity of the network would fail.
  2. It is very difficult to change the blockchain because in doing so even the slightest change in transaction data completely changes the hash of that block, and in turn the hash of every following block. This would make that miner have to solve every block over again and would be extremely costly and wouldn’t be worth the effort of changing the single transaction in the first place.
  3. The network regulates mining difficulty based on how many people are currently mining. The more miners in the network, the bigger the target is of the nonce, and the more guesses it takes to find the correct nonce and solve the puzzle.
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#683

  1. The miner who spends more money on electricity gets their block connected and also gets block rewards (inflation) and the transaction fee - PoW.

  2. Hashing network is secure and one needs 51% hash rate or more to tamper with the network. Miners have to play by the rules to make more money, and wouldn’t make financial sense for the miners sense to tamper with the network.

  3. A target is used. The higher the miners, the lower the target level, meaning guessing the nonce becomes harder and harder. Miners have to guess more times before guessing the correct nonce.

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#684

  1. Due to the competitive nature of the mining process they are incentivized for solving cryptographic puzzles quicker than other miners. So the more rigs and more electricity you are using, the quicker you might be able to solve a block. It also places an incentive on miners to be honest with transactions in a block because if they are caught cheating, they won’t receive block rewards (fees/inflation) and will lose even more money by their upfront electricity usage for that block. A miner could easily be caught cheating because the Miners/Nodes all communicate with each other and need to have consensus of a single truth in regards to the transactions. The other Nodes of the network would reject and invalidate the malicious Nodes copy of the blockchain.

  2. Because there needs to be consensus among all the miners and nodes in the network. Each cryptographic puzzle that a miner solves (the hash) is based upon the last confirmed block in the blockchain. So if that block’s hash, represented in Hexadecimal Notation, is altered in any way, then the next block’s hash is also affected along with any other subsequent block in the chain. Also, if a malicious miner wanted to alter any tiny bit of transaction data in their block, they would also have to adjust every subsequent block while other miners are attempting to solve new blocks. It be practically impossible due the processing power and electricity needed. You would need one entity to control 51% of the hash rate in order to double-spend.

  3. The cryptographic puzzle that a miner must solve involves hashing a combination of: the previous block’s hash (digital fingerprint), the transactions of their current block (data), and a nonce (a random number guessed through brute force that is less than the target value). The target is a variable value dependent upon the difficulty of the network. The more people there are mining, the lower the target value. Thus, the more miners there are, the more difficult it will be for the miners to guess the nonce. A mining computer is essentially built to execute as many guesses/hashes of a nonce as possible to try and solve the puzzle quickly. It makes sense that miners are incentivized to spend a lot on electricity up front in order to solve these puzzles as quickly as possible.

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#685

  1. To show proof of work because they have to keep guessing the nonce so they can meet the target and have their block accepted.

  2. by doing so it will break links with all other blocks and miner would lose money.

  3. By setting a target such that the more the miners the lower the target and the higher the difficulty.

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#686

1. Why is it important to make sure that miners spend money (on electricity) while mining? It is important to make sure that miners spend money while mining to disincentivize them from breaking the rules.

2. Why would it be very difficult for someone to go back and change a previously added block? To make a change on a mined block, the miner would have to remine all subsequent blocks in order for the change to be accepted, which would be astronomically expensive and time consuming.

3. How does the network regulate mining difficulty? The network regulates mining difficulty by changing the difficulty of the target number.

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