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It is important because if they spend money on electricity, they need to follow to rules so that they can earn that money back + make some more. If they don’t follow the rules, they wouldnt be able to make any money which would result with miners actually losing money(on electricity).
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Because if they did, the connection between blocks would be broken, and all the blocks would need to be confirmed all over again. Doing that by yourself would take very long time, which makes mining and following the rules more profitable than changing any transaction back in time.
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Maximum amount of bitcoin in circulation is 21 M. The closer we get to that target, more difficult it gets to mine. That, and also it depends on how many miners there are. More miners = higher difficulty, less miners = lower difficulty.
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It is the cost they incur for playing by the rules of the game and gives them an incentive to figure out the cryptographic puzzle to earn block reward and transaction fees. If they are dishonest they will lose all the money they have spent on electricity.
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The unique fingerprint of your block (hash) is based on the previous hash and the transactions of the current block, therefore if you change a transaction in the list of the current block the hash will change, likewise if you try change previous blocks hash it will affect the hash of the future block.
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The difficulty of the puzzle is proportionate to the hashrate, the more miners the harder the puzzle.
1- Why is it important to make sure that miners spend money (on electricity) while mining?
Miners are forces to spend a large amount of money on resources to solve the PoW. This adds security into the system by making it financially impractical to behave badly in the process of mining.
2 - Why would it be very difficult for someone to go back change a previously added block?
The transaction ID of the topmost block of the blockchain is generated using the hash of the block itself. This block’s hash value is generated with the previously accepted block’s hash value. Any change to a older block, will render each of the newer blocks invalid. It is too difficult to modify all block affected.
3 - How does the network regulate mining difficulty?
The blockchain attempts to maintain a 10 minute block time. If block times appear to increase above 10 minutes, the blockchain raises the target thus making the puzzle less difficult, and visa-versa.
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It is important to make sure Miners spend electricity to make it harder for them to cheat the system and to also allow for an even competition between the miners instead of it being the first one to build a block it goes to the people that are willing to invest more into mining the block.
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changing a previously added block is very difficult because you will have to re mine all the previous blocks to make it equal the current active block.
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The network regulates mining difficulty by lowering the target number depending on number of miners, which makes it harder for the miners to guess it.
1.Miners are competing eachother , they invest in the mining sistem , they consume electritity so after spending money and a lot of energy invested , they are maximally interested to mine onestly , with respecting the rules and then get the block reward and transaction fees
2.If you change the previos added block , the links will be broken . You have a new puzzle to resolv .Network always chose the longest chain .If you must go back you lose time and energy.
3.Miners always guessing a random number - nonce . Based on previous hash ,nonce and transaction list they calculate the hash .If the hash is less than the target , the block will be added. The hash must to be between 0 and the target number . If the target is low then the difficulty of mining is high. When are more miners the target will be low .
Mining consumes much expensive electricity and thus incentive to mine by the rules to insure profit.
By changing a previous block all subsequent blocks would have to be remined which would be nearly impossible
The more miners increases the difficulty of mining a block as the target is lowered
- Spending electricity is like paying upfront for mining so that once they mine below the target, miners get block reward. If miners tamper with the rules, their block gets rejected and will not receive any reward.
- Blocks are connected such that if the hash of previous block changes, the hash of all the blocks connected to it changes. It will be extremely difficult to change a previous block and mine faster than the network to create a new longer blockchain. Theoretically, it is possible but practically impossible.
- The network adjusts the hash target in such a way that a new block creates every 10mins.
proof of work costing money gives miners incentives to earn.
any change invalidates the hash result requiring re-mining of that block and all after it
setting the target lower (more leading zeroes)
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This incentives them such that it keeps them honest and in playing by the rules, they hope to receive a block reward for their effort.
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Because the blocks that followe the one being changed will also change because they include the previous hash within their information. The blocks are linked in this way similar to the links of a chain, hence “the Blockchain”.
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When the target is low the difficulty is high and vice versa. When there are alot of miners the difficulty is higher
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Why is it important to make sure that miners spend money (on electricity) while mining?
It’s part of the incentive mechanism - because of the expenses that they therefore already have made they would loose by not continuing according to the correct protocol. -
Why would it be very difficult for someone to go back change a previously added block?
Because the blocks are all chained together in that they always contain a part of one another and therefore every block until the current one would have to be changed or remined again. -
How does the network regulate mining difficulty?
With a growing number in participators the chance for mining a block faster increases and therefore the difficulty gets increased also. It analyzes how fast the process took place on average; if a time frame of 10 minutes per block is exceeded or undercut a threshold of how much the new hash can deviate from the previous one on a scale of probability from 0 to infinity is adjusted accordingly.
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It is important to make sure that miners spend money (on electricity) while mining because spending money makes them financially invested in the mining process. This means they are liable to lose money if they do not follow the rules because their work is likely to be rejected and so they will not receive any mining rewards. If they have already spent money on mining and are receiving no rewards, they will make a loss.
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It would be very difficult for someone to go back and change a previously added block because the hash of any current block is based on the hash of the previous block. If there is any change in a block, this will cause the hash value to change and will break the link to the next block - because the blocks no longer match. If the next block was then altered so that it did match the previous block, its hash value would in turn also change causing a break in the link with the block after it. Meaning that the following block would also have to change, and so on, right up to the current block being mined. This would require a lot of effort and expense and is not guaranteed to succeed.
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The network regulates mining difficulty by changing how difficult it is to solve a mathematical equation. When there are more miners doing work, the network makes finding a solution more difficult by lowering the target number which the generated hash of the block has to be lower than. This is because there are fewer chances of any miner making a correct guess. When there are fewer miners working, this difficulty is reversed by raising the target number, creating more chances of a correctly guessing a lower number.
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To incentivise them to follow the rules
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They would have to also change all following blocks while trying to catch up with the newly added blocks by the other miners on the network. This energy would be better spent mining legitimately.
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There is a target the miners are trying to get below, when there is a lot of miners the target is lowered making it harder to get below and when there are less miners the target is raised making it easier to get below.
1.Why is it important to make sure that miners spend money (on electricity) while mining?
This disincentives the miners to be bad actors due to forcing the miners to lose money on electricity.
2.Why would it be very difficult for someone to go back change a previously added block?
Every block’s hash is derived from the previous block’s hash, the data contained in the current block and the guessed nonce. If someone were to change data within a block, that would change the hash of the block proceeding it. The bad actor would then have to change the hash of every block while also keeping up with the network.
3.How does the network regulate mining difficulty?
As hashing rate increases, the target lowers, increasing difficulty.
- By spending money via electricity they are investing value and this helps secure the blockchain.
- The network would not approve of the change because the previous transactions are verified.
- When more miners are mining the bitcoin the nonce becomes more difficult and the target is low.
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This provides an incentive for miners to act honestly on the network. They can be rewarded with the block reward and transaction fees to make up for costs incurred.
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The total network hash rate determines the difficulty of finding future blocks. If you make a change in one block, all blocks superseding that block will need to be mined again as their hashes have changed. It will take one person a very long to mine all superseding blocks as they will not control enough hash power relative to the total network hash rate.
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Mining difficulty is based on the total network hash rate. Higher total hash rate across the network leads to increased difficulty to find blocks.
Homework on Mining and Proof of Work - Questions
- Why is it important to make sure that miners spend money (on electricity) while mining?
So they will be honest to earn more money to repay it. - Why would it be very difficult for someone to go back change a previously added block?
No one would respect the changes, it would take a long time and they would have to catch up as theirs would not be the longest chain. They would have to reguess the nonce of all. - How does the network regulate mining difficulty?
By lowering the number the newly required Hash will have to be below. More miners, the more difficult it’s made too.
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Because you need to spend money (on electricity) before you get incentives.
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Because if you alter a block, you also need to change to next block and so on, while the other miners continuing creating block.
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By setting the target to low, it would be difficult to mine. the more computerjoining the network (higher hashrate) the lower the target is.
- It secures the network. It makes miners invest money upfront, before recieveing a reward.
- In theory it would require posesing 51% of hashing power of whole network which in practise is not achieveable.
- It adjusts it based on the hashing power of the network.
Rewards incentivizes miners, not the electricity bill. They want to minimize the electricity cost to 0 if possible.
I wouldn’t say its impossible. It is very hard because how much miners there are in bitcoin. Other networks have been successfully attacked like ethereum classic, but they have way less miners. Just something to keep in mind.