Homework on Mining and Proof of Work - Questions

[Mauro]

@Nikso

So regarding number 3 I understand that the difficulty is changed to keep the block creation at ~10mins. but how?

I see that some posts talk about the target being adjusted every 2 weeks. by who? why would they choose a more difficult target? what’s the consensus procedure on that?

The target difficulty happens every 2016 blocks. It was set by satoshi nakamoto. The difficulty will go up only if the hashrate overall increased in that time. Here are more details about the bitcoin difficulty.
https://en.bitcoin.it/wiki/Difficulty

[Mauro]

@wajak3

1. The difficulty in mining the blockchain is a disincentive to cheating and dishonesty. The amount of work, and energy spent thereof, required to mine a block under normal circumstances is sufficient to discourage cheating

At this point is is hard to have more than 51% hash power, so in a way it kind encourages to follow the network rules rather than to break them.

[Mauro]

@Adam1

1. because you cant mine without electricity

Of course they can’t. But why is it important they spend money on it? When miners find out a nonce that will produce a valid hash it means they actually put the work behind it. There is no way they could have mined the 12.5 bitcoins and accept the transactions otherwise. Making the inflation steady and transactions backed by real work, unlike governments that can print money in seconds without any work behind it. Bitcoin is considered to be hard money.

[Coco]

1. Because if they would not have to spend money they would probably not play by the rules. The blockchain is set up in a way that makes you loose money if you are not playing by the rules, and earn money when you play by the rules.

2. When you go back and for example change a transaction in the block, the link in the blockchain gets broken. And the block that is changed and all blocks after that are broken. So you would have to re-mine all blocks that are invalid. You would always have to win the cryptographic puzzle to be able to re-mine the blocks that are broken and catch up whit the original blockchain that keeps on mining new blocks. Because the longest blockchain always wins it is almost impossible to have that much hashpower and it would be very expensive.

3. The difficulty gets adjusted based on how many miners are mining. When more miners are mining the difficulty increases and the target is set lower. Which means that it gets harder to guess a nonce that will be accepted.

[Richie]

1. It is important to provide security on the network. By making the miner pay ‘up front’ for the cost of mining the block, it provides an incentive for them to play by the rules. Where they do they are rewarded with block rewards and transaction fee’s.

2. Due to each block being based on the previous hash, any changes would corrupt these links making it necessary then to re-mine each block ahead of the one changed so that the rest of the network would accept this.

3. Where there are more miners on the network the target is lowered to increase the difficulty in solving the hash. Where less miners are active on the network the target would be raised having the opposite effect.

[Fabrice]

@ArvidK

More people mining means more miners in the network which means the target number of the nonce is lower which means the difficulty of guessing is higher.

Target number is not for the nonce, but for the blockhash. Miners construct a block and to mine a valid block, the blockhash need to be lower than the target. (hash needs to start with a bunch of leading zero’s depending on difficulty) in order to have a blockhash low enough, you need to add a random number (nonce) hash the block again and check if the blockhash is now below target. This proces is repeated until you find a random number (nonce) that produces a blockhash below target. It’s basically brute forcing the nonce until the blockhash is low enough. then the miner can broadcast the block to the network.
If you check the block explorer, you will see that every blockhash starts with a bunch of leading zero’s. It’s not easy to achieve such hashes.

[Fabrice]

@SMDadli

The network regulates mining difficulty to by lowering and raising the difficulty every 10 mins

Difficulty doesn’t adjust every 10 minutes, but after every 2016 blocks. 2016 blocks needs to be mined in 2 weeks (= 10 minutes per block) if 2016 blocks gets mined faster than 2 weeks, the difficulty (target) will adjust the same percentage that was faster than 2 weeks to keep an average of 10 minutes of blocktime again (and vice versa if it took longer than 2 weeks)

[Fabrice]

Mining difficulty has nothing to do with the halving. The halving is just the block subsidy cut in half ever 210k blocks. Difficulty adjustment is just changing the target every 2016 blocks that should be mined in 2 weeks. Gets adjusted in same percentage when it is higher or lower than 2 weeks to remain an average of 10 minute block interval

[ajphminer]

1. It’s important that there is work or productivity involved in the generation of new bitcoins so that bitcoin will have value.

2. Bitcoin blocks are secured by cryptographic hashes derived from the content of the blocks (transactions) and the hash of the previous block in the chain, linking the two blocks. Any change in the previous block breaks this cryptographic link in a cascading effect to the entire chain forward.

3.The mining difficulty is correlated to the total hashing power of all miners such that the higher the hash rate (more miners mining), the higher the difficulty.

[Lard_Bodum]

1. Miners are incentivised to play by the rules to ensure the security of the network. They want to get their block into the blockchain as that’s how they make money (block reward plus tx fees). So miners compete against each other and need lots of computing power and so they spend a lot on electricity to hopefully get their block completed first and have nothing wrong with it. Once it’s confirmed by the network, the miner gets paid. If there’s something wrong with the block the network will reject it and they will not get paid.

2. Any change to a block that’s already confirmed on the network would break the link between every block that comes after the changed block. All of those links would need to be re-mined by solving the puzzle for each one. Meanwhile other miners are moving forward adding new blocks to the chain so it’s infeasible due to the amount of time, money and computing power that would be required to re-mine and catch up.

3. Mining difficulty is regulated by hashing. A miners current block that they are wanting to append to the blockchain must find a correct hash (digital signature) by solving a puzzle. The hash is derived from the previous blocks hash + current block tx data + nonce. The miner must solve the puzzle by guessing a correct nonce so that the hash is lower than a target number. The lower the target the more difficult it is to find an acceptable nonce. This is why miners spend so much on electricity. Difficulty increases/decreases as the number of miners on the network increases/decreases.

[JPB]

Hi Mauro

Thanks for that.

In my head that is what I said. Maybe I could have chosen my words more carefully…

John

[Crypto_Tax_Fixer]

1. is it important to make sure that miners spend money (on electricity) while mining?
   The Proof of Work increases the integrity of the chain. Miners calculating a new hash that is below the target demonstrate work meriting the block reward and transaction fees.

2. Would it be very difficult for someone to go back change a previously added block?
   It would be extremely difficult because you would have to recalculate the has for all subsequent blocks before additional ones are added.

3. Does the network regulate mining difficulty?

The difficulty is retargeted every 2016 blocks. The new target is higher or lower based on the hash rate.

[Fabrice]

@FeloniousBaker

The stronger the hash rate the lower the nonce, making it harder to guess

Not the nonce, but the target gets lowered.
Miners construct a block and this block hash needs to be lower than target. In order to achieve this, you must add a random number (nonce) until you find a hash low enough.
Every 2016 blocks, target gets adjusted to keep an average of 10minute block interval. 2016 blocks needs to be mined in 2 weeks. Then no adjustment is Needed. If 2016 blocks is mined 5% faster/ slower than 2 weeks, the target gets adjusted by 5% to keep the 10minute average blocktime.

[Fabrice]

@Crypto_Mofo

Answer: Via the hashrate

Target gets adjusted when hash rate is higher or lower To keep a 10 minute interval between blocks. 2016 blocks should be mined in 2 weeks then target gets adjusted

[jxdrew]

Q1: When miners play by the rules and secure the network they get paid through incentives. This is know as Proof of Work (POW). In order to get paid miners must “Do Work” to get their blocks into the blockchain. This is performed by solving a cryptograthic puzzle. Solving this puzzle takes lots of electricity and upfront costs. So in order to make a profit miners know they are going to have to spend a lot of money on electricity (POW). The first miner to solve the puzzle get rewarded by having their block added to the blockchain and thus gaining the TX fees and Block rewards.

Q2: It would be massively difficult for some to go back and change a previous added block because any changes to previous data would result in all further blocks having their hashes changed and thus resulting in block becoming void and rejected. It would also mean that the miner making the change would have to accept enormous amounts of costs and time to re-mine every block thereafter. Making it totally irrational to make the the change in the first place.

Q3: The network regulates mining difficult by asking asking each miner to guess a specific random number (Nonce) and comparing their hash to a specific target. If they are the first to get below this target then get their block added to the chain. So this means if the target is set low (greater difficulty) it means a higher percentages of new blocks will get rejected thus increasing the difficulty of having a block accepted. Conversely if the target is high then its much easier for a miner to get their block accepted to the network.

[Fabrice]

@Clinton

By balancing speed, number of transactions and hash rates.

Difficulty adjustment happens every 2016 blocks. The network regulates the difficulty with changing the target hash that a valid blockhash has to be lower of. The network wants a 10 minute average blocktime. So if blocks get mined to quickly or to slow, the difficulty should be higher or lower (by adjusting the target)

[Fabrice]

@figurin

the nonce regulates the difficulty of the hashing approximately every 10 minutes , the more miners the higher the difficulty and vice versa

Not the nonce, but the target regulates the difficulty. The blockhash need to be lower than target. To achieve this you need to add a random number (nonce) into the block. You keep changing the nonce then hash the block and check if the hash is below target. Repeat until you finally have a hash low enough (in practice have a bunch of leading zero’s in the block hash)

Every 2016 blocks target gets adjusted to maintain an average of 10 minute block interval. (2016 blocks needs to be mined in 2 weeks)

[Fabrice]

@Pendar

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

Extra electricity need to change has not yet made it a better monetary policy (by consensus) to go back in time and change blocks. miners and HODLers will lose money if that happens maybe.

It’s because each block has a the hash of the previous block init. So if you want to change something in a block, you need to remine every next block as well. This needs to be done before another new miner mines a new block again. So it’s practically impossible to mine lots of blocks within 10 minutes. unless you would have the majority of hashpower.

[Mauro]

@Coco

1. Because if they would not have to spend money they would probably not play by the rules. The blockchain is set up in a way that makes you loose money if you are not playing by the rules, and earn money when you play by the rules.

Correct. Only way to play by the rules is to spend the electricity to find a nonce that will produce a low enough hash. Amazing answers.

[Fabrice]

@Matoshi

More miners, makes a bigger hashrate, bigger hashrate affect level of puzzle difficulty (through nonce). And the more difficult puzzel is, the smaller number to guess.

Difficulty gets adjusted by changing the target. A block hash needs to be below target to be a valid block. In order to achieve this, you need to add a random number (nonce) that when the block gets hashed again, the block hash is below the target.

So not the nonce but target is lowered to increase difficulty. Difficulty adjusts to maintain an average of 10 minutes block interval.