- Miners need to be invested in the network, not just receiving rewards.
- Blocks are hashed together. Changing data in a prior block changes the hash and breaks the chain.
- By raising and lowering the target based on the number of miners.
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The importance for miners to spend money is to ensure miners do not cheat and play by the rules. Otherwise they will be " punished " by losing money for not abiding to the rules.
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Because of the nature of bitcoin blockchain, every mined block is linked together by cryptographic hashing. If any miner changes any data in one of the already mined blocks, all the subsequent blocks will be altered as well. It will be very difficult to re-mine all the blocks again because of hashrate. As such, because it is falling behind the rest of the other miners with the old chain, the amended chain will be dropped out because only the longest chain will carry on.
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The mechanism that regulates difficulty is the hashrate. When there are lots of miners, the hashrate will be higher. In other words, the mining Target number will be lowered so miners will find harder to look for the ānonceā number so that after hashing the block, the figure must be lower or equal to the Target number in order to be successful.
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To encourage them to compete for the block rewards.
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Any change made in previous block will change the hash in all the next ones.
One would have to rehash all the coming blocks and it would take too long and cost too much. -
More miners, higher difficulty, lower target.
1- to make consequences for your actions in which if you donāt follow the rules you will not only get rejected thus not receive the block reward and fees but you will loose money because you paid a lot for electricity and got nothing.
2- because chaining one block would require the change of all blocks in which every block is linked to the previous one.
3- by sitting a target
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Provides economic incentive to mine and play by the rules.
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Changing would invalidate the blocks.
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Sets target nonce lower for increased and higher for lower mining difficulty, in an attempt to keep block propagation times at 10 minutes.
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To make sure that miners are penalized for changing blocks. If they could guess the nonces to ācomputeā the hash instantaneously, they could recreate a new and longer blockchain immediately. The time and hashpower required to mine ensures that there is a significant electricity cost.
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Because they would change the block only on their own copy of the blockchain. The change would result in all of the following blocks to be invalid, so they would have to be remined. By the time they are done, the original blockchain would be much longer, thus, making it impossible to catch up. Because everybody appends their new blocks to the longest blockchain, the changed blockchain would be worthless to the miner.
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The difficulty target is a value that gets adjusted every 2000 blocks. A new blockās generated hash has to be lower than the target number. The only variable in this hash function is the nonce, which the miners have to guess over and over until one of them can compute a hash lower than the target. SHA-256 has a lot of possible numbers and the lower that target is, the bigger the amount of wrong hashes gets.
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It is proof of work, effort required to earn the block reward. It is conversion of effort into bitcoin in return.
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They will need to mine the block and all the blocks after it again.
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When more miners joined (with higher hash rate), the block time will be shorter than 10mins, the difficulty will then be adjusted accordingly.
- so they have spent there own money towards mining and makes them have more incentives to play by the rules
- because it disrupts all future blocks
3.by increasing or lowering the target
Why is it important to make sure that miners spend money (on electricity) while mining?
The idea is that they spend money to make money. They are incentivized to do the necessary work
to put forth the effort to gain the reward. This process keeps everyone honest.
Why would it be very difficult for someone to go back change a previously added block?
Because each block contains a reference from the block mined before it, along with a
random unique number allowing for proper block size. It would be impossible to
edit 1 block and also recreate all those that had followed and continue to be made
during that process.
How does the network regulate mining difficulty?
Raising and lowering the difficulty target.
1 Para que exista uma puniĆ§Ć£o financeira para quem tentar corromper os dados na blockchain.
2 Pois nĆ£o existe incentivo financeiro para que isso seja feito, afinal de contas para que ocorra um ataque de 51% na blockchain Ć© preciso obter a maior parte da capacidade de hashing.
3 Ao restringir as possibilidades de outputs(hash do bloco). Quando os blocos comeƧam a ser minerados num tempo relativamente diferente de 10 minutos existe um ajuste de dificuldade, onde o target dos outputs Ć© diminuido ou aumentado, afim de dificultar a obtenĆ§Ć£o de um hash na faixa desejada.
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Because it creates an incentive for the miners to play by the rules; if they donāt play by the rules, the electricity they spent on mining the next block, will be lost, because the rest of the network will not accept the block as the next block in the chain.
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Because as soon as they change the data in a block, that blockās hash will change. Each and every block (except for the genesis block) refers to the previous blockās hash. This means that if you change the data in one block, that blockās hash will change, making the next blocks link to the block you changed invalid. This requires you to re-mine that block and find the correct hash for that block, and soforth for each and every descendant block, and, at the same time, keep up with the network that keeps on mining new blocks. In theory itās possible, but itād require insanely amounts of electrical power. And even if you had that electrical power, youād then just be more incentivized to invest that electrical power in mining new blocks and earning block rewards and fees.
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A hash is basically a hexadecimal value. To make sure there will always be an incentive for miners to mine new blocks and play by the rule, there is a puzzle you need to solve, that gets harder or easier depending on the supply/demand status; how many transactions needs to be verified and how many are there to verify these transactions (miners). The puzzle you need to solve is basically to generate a hash that has a hexadecimal value below a certain target. This target will be lower when the demand is higher (so it becomes more difficult), and higher (easier for miners) when the demand is lower. The hash is based upon the previous blockās hash, the current list of transactions (the txs you want to include in the block youāre about to mine) and an unknown number; the ānonceā; basically that last variable you need to find that (together with the transactions and the hash of the previous block) returns a hash with a hexadecimal value within the target range.
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- Keeps them honest. If they donāt play by the rules there block will not be accepted, and will incur a loss
- They would never be able to catch up and repair that block and future blocks.The longest chain wins.
- By the amount of miners on the network, many high less miners lower difficulty.
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It important to make sure that miners spend money (on electricity) while mining, because it gives value to each bitcoin, it gives more security by incentivizing the miners to play by the rules.
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It would be very difficult for someone to go back change a previously added block, because he would need to recalculate every subsequent blocks, which would require too much computational power.
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The network regulates mining difficulty by adjusting the mining difficulty every 14 days, i.e. the miners will have to guess a nounce smaller and smaller each time the difficulty increases.
Homework on Mining and Proof of Work - Questions
1. Why is it important to make sure that miners spend money (on electricity) while mining?
The blockchain transaction fee is designed to reward the miners, and cover their electricity operating costs to maintain the blockchain network. Whereas, the blockchain reward acts as an initial bonus to encourage miners to join the network, compete and maintain the longest length blockchain.
Overtime the blockchain reward diminishes to zero, and is ultimately replaced by the miner only receiving the blockchain transaction fee. Therefore, the value of transaction fee must be designed to grow proportionally to the value of the blockchain difficulty thus encouraging miners to continue to compete to maintain the longest blockchain.
Each newly appended block added to the blockchain is controlled via a consensus algorithm based on a 5 discrete elements; 1) Only the longest blockchain is maintained, 2) A target number, 3) A random number 4) The new transaction, and 5) The previously hashed block.
Mining electricity costs are directly related to the these 5 elements with the level of difficulty (electricity costs) being controlled via element 2 the ātarget numberā. By controlling the value of the target number the computational difficulty of the consensus algorithm is constantly regulated and updated causing the miner to incur additional electricity costs to mine (compute) the newest block. Therefore, the transaction fee is directly related to the mining compute difficulty, and thus ensuring each newly form block appended to the blockchain is not realized for free, but at a cost to the miner.
2. Why would it be very difficult for someone to go back change a previously added block?
The blockchain is a mathematical puzzle where each subsequent hashed block is appended to the end of blockchain via a mathematical hashed dependency which is linked to the previously mined hashed block.
The Blockchain miners & network nodes follow the blockchain with the longest sequence of blocks. All other shorter blockchains are ignored. Therefore, to change a previously hashed block requires an extremely high level of compute power to change a previously mined block, but at the same time update all subsequent blocks added to the blockchain and do it at such a rate that the newly formed āchanged-blockchainā exceeds the length of the existing blockchain. If the newly formed blockchain does not exceed the length of existing blockchain then it will not become accepted by all nodes within the blockchain network and so it is ignored consensus as being false/inaccurate.
3. How does the network regulate mining difficulty?
Mining difficulty is regulated via a consensus algorithm which derives the newly hashed block based on 5 elements; 1) Only the longest blockchain is maintained, 2) A target number, 3) A random number 4) The new transaction, and 5) The previously hashed block.
The element 2 - the target number - ensures the miner is unable to guess the random number required to mathematically hash the newest block appended to the blockchain.
The value of the target number is set based on the number of active miners. The more miners competing to form the newest block the lower the target number. A lowered target numbers increases the networkās hash rate (computational mathematical difficulty) to mine the newest block in the blockchain which in-turn increases the transaction fee, and hence the miners electricity costs.
Therefore, the transaction fee is directly related to the mining difficulty to ensure each newly form block appended to the end of the blockchain is not realized for free, but at a cost to the miner.
1.Miners spend electricity for bitcoin as an incentive and its important to they keep the network alive
2.To change a transaction you would have to mine all subsequent blocks and it would take more energy than it would be worth to do.
3.More miners on the network lower the target so it is more difficult to find the nonce.
- Why is it important to make sure that miners spend money (on electricity) while mining?
So that they seek compensation through the Bitcoins they earn for their work.
- Why would it be very difficult for someone to go back change a previously added block?
Because they have to resolve the puzzle for each block in the chain starting from the changed block onwards. This may take many years to achieve.
- How does the network regulate mining difficulty?
When there are many miners (high hash rate), then the difficulty of the puzzle to guess the Nonce becomes higher and the target to compare the block hash to is lower.
Little number of miners, means less difficult puzzle and higher target.
- Because if the miner spend money they want to make profits. And to and to achieve that they should be play by rules. If they donāt they will lose their money
- Because he must mine all the old blocks plus the new blocks. This action needs enormous computer power.
- If a block mined from a miner at less than 10 minutes the network decrease the value of the hash that the miner should be found.
1.) The miners spend money (in this case by electricity costs) in advance. If the play by the rules, they can be rewarded, if not, they loose money (their blocks are refused and they spend money, without being rewarded) - so cheating is expensive and they are willing to play be the rules in order to get rewarded.
2.) because it takes time (and money) to remine all previous blocks to fullfill the PoW-puzzle (hashing nonce, prev. hash!, TXs) and the time increases, so it costs more and more money!
3.) mining difficulty is determined by the amount of available hashpower (by miners) - blocks should be mined aprox. all 10 minutes, in order to fullfill the block times (defined in the BTC core protocol?), if a few miners (less hashpower) are available, the difficulty (solving time) is reduced, and vice versa. Difficulty is changed all 2016 blocks, as I know 
- They have to pay money up front in order to follow the rules to win block rewards to get money back. If they cheat their block will be rejected and they wasted their electricity/money.
- If they change a previous block, it will change the hash of the block which will change the hash of the next block since each block is made of the previous blockās hash. Therefore, the person would need to resolve the cryptographic puzzle for each block in the chain that comes after the change while people are still adding on to the original chain, so they would always be behind and playing catch up.
- If the blocks are taking more or less than 10 minutes to solve, the network will change the target difficulty level to compensate and return it back to 10 minutes.
- Miners will want to recoup the investment and make a profit.
2Becasue each block has a hash(unique finger print) that is made off transactions on that block and also on the previous blockĀ“s hash any changes breaks the chain. This is dificult because there is a dificulty set by the whole networks hashrate which makes it time consuming and practically impossible to do by a single person.
.3 The higher the dificulty (due to haspower). The lower the target to guess the nonce by the miners