Homework on Mining and Proof of Work - Questions

Blockchain and Bitcoin 101
#1070

1 - proof of work done
2 - because it will need to validate the rest of the block after it also while there are still other blocks being put on top of the current chain
3 - by number of active miners

#1071

  1. This is to ensure that miners are incentivised to follow the rules in the hope that their investment will pay off in terms of block reward and transaction fees.

  2. It will change the hash output of all the subsequent blocks as the hash of each block is dependent on the hash of the previous block.

  3. The more the miners, the lower the target and hence the greater the difficulty to guess the nonce.

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#1072

  1. To keep miners honest and therefore transactions valid

  2. It would break the chain after the block where the changes were made and he would thus have to remine all the blocks thereafter which would be very expensive.

  3. Target is lowered / made more difficult with more miners mining.

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#1073
    • Why is it important to make sure that miners spend money (on electricity) while mining?
      A: Because they are putting skin in the game and have something to lose if they don’t play by the rules. It incentivizes the miners to mine properly and also serves to secure the network since attacks cannot be done for free.
    • Why would it be very difficult for someone to go back change a previously added block?
      A: Because each block mined and added to the blockchain references the previous block’s hash. Changing one block would break the chain of hashes moving forward and all subsequent blocks would need to be re-mined. This would cost a lot of money to complete.
    • How does the network regulate mining difficulty?
      A: By changing the target of the hash. The hash must be lower than the target in order to be accepted. The target # is lowered to increase difficulty and raised to decrease difficulty.
#1074

Hi there!! Actually, the block reward is always the same, currently 6.25 BTC. You are right about the target. Maybe you meant block confirmation time?

Felipe.

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#1075

thank you!! :green_heart:

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#1076

Correct! But how is this related to security of the network?

@SimonO
Actually, is not about the number of miners, but the total hash rate of the network. There are different mining equipment, with high or low hash rate. So, the higher the total hash rate, blocks will be confirmed faster, so difficulty should rise!

Hope that helps!

Felipe.

#1077

Great answer @abull ! Keep up the great work!

Felipe.

#1078

  1. It’s important for miners to spend money on electricity while mining so that they have paid upfront to append a block to the blockchain. If the miner is dishonest then the network will reject the block and the miner will be at a loss for the money spent on electricity. Therefore the miner is incentivised to be honest, hence the block will be accepted by the network, and for the investment made in spending on electricity the miner will receive the block reward and the transaction fees

  2. It is very difficult for someone to go back and change a previously added block because the hash will change, hence breaking the link to the next block and all blocks afterwards. The miner must re-mine all these blocks and also catch up with newly appended blocks - the hashrate ensures this is practically impossible due to the electricity cost and time to re-solve the puzzle for each block

  3. The network regulates mining difficulty by lowering the target as the number of miners increases

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#1079

Hi wafflemakr,

Many thanks for your feedback.
Right, I mixed up the nonce with the block hash.

Best,
Eric

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#1080

  1. Mining is an incentive based process meaning there is financial compensation for adhering to the rules. Money on the line keeps things honest.

  2. Modifying previously added blocks is extremely impractical because of the cost behind re-mining all of the information. Changing one block (transaction) in the past changes the entire chain network because every new block is based on the prior’s information.

  3. The mining network is regulated by a sort of “tier based” difficulty system. The more miners attempting to solve the puzzle narrows the solution or “target”. This target is a random number between one and infinity; narrow target means a narrow spectrum of solutions. The result of this is more hashing power required to find the solution with increased electricity costs.

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#1081

1.) By spending money on mining through electricity, vesting the miner trying to figure the nonce.
2.) To change any transaction is practically impossible because when you try to change something it changes the hash of the block being messed with along with the previous block. So in order for you to do so you would have to remind those two blocks along with all the others after, basically impossible.
3.) When there are a lot of miners in the network mining the target to guess the nonce is lowered.

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#1082
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    It maintains the integrity of the blockchain. Miners are incentivized to play by the rules, or else risk losing money if they do not.
  2. Why would it be very difficult for someone to go back change a previously added block? They would have to recreate the links between blocks, which is theoretically possible, but would take thousands of years and potentially billions of dollars. The hash of each block is based on the hash of the prior block, the transactions in the new block and the nonce. IN turn, the hash of the prior block is based on the transactions in that block, the hash of the prior block and the nonce. If the transaction in a block is changed, the hash changes, thus affecting future blocks and invalidating the hash. A miner would have to re-mine every block, which would take a lot of electricity, and even then, they would also lose opportunity to add new blocks being created in the meantime.
  3. How does the network regulate mining difficulty? By setting the target low when more miners are attempting to mine, thereby increasing mining difficulty.
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#1083
  1. Once miners burn electricity to crunch numbers they have a financial incentive to succeed in creating a compliant block in order to win a financial reward in BTC
  2. All blocks on the blockchain are interdependent with their hashes resolved from previous blocks as well as the transaction data within those blocks. It’s a house of cards
  3. To regulate mining difficulty the network raises & lowers the target aimed for by miners . This is a function of time & the number of active miners on the network. More miners = greater difficulty.
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#1084

Homework on Mining and Proof of Work - Questions

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

  • it becomes there business ante
  • the miners become incentived
  • the want to collect the rewards + fees so the ‘must’ spend money to get that done

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

  • every change will break all the forward changes
  • you will have to remine all the changed blocks
  • on your own it is impossible to create that kind of mining hashrate to compete to the network hashrate (51% attack)

How does the network regulate mining difficulty?

  • changing the target changes the difficulty
  • to set the target lower ==> difficult increases to find the correct hash
  • higher target decreases the difficulty
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#1085
  1. Proof of Work
  2. because there are already new blocks are added to chain and all hashes are changed so the mining have to begin again. it would be not possible to re-mine all blocks again.
  3. is there are more miners the difficulty is rise by hash target lowering
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#1086

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    When Miner’s spend money first, they have an incentive to stay honest and work by the book or they will lose money.

  2. Why would it be very difficult for someone to go back change a previously added block?
    Because they would need a lot of time / money to change one single block. On top of that, they would need to change all the following produced blocks. This would be almost impossible!

  3. How does the network regulate mining difficulty?
    A Miner needs to compare a Hash to a Target. This Target has different difficulties depending of the amount of Miner’s. Each time the Miner is Hashing, they must compare this number to this Target and be a lower number between Target and zero. Many Miner’s means higher difficulties / lower number!

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#1087

1 - It is important because it sets the incentives properly. Spending electricity upfront forces the miners to play by the rules, allowing one of them to earn the right to connect his proposed block and collect the inflation + fees rewards.

2 - It would brake the chain of the downstream blocks, because it would mean a change in the input data of the related block, which would result in a different block hash. Furthermore, this hash is part of the data that generates the next block hash, which would result in a new block hash again for the next block, and so on, and so forth, so the whole thing will not match and the chain is therefore broken. To fix that and recreate a new blockchain with the different transaction, who made the modification will need to re-mine all the next dependant blocks, which is mathematically impractical and economically inviable.

3 - The more the computing power being used to solve the puzzle, the lower the target below which the correct answer is. So more computer power means less likelihood to guess correctly the puzzle answer, making it more difficult.

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#1088
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    Incentives. If you pay out electricity upfront they have less incentive to cheat as their block will be cancelled and they have thus lost money. This is almost to the physics of the proof of work.
  2. Why would it be very difficult for someone to go back change a previously added block?
    The hash of any block is based on the transactions of that block, the Hash of the previous block and a random nonce. Thus changing something in a previous block no matter how small changes the hash of that block and breaks the chain to subsequent blocks. So the changed block would have to be remined IE the crypto puzzle has to be solved again and the subsequent blocks would also have to be remined. This is practically impossible. In the meantime new blocks are being mined meaning that the dishonest miner is behind and never likely to catch up. The network favours the longest chain. If you keep going back and changing stuff you won’t have a very long chain.
  3. How does the network regulate mining difficulty? The more miners there are the lower the threshold is for the hash, making is tougher to find the nonce that delivers a low enough hash.
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#1089
  1. its a form of investment for them in order to claim a potential block reward
  2. because it causes a cascading effect of invalidating all the hashes in the subsequent blocks. They would need to solve the nonce for every subsequent block, Doing it for one block would be time consuming it enough, but in that time the main blockchain will also have moved on creating more blocks making it harder and harder for them to successfully change the whole chain.
    3.It makes the hash target smaller, thus, the chances of guessing a nonce that when combined with hash of trxs and then rehashed and it resulting in a hash that is less than the target are less
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