How cryptocurrency mining works: Bitcoin vs

Posted: December 11, 2018 by Pieter Arntz

Everzwijn wondered why websites that are mining te the background don’t mine for the immensely hot Bitcoin, but for Monero instead? Wij can explain that. Spil there are different types of cryptocurrencies, there are also different types of mining. After providing you with some background information about blockchain [1],[Two] and cryptocurrency, we’ll explain how the mining facet of Bitcoin works. And how others differ.

Proof-of-Work mining

Cryptocurrency miners are te a wedstrijd to solve a mathematical puzzle, and the very first one to solve it (and get it approved by the knots) gets the prize. This method of mining is called the Proof-of-Work method. But what exactly is this mathematical puzzle? And what does the Proof-of-Work method involve? To explain this, wij need to vertoning you which stages are involved te the mining process:

  1. Verify if transactions are valid. Transactions contain the following information: source, amount, destination, and signature.
  2. Bundle the valid transactions ter a block.
  3. Get the hash that wasgoed assigned to the previous block.
  4. Solve the Proof-of-Work problem (see below for details).

The Proof-of-Work problem is spil goes after: the miners look for a SHA 256 hash that has to match a certain format (target value). The hash will be based on:

  • The block number they are presently mining.
  • The content of the block, which ter Bitcoin is the set of valid transactions that were not ter any of the former blocks.
  • The hash of the previous block.
  • The nonce, which is the variable part of the puzzle. The miners attempt different nonces to find one that results ter a hash under the target value.

So, based on the information gathered and provided, the miners wedstrijd against each other to attempt and find a nonce that results ter a hash that matches the prescribed format. The target value is designed so that the estimated time for someone to mine a block successfully is around Ten minutes (at the uur).

If you look at BlockExplorer.com, for example, you will notice that every BlockHash is 256 hexadecimal digits long and starts with Legal zeroes. For example the BlockHash for Block #497542 equals 00000000000000000088cece59872a04457d0b613fe1d119d9467062e57987f1. At the time of writing, this is the target—the value of the hash has to be so low that the very first Legitimate digits are zeroes. So, basically, miners have some stationary input and commence attempting different nonces (which voorwaarde be an rechtschapen), and then calculate whether the resulting hash is under the target value.

How is Monero different?

Browser mining and other methods of using your system’s resources for other people’s build up is usually done using other cryptocurrencies besides Bitcoin, and Monero is the most common one. Te essence, Monero mining is not all that different from Bitcoin. It also uses the Proof-of-Work method. Yet, Monero is a popular cryptocurrency to those that mine behind the scenes, and we’ll explain why.

Anonymity

The most notable difference inbetween Bitcoin and Monero mining is anonymity. Where you will hear people say that Bitcoins are anonymous, you should realize that this is not by vormgeving. If you look at a webpagina like BlockExplorer, you can search for every block, transaction, and address. So if you have sent or received Bitcoin to or from an address, you can look at every transaction everzwijn made to and from that address.

Therefore wij call Bitcoin “pseudononymous.” This means you may or may not know the name of that person, but you can track every payment to and from his address if you want. There are ways to obfuscate your traffic, but they are difficult, costly, and time-consuming.

Monero however, has always-on privacy features applied to its transactions. When someone sends you Monero, you can’t tell who sent it to you. And when you send Monero to someone else, the recipient won’t know it wasgoed you unless you tell them. And because you don’t know their wallet address and you can’t backtrack their transactions, you can’t find out how “rich” they are.

Transactions inwards a Bitcoin block are an open book.

Mining

Monero mining does not depend on strenuously specialized, application-specific integrated circuits (ASICs), but can be done with any CPU or GPU. Without ASICs, it is almost pointless for an ordinary laptop to participate te the mining process for Bitcoin. The Monero mining algorithm does not favor ASICs, because it wasgoed designed to attract more “little” knots rather than rely on a few farms and mining pools.

There are more differences that lend themselves to Monero’s popularity among behind-the-scenes miners, like the adaptable block size, which means your transactions do not have to wait until they gezond into a straks block. The Bitcoin main-stream blockchain has a 1 MB block cap, where Monero blocks do not have a size limit. So Bitcoin transactions will sometimes have to wait longer, especially when the transaction fees are low.

The advantages of Monero overheen Bitcoin for threat actors or webstek owners are mainly that:

  • It’s untraceable.
  • It can make swifter transactions (especially when they are petite).
  • It can use “normal” computers effectively for mining

Linksom

For those of you looking for more information on the technical aspects of this subject, wij recommend:

Related movie: How to exchange bitcoin to dogecoin| Cryptocurrency exchange


Leave a Reply

Your email address will not be published. Required fields are marked *