Homework on Mining and Proof of Work - Questions

  1. As a way to ensure they are working by the rules. Otherwise it becomes very costly.
  2. Because blocks will be added time after time. Before someone ques the puzzle to link the block again, many blocks have been added. Rule is; longest chain of blocks is valid.
    3.Mining difficulty is regulated by the nonce. (a changing random number addedto make the final hash of the block.
  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    1.it is costing the miners a lot of money so they will play by the rules. There is no gain in cheeting.

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

  3. You break the link in the chain if anything is canged in a block, the previous,the next and following blocks too.

3, How does the network regulate mining difficulty?
3. The target is made low when the difficulty (many people is mining) is high, making the nonce harder
to guess. when less minors working the nonce is easier to guess because the target is high

Why is it important to make sure that miners spend money (on electricity) while mining?
Because they will be incentivized to continue mining to pay back their costs and to make a profit.

Why would it be very difficult for someone to go back change a previously added block?
If a previously confirmed block is changed, the hashes of that block and all subsequent blocks would change, requiring that they all be mined again. This may take a very long time for a single miner to complete.

How does the network regulate mining difficulty?
The block hash must be below a target number. This target decreases as more miners participate, making mining more difficult, which adjusts for the higher supply of miners.

  1. It incentives miners to play by the rules. If they will cheat- there block will not get accepted to the pool and all this money wasted on electricity will be lost
    2)It will require too much electricity and computing power, because he will be required to create new links to all blocks in front of the changed one + catch up with the blockchain, since blockchain prioritizes the longest chain of blocks.
  2. More miners = lower target number
  1. So they can play by the rules and not try to cheat, because if they try to cheat they will lose money they have spent (on electricity) while mining.
  2. It would be very difficult if not impossible for someone to go back to change a previously added block because all the other blocks will disagree. For it to happen he or she will have to contact all the millions of other blocks that have been created to also update their blocks.
  3. When there is mining difficulty, the reward becomes low, and many miners will drop. Then after some time the difficulty reduces again when there are fewer miners.

1.Miners spend money so the upfront cost will incentives them to keep them playing by the rules, bad actors will always lose this upfront costs

2.It is difficult to change previous added block as this block is based on the previous block hash

3.mining difficulty is regulated by difficulty adjustment, the hash of the new block
previous block + TX + nonce must be below target value, as increase in target value the easier to mine the value

  1. Why is it important to make sure that miners spend money (on electricity) while mining?
    It ensures the integrity of the blockchain by making sure that miners follow protocol in order to claim the block reward and their associated transaction fees. If they break the rules they will not be able to add blocks to the blockchain and will therefore be financially penalised.

  2. Why would it be very difficult for someone to go back change a previously added block?
    If any previous block is tampered with, (i.e. attempt to remove a transaction record), it will invalidate the hash of that block and break all subsequent links and blocks. The offending miner would then need to unilaterally mine all those blocks again which, given that the blockchain is continually updated every 10 minutes with the addition of new blocks, would be energy and time costly and therefore unfeasible. Whilst is possible for a miner to achieve this by gaining control of 51% of the network, it has been estimated that this would require enough energy to power a large city for more than a week and is therefore not economically viable.

  3. How does the network regulate mining difficulty?
    A new target number is generated every 10 minutes and is based on the number of miners on the network. The more miners there are, the lower the target and corresponding difficulty level. Miners continually guess a new hash until it is lower in value than the target to enable their block to be added to the blockchain.

  1. It intensives people to follow the rules. It could also be argued that it gives bitcoin value as it takes work and investment to keep it operational

  2. Because it takes enormous amounts of power to rewrite the block chain and if you had that it would make more sense to just play by the rules and profit that way

  3. The protocol lowers and raises in difficulty to keep the blocks being produces every 10mins or so

  1. to incentivize a reward and prevent corruption like trying to create a fake transaction.
  2. Because each block is linked and they would have to re-mine all the proceeding blocks again plus blocks that are being mined at the time.
  3. With nonce guessing a random number the more miners there are the more difficult it is.

1. Why is it important to make sure that miners spend money (on electricity) while mining?
Because by making this initial investment, they have an incentive to follow the rules in order to get the block reward and transaction fees.

2. Why would it be very difficult for someone to go back change a previously added block?
Because its hash would change and therefore the hash of the next block as well destroying the links between the blocks. For one person to recreate new links is theorytecally feasible but practically impossible.

3. How does the network regulate mining difficulty?
By lowering the target mining becomes more difficult.

  1. Miners need to be invested in the network, not just receiving rewards.
  2. Blocks are hashed together. Changing data in a prior block changes the hash and breaks the chain.
  3. By raising and lowering the target based on the number of miners.
  1. 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.

  2. 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.

  3. 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 “nonce” number so that after hashing the block, the figure must be lower or equal to the Target number in order to be successful.

  1. To encourage them to compete for the block rewards.

  2. 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.

  3. More miners, higher difficulty, lower target.

1- to make consequences for your actions in which if you don’t 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

  1. Provides economic incentive to mine and play by the rules.

  2. Changing would invalidate the blocks.

  3. Sets target nonce lower for increased and higher for lower mining difficulty, in an attempt to keep block propagation times at 10 minutes.

  1. To make sure that miners are penalized for changing blocks. If they could guess the nonces to “compute” 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.

  2. 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.

  3. The difficulty target is a value that gets adjusted every 2000 blocks. A new block’s 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.

  1. It is proof of work, effort required to earn the block reward. It is conversion of effort into bitcoin in return.

  2. They will need to mine the block and all the blocks after it again.

  3. When more miners joined (with higher hash rate), the block time will be shorter than 10mins, the difficulty will then be adjusted accordingly.

  1. so they have spent there own money towards mining and makes them have more incentives to play by the rules
  2. 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 punição financeira para quem tentar corromper os dados na blockchain.

2 Pois não existe incentivo financeiro para que isso seja feito, afinal de contas para que ocorra um ataque de 51% na blockchain é preciso obter a maior parte da capacidade de hashing.

3 Ao restringir as possibilidades de outputs(hash do bloco). Quando os blocos começam a ser minerados num tempo relativamente diferente de 10 minutos existe um ajuste de dificuldade, onde o target dos outputs é diminuido ou aumentado, afim de dificultar a obtenção de um hash na faixa desejada.