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Swaxxx edited this page Nov 23, 2017 · 2 revisions

What is it ?

You should now have understood that the Blockchain was designed to be a secured ecosystem. Aside to the private/public pair of keys system that prevent an user to usurp the identity of another one and send transactions in his name, the Blockchain works on a process called Mining.

This process was made to certify once more the authenticity of the users and their transactions, without having to rely on a trusted third-party authority, in contrast with most of nowadays applications. The validation is kept objective thanks to complex cryptographic methods such as the proof-of-work.

Purpose

Why is Mining so important ? Because this is the process that allows to validate and register transactions to the Blockchain. The users that are taking part in this process are called miners, they offer their own computing power in order to solve complex cryptographic puzzles. This method create a competition between the miners onto the next block to commit, in order to prevent the same miner from validating consecutive blocks. This is what keeps the process safe from validating fraudulent transactions. In order to commit a block, miners try every possible combinations until they find the result of a hash function corresponding to the block. The odds to be the miner who'll succeed in validating the block depends on the ratio between his computing power and the one of the other miners. This makes the committing process random.

How it's worked

Mining refers to the distributed computational review process performed on each "block" of data in a "block-chain". This allows for achievement of consensus in an environment where neither party knows or trusts eachother.

Proof of work is the competition encouraged by miners to find the correct hash.

The chance of finding the solution is so low that the when one is actually found this is considered proof that the miner has done the work and so deserves the block reward.

The problem is that this is very energy intensive and has grown more so as the Cryptocurrency network has expanded and peta hashes of power have been directed at solving the hash rather than gighashes.

What blockchain choose ?

The first two most used blockchains are Bitcoin and Ethereum. While Bitcoin is bigger, it's less vulnerable to the 51% attack (see : https://www.investopedia.com/terms/1/51-attack.asp), but Ethereum have the possibility of using Smart Contract, so that's the reason this one was choose by the leaders of SXP project.

Financial Reward

Last but not least, mining is an interesting process because it allows to obtain a financial reward in ether, which is the crypto-currency required to send transaction on the Ethereum Blockchain. This financial reward is due to the fact miners use their own computing power to maintain the ecosystem, i.e their own electricity.

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