Flatrock Mining
Sep 6, 2018 · 2 min read

Hi Karl

Most people use the word “puzzle” to simplify what is actually been done. Because to explain you actually have to take a few steps back. And you need to start explaining how the network works and how it protects itself. So puzzle is the short version.

I’ll explain but its going to be the long version :)

So first off to create a decentralized system you need to have computers all over the world hosting the ledger(blockchain), routing, securing and submitting the transactions to the ledger. Miners are responsible for adding blocks of transactions on the chain.

As a secondary functions of the computing (hashing)power they bring secures the ledger.

To protect the ledger the network uses a hash/encryption. But unlike most hashes the bitcoin network does not have a key(also known as a private key) to unlock it and write info to it. Its basically a password.

The reason their is no key is because a key into a system is a vulnerability, especially a key that would need to be online, a hacker could find it, steal it and use it, to add or rewrite transactions(also know as a double spending). He could buy groceries go back to the ledger and wipe out that transaction and put the money back in his bitcoin wallet. So because their is no key to add new blocks miners literally have to guess what the key(a key which in fact changes from block to block) is.

But now as you know computers get more and more powerful, which also means a computer can start to break hashes in quicker times. So another nifty little trick the network has to protect itself is an ever increasing difficulty. So the key gets harder and harder to figure out based on how powerful the computers on the network are.

When a miner logs onto the network the network calculates its ability to break hashes. Based on this the network then increases the difficulty to add a block. If it did not do this you could have a situation that someone can come along with a massively powerful computer and start breaking the hash and start double spending coins. which means the ledger is no longer considered immutable. This is the secondary function of the miners, besides adding transactions they actually help secure the network because of the computing power they bring.

So say i use my bitcoin to buy some groceries and you buy a telescope.

All those transactions have to now be added into a block and added to the ledger. But the miner cant just add it to the chain, the miner needs to figure out the hash the network gave it. Which is the hash of the previous block + a random number called the nonce. This nonce is what helps set the difficulty as more powerful computers are added to the network.

This process of the miner finding the key to add the block to the chain is what people call solving the puzzle. Its anything but pointless its the reason the bitcoin network has not been hacked.

If you have any questions I will try to answer them.

    Flatrock Mining

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    We are a mining as a service company (MaaS). We help you to easily mine cryptocurrencies.