The new buzz in cryptocurrency; Ethereum mining
The base of decentralised network
Miners are key people in making sure Ethereum keeps on working. It can be said that the sole purpose of mining is to generate ether, instead of having a central issuing authority. Ethereum token is generated through this procedure at a rate of 5 ethers for every 1 mined block. However, Ethereum mining serves more than one purpose in keeping Ethereum afloat. Like for a fiat currency, banks regulate the transaction making sure that money is not created out of thin air and nobody spends their money twice. Block chain on the other hand introduced a new way of record-keeping; the entire network is responsible for verifying the transaction and to add them to the public ledger. Even though the goal of the decentralised network is to be trust less, someone still needs to secure financial records.
Miners serve the purpose of verifying the transaction whilst preventing fraud, a problem faced by decentralised currency, before ‘proof-of-work’ block chains.
The workings of ‘Ethereum mining’
In simpler words, miners with the help of dedicated computers try to solve a puzzle very quickly through constant repeated attempts until one of them solves it. What miners actually do is run the metadata of the block’s header across a hash function, only to change the nonce value by a bit, which in turn impacts the resulting hash value.
The miners aim to match a hash value with the target and in doing so, are awarded some Ether. This block is then broadcasted across the entire network to each node to validate and copy the same to their ledger as well. In this process, upon receiving the information about the discovery of a new hash, all the miners will stop working for this one and move on to the next. It becomes next to impossible for the miners to cheat and requires extensive work, hence called ‘proof-of-work’.
A miner’s future in Ethereum mining
Due to the cost and work associated with the process, Ethereum is looking to move to another method of consensus about the validity of transactions. In this process the developers plan to roll out a new method called ‘proof-of-stake’, which would mean getting a distributed consensus, requiring fewer resources.
Lou Chan, Populous World.
