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Is Generating Ethers, the Main Purpose of Mining? Ethereum Blockchain

It is often misconstrued that the sole purpose of mining is to create Ethers in a way that doesn't require a central issuer. Yes, Ethereum tokens are minted through the process of mining at a rate of 5 Ether for every mined block. While, it is right to say that Ether generation is not dependant on a central authority, mining has another, as important, if not more important job. Hire dedicated blockchain development company in India

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Is Generating Ethers, the Main Purpose of Mining? Ethereum Blockchain

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  1. Is Generating Ethers, the Main Purpose of Mining? Ethereum Blockchain It is often misconstrued that the sole purpose of mining is to create Ethers in a way that doesn't require a central issuer. Yes, Ethereum tokens are minted through the process of mining at a rate of 5 Ether for every mined block. While, it is right to say that Ether generation is not dependant on a central authority, mining has another, as important, if not more important job. In the centralized world, Banks perform the legendary, centralized way of record-keeping and ensure its customers accuracy and a high level of trust. This centralized authority regulates currencies and averts fraud and double spending. This was one of the most challenging impediments faced by decentralized ledgers before Bitcoin! Although a ‘trustless’ monetary system was the goal, the financial records still needed to be secure, ensuring that there is no cheating. Ethereum, like Bitcoin, solves this fascinating issue of double spending through the Proof-of-work mechanism used in its mining. Ethereum Miners come to a consensus about the exchange history using the Proof-of-work algorithm called EtHash. On Ethereum, for every block of transactions, miners use high speed, high processing, ASICs computers to process puzzles and reach the correct answer as fast as possible, until one of them wins. The winner gets corresponding ethers and broadcasts the new block across the network for each node to validate. It takes almost no time for others to verify that the hash value is correct and add it to their copy of the ledger. A new block is mined approximately every 12–15 seconds. If miners start to solve the puzzles faster or slower than this, the algorithm automatically readjusts the difficulty level of the problem so that miners spring back to achieve roughly the 12-second solution time. Both luck and computing power affect the profitability of the miners. Conclusively, mining makes decentralized record-keeping possible. The Future of Ethereum Mining… Due to heavy energy costs which are eventually paid with fiat currencies, leading to a constant downward pressure on the digital currency’s value, blockchains like Ethereum plan to replace Proof-of-work with other methods of reaching a consensus about the validity of blocks. It is predicted that Ethereum will soon hard fork to Proof-of-Stake which would mean the creator of a new block is chosen in a deterministic way, depending on its wealth, also defined as stake. There is no block reward, so the miners take transaction fees. In fact, in this PoS system miners are called forgers, instead.

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