Crypto Academy Week 4 Homework Post for [Professor @besticofinder]

in SteemitCryptoAcademy2 months ago (edited)

Hello Friends!

We have stepped to the month of March. I will be completing the first homework task of this month given by professor @besticofinder. If you missed this week's lesson by professor @besticofinder. Click the link Introduction to Cryptocurrency Mining | Steemit Crypto Academy | Lesson 4 Let's do it!.


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This week's task...

You need to do your own research and create an article discussing the following topics,
(1) How cryptocurrency mining works?
(2) What is Mining Difficulty?
(3) What are the challenges for cryptocurrency miners?


What is Cryptocurrency mining?

In brief Cryptocurrency mining is the process of verifying transactions between users and adding them into a blockchain public ledger. These transactions are verified by solving cryptographic algorithms. This is where the miners get involved, solving cryptographic algorithms known as proof of work for each transaction. when the cryptographic algorithm is solved the miner will add a new block to the blockchain which will be recorded as an official transaction.

Miners solve complex mathematical puzzles, and once a new block is added to the blockchain the miners will be a reward for their efforts. They will be rewarded in form of cryptocurrencies.

This whole process is known as cryptocurrency mining.

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(1) How cryptocurrency mining works?

In the process of creating a blockchain there are several key components:

  1. Nodes
  2. Miners
  3. Transactions
  4. Hashes
  5. Nonces
  6. Consensus algorithm
  7. Blocks
  8. Blockchain

Let's Look at the cryptocurrency mining process step by step:

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(2) What are Mining Difficulties?

Every time a new participant joins the peer-to-peer network the difficulty of hashing increases. The miners start competing for a limited stock reward. Finding the right hash or solving complex cryptographic algorithms consumes time and very competitive when maintaining the target block time. The difficulty of mining depends upon the number of miners entering the network.


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(3) What are the challenges for cryptocurrency miners?

There are many challenges miners face nowadays. The major challenges are:

* Not enough resources

Many miners these days don't have enough resources even if they are interested. Mining requires lots of computing power which consumes high energy power.

* Cryptomining comes with a huge cost

Not everyone can bear the cost of mining. Apart from energy costs, there are many other costs involved when mining. Since many new participants entering the network, mining now has become very competitive. At least to get a slight chance to compete at their level, you need to have high tech and processing capacity which involves less energy consumption.

* Return on investment is low

Even if you have enough resources and invest money in mining, sometimes you won't be able to get the return on investment as you expected. There are people who have made money from mining but nobody can assure. Many miners join the network as teams these days and compete at a very high level and this leads to a decrease in ROI.


I have answered all questions as per my understanding of this week's lesson. Looking forward to next week's lesson.

Mentioning respected @steemcurator01 & @steemcurator02

#cryptoacademy #besticofinder-week4 #srilanka #steemexclusive #steemitblog

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Hello @vishwara ,
Thank you for submitting homework task 3 ! You have discussed all the topics required ! nice work [7]
Thank you

You have been upvoted by @besticofinder,A Country Representative from SRI LANKA. we are voting with the Steemit Community Curator @steemcurator07 account to support the newcomers coming into steemit.

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