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How to Compete for Digital Coins Using Hashes

By: Shitlister

In bitcoin network, miners seal off a block chain or a general ledger using hashes created using a mathematical formula. Miners compete with each other to seal off block using a software and every time someone successfully creates a hash, they are rewarded with 25 bitcoins as an incentive to keep mining, and keep the transactions working. Every time someone gets a reward, the block is updated and everyone in the network hears about it. Mining has to be controlled otherwise all bitcoins would be mined in minutes. This is how it done.

Bitcoin protocol: why a ‘proof of work’It is generally easy to create a hash from a collection of data. This means that if the bitcoin network doesn’t make it more difficult to create a hash, everyone would be hashing hundreds of transaction blocks in every second. So to avoid all bitcoins from being mined within few minutes, bitcoin protocol introduced a ‘ proof of work’ to make hashing more difficult. In order for your hash to be accepted by the bitcoin protocol it must have the following characteristics:

It has to look a certain way, not like any other old hash.
It must have a certain number of zeroes at the start.
It is difficult for a miner to tell how the hash will look like before he produces it. Once he includes some data in the mix, it will look totally different.

How to create a different hash.

Miners change the data they are using to create a different hash. To do this, they just take random piece of data called a nonce. They play with the nonce until the hash fit the required format. If the hash doesn’t fit the format, the nonce is changed and the whole thing is hashed again. Finding a nonce that works is difficult and this is where miners in the network compete on: getting a nonce that works.

Generally, it can take miners many attempts to earn bitcoins. It will take ones experience to earn more than other in the network considering that all miners are trying to come up with a nonce that fit the format at the same time. The speed of the miner in generating nonces will determine how much he will outdo the others in the network.

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