Pool Mining - What it is and Why it is Critical to the Blockchain Ecosystem
Work and Proof-of-Work
One of the key attributes of the Blockchain distributed ledger technology is reaching consensus among participants (known as Miners) whose job is to add new records (blocks) to the distributed ledger. Adding a new record to the distributed ledger is a trivial task and because of that, it can lead to a nefarious participant quickly adding records to the distributed ledger without peers’ verification and validation. That is why some Blockchains used by cryptocurrencies (like Bitcoin) require work to be done by a Miner and proof of this work presented to participating peers before adding a new record to the distributed ledger that can be verified, validated and accepted by the peers.
How Does A Miner Do Work?
Before a Miner can add a new record to the distributed ledger, they must first generate a random number (called a nonce), append this random number to the unique digital signature (hash value) of the new record, and then generate a new unique digital signature. If the new unique digital signature value meets a minimum requirement (called difficulty target, which is dynamically determined every time a new record is added), then the Miner has found the golden random number (golden nonce). If the generated digital signature does not meet the minimum requirements, the Miner must repeat the process until they find such a random number that, when appended to the unique digital signature of the new record to be added, the resulting generated new unique signature meets the minimum difficulty target. This minimum difficulty target could be for example, the first four digits of the generated digital signature must start with four zeros.
The process of generating a random number (nonce), appending it to the digital signature of the new record to be added, and generating (hashing) a new unique digital signature is referred to as Mining or doing work.
Most modern smartphones or laptops can easily perform Mining, however, someone using a smartphone or their laptop to do Mining would have a harder time finding the golden nonce compared to someone using a powerful server. There are several powerful data centers built by single entities to perform Mining at a large scale which means reward earnings from finding the golden nonce could be dominated by a single player which can lead to a 51% attack.
Pool Mining allows anyone with a computing device (such as a smartphone or laptop) to join forces with others and collectively create as much powerful computing resources as the data centers created by big corporations for Mining.
I believe Pool Mining is critical to the growth, adaptability and security of proof-of-work based Blockchain applications. Here at BlockMint, we created the Minter browser to enable anyone to participate in the Blockchain economy. Recently, Bitcoin has seen a large increase in price, rising more than 140% in the year to date to trade at US$8,942.58 as of Monday, May 27th (see chart below). This has caused similar increases in other cryptocurrencies, such as Monero, which is the coin mined by the Minter browser.
BlockMint’s Minter browser is the easiest way for people to join a Mining Pool and earn passively with their device while they browse the internet.
Recent News in Blockchain and Cryptocurrency
- Facebook has yet to publicly announce an asset-based cryptocurrency but media reports have emerged over the past six months on its proposed plans for Project Libra. The Facebook founder has been quoted as saying “it should be as easy to send money to someone as it is to send a photo” which indicates that Facebook may be preparing to jump into the commerce payment and remittance space. Reports indicate that the cryptocurrency – called “GlobalCoin” internally – will launch in about a dozen countries by the first quarter of 2020 and operate within Facebook’s existing messaging products (WhatsApp, Instagram and Facebook Messenger).
- Salesforce, the leading provider of cloud solutions for business management, revealed its own blockchain solution this week. The product, named Salesforce Blockchain, helps users build and maintain blockchain networks, apps and smart contracts, allowing them to “create and share blockchain objects in the same process as any CRM [client relations management] data object — with clicks, not code,” according to Salesforce’s press release.
- An ECB official highlighted the benefits of central bank digital currencies (CBDC) while stressing caution in a speech published by the Bank of International Settlements on May 27th. Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania and a member of the Governing Council of the ECB, delivered a speech in which he specifically considered whether CBDCs should be wholesale, retail, or both.
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