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How Does Ethereum Difficulty Work

Mining Difficulty And Network Hashrate Explained | 2miners Blog

Mining Difficulty And Network Hashrate Explained | 2miners Blog

Mining Difficulty and Network Hashrate Explained Let's try to understand what network difficulty and hashrate are. I'm in Crypto World, literally, for three months. I'm still not going to claim that I have a super knowledge. It was challenging for me to understand the principles of the cryptocurrency networks, so I decided to share my perspective on them. There are a lot of chats out there on the subject of cryptocurrency mining and trading. A typical question for any newbie would be something like, "which ASIC to buy or which mining rig to build," and the response is: "Take a look at the growing difficulty of the network and don't even think about getting into this business!" Lets have a look at the hashrate and difficulty of a Musicoin blockchain (similar to Ethereum, same as a Dagger Hashimoto algorithm). The values are smaller than you think, so I hope it will be easier for you to understand the idea this way. Each cryptocurrency network has a block time parameter. In Musicoin the block time is 15 seconds. Lets assume that all miners around the world are solving a big puzzle. Each piece is called a block. A musicoin block is found every 15 seconds in an ideal world. But this is not the case, so sometimes it could be 1 second or even 1 minute. However, the average block time is 15 seconds. How is this parameter being held regardless of the number of miners that connect to the network? It is evident that if there are lots of miners, they should find blocks frequently (here is an example of an empty block at UBIQ ), and if there are only a few miners, the blocks will be rare, and the network transactions will take a very long time. Currently, a miner or Mining Pool (many miners working together) receive 309 Musicoin coins ($13) for one solved Musicoin block. In the Et Continue reading >>

Mining Ethereum/wiki Wiki Github

Mining Ethereum/wiki Wiki Github

The word mining originates in the context of the gold analogy for crypto currencies. Gold or precious metals are scarce, so are digital tokens, and the only way to increase the total volume is through mining it. This is appropriate to the extent that in Ethereum too, the only mode of issuance post launch is via the mining. Unlike these examples however, mining is also the way to secure the network by creating, verifying, publishing and propagating blocks in the blockchain. Mining Ether = Securing the network = verify computation Ethereum Frontier like all blockchain technologies uses an incentive-driven model of security. Consensus is based on choosing the block with the highest total difficulty.Miners produce blocks which the others check for validity. Among other well-formedness criteria, a block is only valid if it contains proof of work (PoW) of a given difficulty.Note that in Ethereum 1.1, this is likely going to be replaced by a proof of stake model. The proof of work algorithm used is called Ethash (a modified version of Dagger-Hashimoto ) involves finding a nonce input to the algorithm so that the result is below a certain threshold depending on the difficulty. The point in PoW algorithms is that there is no better strategy to find such a nonce than enumerating the possibilities while verification of a solution is trivial and cheap. If outputs have a uniform distribution, then we can guarantee that on average the time needed to find a nonce depends on the difficulty threshold, making it possible to control the time of finding a new block just by manipulating difficulty. The difficulty dynamically adjusts so that on average one block is produced by the entire network every 12 seconds (ie., 12 s block time). This heartbeat basically punctuates the synchronisation Continue reading >>

Ethereum Difficulty, What Is Happening - Ethermining

Ethereum Difficulty, What Is Happening - Ethermining

It's the windows update from last night. It took 30% off my claymore hashrate. Just dont say it, keep it quiet for the mining dudes who follow this things and make profit of it. Wait, can I trade my reddit Karma for ether!? Shh! Don't bring these things to light, quiet and mine... Alt coins are recovering in price making it more profitable to mine than ETH Chinese New Years taking a break from mining. Correlation doesn't equal causation, but god damn I cannot agree with this more. The company I work for relies heavily in certain areas of Chinese manufacturing and we are SOL for this week and next. That's just one farm having a temporary shutdown or power failure or something. That drop is equal to about 500 rigs. Not a big deal. has to be more than 500 rigs. my back-of-the-envelope math shows that there would only be 12-13,000 rigs for 500 to create a 4% drop like that. There is more than 13,000 rigs mining ETH. Considering these guys have 16,000 rigs to themselves, I'd say you're right. This drop is significantly more than 500 rigs. 4% of 236,293 GH/s is about 9,451,720 MH/s. Or somewhere around 315,000 rx580s. Definitely more than 500 rigs. Who/how does the difficulty get set? Last weekend ETH difficulty went up 5% in one day. Could that have been too high of an increase and this is a correction today? I guess difficulty is a function of the hash rate and time between mined blocks. Where D = difficulty, H = network hash rate, and T = time between blocks: It would make sense that it scales linearly. So, a 5% increase in hash rate might result in a 5% increase in difficulty. And vice-versa should the hash rate go down. That being said, I'm not sure it would take days before the difficulty corrected itself. As I understand it, the difficulty is pretty fluid and changes Continue reading >>

Ethereum 'difficulty Bomb' May Not Happen For Another Year Or Two - Bitsonline

Ethereum 'difficulty Bomb' May Not Happen For Another Year Or Two - Bitsonline

August 22, 2017 by Jon Southurst 27 Comments 12926 Views There will be another delay for Ethereum minings difficulty bomb and switch to a proof-of-stake (POS) network, developers say. The decision could affect miners economic decisions in the near future, such as how much to invest in equipment and how much hashing power to devote to ETH. Also read: Shanghai Authorities Halt Blockchain Event, but No Fears of Wider Crackdown Increased Difficulty Means Leaner Times for ETH Miners There will likely be a squeeze on Ethereum blocks and block rewards from now until a new update arrives in late September. Reports from an Ethereum developers conference call last week said the long-proposed POS implementation, called Casper, will still not be ready soon. Originally planned for late 2017, the roadmap could push Casper back to the end of 2018 or later. Moving to POS has long been part of Ethereums roadmap, though the exact timing is unknown. It would fundamentally change the network, removing all ETH mining activity as it currently exists. Ethereum currently mines using proof-of-work (POW) like Bitcoin, where powerful machines race to solve a complex math problem and receive block rewards. Ethereum blocks are mined roughly every 12 seconds (depending on difficulty) and the block reward is 5 ETH. The rapid rise in ETH value from around $8 USD at the start of 2017 to around $400 in June has seen a rush to mine the token . It has also created a worldwide shortage of GPU cards. Under a POS model, Ethereum would require no GPUs at all. The difficulty bomb is code inserted into Ethereum that increases POW mining difficulty exponentially in preparation for POS introduction. The period where it gets too difficult to mine at all is called the Ice Age and its already beginning. The current Continue reading >>

When Will Ethereum Mining End?

When Will Ethereum Mining End?

In August of this year (2017), Vitalik Buterin, creator of Ethereum , released the implementation guide for the first version of Casper. As a hybrid proof-of-stake (PoS)/proof-of-work (PoW) algorithm, Casper v1 is going to decrease (and eventually end) the profitability for Ethereum miners . The release date is estimated to be sometime in 2018 as part of the Constantinople hard fork and theres a lot to learn before this happens: Casper is a PoS algorithm thats projected to be released on the Ethereum network sometime in 2018. Beginning as a hybrid with the current PoW algorithm, the first version of Casper will only use a PoS consensus to validate every 100th block, called checkpoints. Once a checkpoint is validated, theres no way to go back and use a chain without it. Even if 99% of miners support a chain that doesnt include a checkpoint block, all clients in the network will still continue to use the one with the checkpoints. This removes a lot of the power that miners currently have. The Ethereum community hypothesizes that the switch to PoS will help with the scaling issues that the network is currently facing. The algorithm should enable new blocks to be created more quickly while allowing the network to scale more efficiently through sharding. Sharding is a horizontal partitioning of a large database into smaller and more easily managed parts. Beyond that, PoS algorithms also use less energy to run the network, reduce centralization, and make 51% attacks more difficult. With the upcoming hard fork, there could potentially be three forks of Ethereum: And, if youre a miner, you may be thinking, No big deal, Ill just continue to mine and give support to the Ethereum PoW fork. The Ethereum developers have stated that theyll be releasing what they call the difficulty Continue reading >>

The Mystery Behind Blocktime

The Mystery Behind Blocktime

Identity Evangelist, Author, Blogger, Developer, Blockchain Enthusiast, Senior Director of Security Architecture at WSO2, Apache WS Committer, Axis PMC Member Block time defines the time it takes to mine a block. Both in bitcoin blockchain and ethereum blockchain, there is an expected block time, and an average block time. In bitcoin, the expected block time is 10 minutes, while in ethereum it is between 10 to 19 seconds. Both bitcoin and ethereum, at the time of this writing use a proof of work based distributed consensus algorithm (ethereum is planned to move to a proof of stake based algorithm with its serenity release). The expected block time is set at a constant value to make sure, miners cannot impact the security of the network by adding more computational power. The average block time of the network is evaluated after n number of blocks, and if it is great than the expected block time, then the difficulty level of the proof of work algorithm will be reduced, and if it is less than the expected block time then the difficulty level will be increased. Thats the core design principle behind block time, but you will see as we proceed, how bitcoin and ethereum differentiate themselves from each other. The level of difficulty varies with the time, as per the following formula. It tries to evaluate the speed of the mining network and find out how much it deviates from the expected level. The expectation is to mine a block in 10 minutes. For example, if the average speed of mining the last 2016 blocks is 8 minutes then the new difficulty factor will be greater than one, so the current difficulty level will be increased. In case the average is above 10 minutes, then the factor will be less than 1 and the difficulty level will be decreased for the next 2016 blocks. The d Continue reading >>

Ethereum's Difficulty Bomb: All Smoke, No Fire? - Coindesk

Ethereum's Difficulty Bomb: All Smoke, No Fire? - Coindesk

Ethereum's Difficulty Bomb: All Smoke, No Fire? Sometimeinthe future(we can't be certain when), ethereum will likely switch from its proof-of-work consensus algorithm to Casper, a proof-of-stake system its developers are now in the throes of completing. While this may sound like a slight change to those who are unfamiliar, altering this one parameter will have an outsized effect.When the protocol change happens, the ethereum blockchain will hard fork, meaning that, for a short period of time, two networks the old and new will exist simultaneously. At that point, the goal for ethereum will be to persuade the majority of its users to upgrade to thenew proof-of-stake-powered blockchain. Otherwise, ethereum risks winding up creating another blockchain, as it did when a past technical update created ethereum classic . On the surface of things, getting the companies that use the ethereum network to switch should not be a problem. After all, proof of stake promises to be faster and more scalable, and to consume far less energy than proof of work. To most of the ethereum community, Casper sounds like a great deal. Unless, of course, you are a miner. That's because proof of stake doesnt rely on mining. Rather, it gives the job of creating the next block to those who own tokens on a blockchain a move that essentially puts miners out of a job . But, two things could go wrong with ethereum's big switch. One would be if Casper does not work as planned. In this case, ethereum could simply delay the switchover. The second is if miners continue mining the old chain. But ethereum has always had a plan for that something called the 'difficulty bomb'. Baked into ethereum shortly after the network launched, the difficulty bomb was created to make mining a block increasingly difficult over Continue reading >>

What Is The Ethereum Difficulty Bomb?

What Is The Ethereum Difficulty Bomb?

Over the past few months, there has been a lot of speculation regarding Ethereums mining difficulty. This problem is known as the Difficult Bomb, and it poses a significant threat to the ecosystem. Or that is what most people think will happen if things ever come to such a point. Switching to proof-of-stake should make this a non-issue, though. Now is a good time to look at Ethereums difficulty bomb and what it could potentially mean for the network if left unchallenged. The Ethereum Difficulty Bomb Makes Mining Impossible It is important to understand the problem of the Ethereum difficulty bomb first and foremost. When Ethereum was first created, the developers had to create a consensus algorithm. Similar to Bitcoin, this consensus is achieved through mining in a proof-of-work environment. However, with the mining difficult going up over time, it could potentially create a problematic scenario. After all, it does not appear there will be ASIC-like mining hardware for Ethereum anytime soon. However, the Ethereum developers have come up with a different plan. From the outset, the plan was to make Ethereum mining impossible at some point in the future. This change will be introduced through an arbitrarily difficult block to mine, which will effectively create the difficulty bomb in question. As this difficulty bomb is activated on the network, the mining difficulty will skyrocket and eventually make Ethereum mining unfeasible and extremely unprofitable. Some people would expect this to be the end of Ethereum, but there is no reason to panic just yet. The goal is to switch over to a proof-of-stake algorithm before the Ethereum difficulty bomb can even become a problem. Right now, that PoS algorithm is still in development, albeit its completion appears to be imminent. Do Continue reading >>

Ethereum Difficulty For Miners

Ethereum Difficulty For Miners

is it possible to predict how much ethereum difficulty grows each month and can anyone tell me about the most difficulty it will reach in the future? as a miner i would like to know how long it can be profitable for me to mine when zcash showed up , ethereum difficulty dropped and again it is rising rapidly. Continue reading >>

Ethereum Mining 101: Your Complete Guide

Ethereum Mining 101: Your Complete Guide

The world has gone digital, from the development of smart homes to the development of innovations that promote seamless transactions. Every industry is feeling the impact of technology now more than ever. In every part of the world, the technologically driven goals remain the same: the maximization of profit and the promotion of sustainable development in all spheres of life. It is this yearning to make life as easy as possible that brought about the birth of cryptocurrency . Ethereum seeks to make these aspirations come true. The platform boasts of several applications that help users carry out everyday tasks in a simple fashion. What is Mining, Ethereum Mining and Where Does Ether Come From? Mining is a computationally intensive work that requires a lot of processing power and time. Mining is the act of participating in a given peer distributed cryptocurrency network in consensus. The miner is subsequently rewarded for providing solutions to challenging math problems. It is done by putting the computer's hardware to use with mining applications. All the information on cryptocurrency transactions must be embedded in data blocks. Each block is linked internally to several other blocks. This creates the blockchain . These blocks must be analyzed as fast as possible to ensure a smooth running of transactions on the platform. However, the issuers of such currencies do not have the processing capabilities to handle this alone. It is where miners come in. A miner is an investor that devotes time, computer space and energy to sorting through blocks. When the mining process hits the right harsh, they will submit their solutions to the issuer. After verification, the issuer of the currency offers rewards which are portions of the transactions they helped in verifying. They als Continue reading >>

Is Serenity The Solution To Ethereums Difficulty Bomb?

Is Serenity The Solution To Ethereums Difficulty Bomb?

Is Serenity The Solution To Ethereums Difficulty Bomb? There is a difficulty bomb programmed into the Ethereum network that could freeze the Ethereum Blockchain later this year. The views expressed here are the authors own and do not necessarily represent the views of Cointelegraph.com Ethereum has four milestone phases in its development post-release; Frontier , Homestead , Metropolis , and Serenity. Ethereum is currently in phase three - Metropolis version Byzantium. However, Ethereum has had a difficulty bomb a protocol that makes mining the cryptocurrency more difficult programmed into its Blockchain since the Frontier phase. Ethereums final milestone phase is Serenity. A major change that comes with Serenity is that Ethereums Blockchain consensus algorithm will change from proof-of-work (PoW) to proof-of-stake (PoS). Before the Ethereum network is able to make the shift from PoW to PoS, the network has to shift miners off of the PoW Blockchain, onto the PoS Blockchain. For the Ethereum network to continue functioning with full support, miners will have to support the PoS Ethereum Blockchain and not the chain that will proceed with a PoW protocol. This is a bit confusing - and that is exactly why developers programmed a difficulty bomb into Ethereums Blockchain, to eliminate any confusion. The difficulty bomb was first mentioned on August 4, 2015 in a blog post by former Ethereums chief commercial officer Stephan Tual that announced the first patch to Frontier. A lot of you have been wondering how we would implement a switch from PoW to PoS in time for Serenity. This will be handled by the newly introduced difficulty adjustment scheme, which elegantly guarantees a hard-fork point in the next 16 months it works as follows: starting from block 200,000 (very roughly 1 Continue reading >>

What You Should Know About Nonces And Difficulty

What You Should Know About Nonces And Difficulty

Verify is a Reputation Protocol for the blockchain What you should know about nonces and difficulty This is the sixth in a series of posts where we discuss the core concepts behind the Blockchain, Bitcoin and Ethereum. At Verify, were building a reputation protocol on the Ethereum blockchain and are sharing these posts in an effort to share our knowledge with the wider crypto community. In Ethereum ABC , we introduced the accounts fields. We mentioned the nonce field, but never explained it. This post will dive into that. Every transaction in Ethereum has what is called a nonce. We first saw the word nonce in our talk about Bitcoins mining , used to find proof of work; is it the same nonce in Ethereum transactions? Let us look into this question. In Ethereum there is a nonce for the block, which is similar to what we have been introduced to in Bitcoin. There is also a nonce for every transaction (in external accounts). It is the number of transactions made or sent from a given address. Whenever you send a transaction the nonce is incremented by one. The reason for a nonce in a transaction is to ensure: > That transactions are executed in order. You may have already guessed why this is important. Well, you guessed right: it is to prevent double-spends. Consider an example where: you send out a transaction with normal GASPRICE, when it is waiting to be added by some miner you send out another transaction with high GASPRICE to have the second mined before the first, making the first transaction invalid. That is why you have a nonce in Ethereum transactions, double-spends can never happen. A transaction of nonce 2 can never be mined before a transaction of nonce 1. Also note that a nonce cant be skipped. Meaning if you sent out a transaction with nonce 3 without sending no Continue reading >>

What Is The Ethereum Ice Age?

What Is The Ethereum Ice Age?

Ethereum is currently a Proof of Work cryptocurrency, meaning that computational power is needed, not only to produce new coinsbut to process transactions and to keep the entire ecosystem moving. In order to ensure the system is scalable and decentralized, Ethereum plans to move to a Proof of Stake protocol where a lot lesscomputational power is required and miners can earn rewards according to their balance. The Ethereum Foundation is still working on the Proof of Stake protocol, Casper. Since Casper is not finished and it's not contained in the release version of Ethereum a hard-fork might be required to implement this change. An hard-fork creates an incompatibility between the previous version and the latest, there is always the possibility to create a "split" that result in two blockchains, like Ethereum Classic , did on the 1920000th block, after the hard-fork to refund The DAO token holders took place . In order to ensure such event doesn't take place (although it did already) and to give themselves a time-frame to finish Casper (making the community aware of the introduction of a hard fork within that time-frame), a Difficulty Time Bomb, is also known as Ice Age was implemented in Ethereum. The Ethereum Ice Age is a difficulty adjustment scheme that was put in place to ensure that everyone has an incentive to move to the new blockchain once the hard-fork is implemented. It was introduced on the 7th of September (2015-09-07), about 11 months ago and it's programmed to raise difficulty exponentially. It's impossible for miners to keep up with the increase of difficulty which would raise block time and it would make the blockchain freeze, hencethe name Ice Age. The key part is the calculation for the increase in difficulty is Math.pow(2,Math.floor(block.number / 10 Continue reading >>

How Difficulty Adjustment Algorithm Works In Ethereum

How Difficulty Adjustment Algorithm Works In Ethereum

How Difficulty Adjustment Algorithm Works in Ethereum In order to explain the logic of difficulty adjustment, we will use the go implementation of Ethereum which is generally called Geth. Source code of Geth can be found here. Difficulty adjustment algorithm is coded inin block_validator.go file, which can be found here. By difficulty adjustment we mean the logic in Ethereum using which Ethereum tries to keep mining time of the blocks between 10 to 19 sec. If difference in mining time is between 0 to 9 sec. then Geth tries to increase the difficulty to mine the block and if difference is 20 sec. or more, then Geth tries to reduce the mining difficulty of the system. In block_validator.go file, function CalcDifficulty is called to adjust the difficulty of the system and it returns the difficulty of the next block when it will be created. This function, in return, calls calcDifficultyHomestead or calcDifficultyFrontier depending on the configuration parameters. Latest version of Ethereum uses calcDifficultyHomestead function, therefore we will be reviewing calcDifficultyHomestead function. In order to calculate the difficulty of the new block, this function needs following input parameters: time Proposed time of formation of new block parentTime Time of formation of parent Block parentNumber Parent block, block number. Below is step by step process how difficulty of new block gets created. 1. First, difference between time of formation of parent block and new block is calculated. 2. Output of step 1 is then divided by 10 and integer of it is stored. This is done to create ranges. If output of step 1 is between 1 9 then output of this step will be 0. If output of step 1 is between 10 19 then output of this step will be 1. If output of step 1 is between 20 29 then output o Continue reading >>

7 Answers - Why Is Ethereum's Difficulty Rising When Ethereum Is Down 50%? - Quora

7 Answers - Why Is Ethereum's Difficulty Rising When Ethereum Is Down 50%? - Quora

Why is Ethereum's difficulty rising when Ethereum is down 50%? Over $20,000 in your IRA or 401k? Here's how to move to Bitcoin. Open a Bitcoin IRA now for massive growth potential on a tax-deferred basis. Get a free info guide now. The difficulty has no direct correlation with price. So, in this case, it means that even with the price down, at least the same amount of hashing power is in play to sustain the Ethereum Network. Why? We can only guess, but at least these miners see good reasons to continue to mine. The next month, the ETH value drops by 50% You can re sell all your rig for say $7000. You lose $3000. Or you can still mine and earn some ETH that might be worth much more in the future. Trading has a short term horizon. Mining has a long term horizon. You cannot buy and sell a rig as fast as buying and selling a bitcoin. Learn blockchain. Earn up to an average of $63,566 per year. Master the concepts like cryptography & cryptocurrency, blockchain networks, bitcoin mining & security. There's no correlation between the hash rate and the price. The hash rate is a function of total computational power on the network. New computers get added and older dogs get upgraded so it makes sense that the hash rate will continually increase over time. The price of ether is a function of trading volume and ultimately the supply and demand. It acts similarly to a traditional stock market in this sense with some interesting differences. If the price continues to call it means there is greater selling pressure than those looking to buy it. In the examples below about the price of the rig and the incentive to hold it lies the basic incentive for miners. While the price of ether is high enough, where you might break even, there is the potential to make a profit of the price increa Continue reading >>

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