CCX010 - Crypto Mining, Hash, Block, Consensus, Nodes - Technical Terminology Crypto and Blockchain Part 2

Mining

When a transaction between A and B is validated by the P2P network of servers and in return they are rewarded with the fraction of the cost of the transaction. These servers are called Nodes.

Nodes

Block - the transaction information, and other data shared across the nodes goes into the block. There is no limit to how many transactions can be in the block and at the time there is only one transaction in a block, however, there is a limit to how big a block can be. For example for Bitcoin, each block can be up to 2Mb.

The block is hashed and becomes a record.

Each block has all the information regarding the transactions happened and has the hash of the last block as a reference. These blocks are sequentially connected, like a chain. Every new block contains the hash, node information and other details of the last block and its own transaction information.

Now what is Hash: For example, you take a 100,000-word document or an ebook and hash it, it will provide you with a string of characters and let's say its 32 characters long. This is not random, because if you take the same document and hash it again, it will give you the same cryptographic string of characters. But if you change even a minor thing in it, the sting of character will be different.

P2P network - If any information is updated or changed on any of the nodes within a peer to peer network, the nodes to talk to each other frequently and will update each other.

A new node that connects to the network will have to download the entire ledger on it, and that can take a day or more.

Bitcoin Mining using ASIC

The computers use their processing power to solve complex puzzles and whosoever solves this puzzle fast, gets rewarded with the bitcoin. As more and more nodes join the network the puzzle gets harder and required more computation power to solve the puzzle and the puzzle still needs to solve within the 10 mins per block. Due to this reason, many people join forces and create mining pools and the reward is distributed among each other.

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