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How bitcoin is produced. Top 10 algorithms for bitcoin mining.



Before bitcoin was launched into the broad masses, the first enthusiasts (the first who recognized bitcoin) agreed on the progress and development of bitcoin. They approved the bitcoin mining algorithm (consensus algorithm).

The algorithm of exposure / consensus is a method of gradual extraction of crypto currency about which all the participants of the network agreed in advance.

The essence of this is to use the crypto currency, and it grew in price the following conditions are necessary:

Limitation in the amount.
There should not be an infinite number of bitcoins, if it were infinite - it would not be appreciated.

Gradual extraction.
If a large number of bitcoins entered the market at once, this would never raise it above some kind of bar. As people got to know about him, he gradually entered the market.

Cost of resources for extraction.
What comes with difficulty is always appreciated.

Has a unique technology or solved an unresolved problem so far (anonymity, fast payments, free or cheap transactions, security, lack of regulators).
These four points helped reach the bitcoin of the level and price that can now be observed, and it continues to grow.

Who are the miners and what is the benefit of mincing and servicing the network of detachments?

Miners using the resources of their computers find / create new blocks in the blockroom and fill these blocks with transactions of network users receiving a double benefit:

Having found / creating a new block in the blockroom, the miners receive 12.5 bitcoins from it.
If the number of transactions is too high, network users are ready to pay a commission to the ministers to ensure that their payments are included in the new block first. The commission depends on the number of transactions, the size of the block (now 1 MB) and the size of your transaction - it is constantly changing. The average commission is $ 1.
In this case, it is advantageous for the miners to fill up the existing block more quickly in order to start producing the next block sooner than others. Whoever first finds a new block - he gets 12.5 bitcoins. Therefore, less powerful miners combine into minining pools to increase the chance of finding blocks by them, and then divide the profits proportionally to the resources expended for each participant of the pool mining.

What are the consensus algorithms?

Proof of Work - We spend resources in the form of electricity, time and purchase of special computer cards to find new blocks and bitcoins in them (for each new block the miner gets 12.5 bitcoins).

Example: Bitcoin

Problem / benefit: A lot of resources and electricity are spent, there is a risk of decentralization of 51% in the hands of 1 miner.

Proof of Stake - the more we hold the coins in the account, the greater the chance that we will find the next unit, while the purse should be connected to the network 24/7, or you can rent the hosting.

Example: BlackCoin

Problem / benefit: A lot of resources and electricity are spent, there is a risk of decentralization of 51% in the hands of 1 miner.

Proof of Importance - the algorithm is similar to Proof of Strake but besides keeping the coin on the account it is counted how long the coins lie on the wallet, and also how much and in what amount of transaction you conducted with this currency. Those. The more transactions you make with the currency within the network - the more your reputation grows, which affects the passive mining of new coins.

Example: NEM

Problem / Benefit: Allows to avoid decentralization and evenly distribute new coins among all active network members. Algorithm for true coin fans.

Proof of Activite (Proof of Activity) is a standard scheme combining Proof of Work (PoW) and Proof of Stake (PoS).

Example: Dash

Problem / benefit: We made a pre-fixing by determining the initial value of the coin and switched to a more sparing algorithm.

Delegated Proof of Stake is a general term describing the evolution of basic consensus protocols based on share confirmation.

Example: BitShares

Proof of Burn ("Combustion") - "burning" occurs by sending coins to an address from which it can not be guaranteed to be spent. Getting rid of their coins in this way, the user gets the right to lifetime mining, which is also arranged as a lottery among all owners of burnt coins.

Proof of Capacity (implementation of the popular idea "megabytes as resources"). It is necessary to allocate a significant amount of disk space to join the mining.

Proof of Storage - similar to the previous concept, in which the allocated space is used by all participants as a shared cloud storage.

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