What is the purpose of mining blocks (what does mining blockchain mean)

08/16/2023 13:44 • Tech Ticker • 84 views

What is the purpose of mining blocks? Miners can receive corresponding rewards by mining blocks. For example, miners can earn fees by mining their own coins, and they can also use their assets on the blockchain as transaction records for accounting and storage. They can also vote on transaction initiators or nodes based on their own situation to gain profits. If a project wants to attract more user attention, it can directly participate using the mined blocks without paying any fees to complete the work.

What does mining blockchain mean

Mining blockchain is a new type of digital economic activity based on cryptography, distributed ledger technology, and consensus mechanism. It is a complex technology with great potential in the computer industry. Bitcoin was developed as a new business model to solve the problem of information asymmetry. However, due to the nature of blockchain technology, it is difficult to become a simple system. Therefore, we need to combine this new economic activity with Proof of Work (PoW) to achieve this goal. Therefore, cryptocurrency is used to create network nodes.

Specifically, mining blockchain is a method of calculating and recording data using mathematical methods. “Mining” refers to the process of sending certain specific data to others and then broadcasting it to others to obtain these data. (As shown in the figure: when we run smart contracts on Ethereum, this part of the data is generated.)

If someone can find part of the data (that is, verify the block), they can get corresponding rewards, thus obtaining certain income or revenue. Of course, there may also be different incentive measures, such as encouraging users to contribute their code to participate, or attracting more players to join. What is mining blockchain? In fact, it is very simple. “Mining” is also called the bookkeeping process-the task of bookkeeping is written by machines, and its task is not to issue tokens or pay interest to any party, but to let everyone know how much computing power assets they have.

Because it is a peer-to-peer transaction, there is no central entity, and it is managed by an organization composed of one person controlling all nodes in the entire network. This leads to a very big risk: “Suppose you have a wallet or application that wants to track the amount of on-chain transfers, then you must ensure that your funds are passively held.”

For example, if you want to buy a $100,000 stock, you can first buy 1 Bitcoin futures exchange. Once the market price reaches that level, you may lose more than $100. However, as the price of Bitcoin continues to rise, investors will realize another major issue, which is how to maximize profits.

For most people’s understanding, mining is the same. Many people know that mining blockchain actually has its purpose. For example, some news we usually see, including an article about mining reported by The New York Times, mentioned many topics about mining.

However, many times people do not understand how the blockchain works, and even ordinary people cannot understand this. For example, now everyone thinks that the blockchain is just like a computer, just to improve efficiency.

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What is the purpose of mining blocks (what does mining blockchain mean)

What does mining blockchain mean

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