Mining Tools Mining is a process of increasing money supply. Mining also protects the security of the system, prevents fraudulent transactions, avoids double payments, and double payments means spending the same amount many times. The miners are given the opportunity to reward for the network.
The miners validate each new transaction and record them on the general ledger. Every 10 minutes there will be a new block is excavated out, each block contains from the previous block to the current period of time all the transactions occurred, these transactions are added to the block chain in. We refer to the transaction that is included in the block and added to the chain as a "confirmation" transaction, and after the transaction is confirmed,Mining Tools the new owner can spend what he gets in the transaction.
Miners in the mining process will be two types of incentives: the creation of a new block of the new coins reward, as well as the transaction included in the block transaction fee. In order to get these rewards, miners are struggling to complete a mathematical problem based on the cryptographic hash algorithm. The answers to these puzzles are included in the new block as proof of the computational effort of the miners,Mining Tools known as proof of work. The mechanism of competition for the algorithm and the mechanism by which the winners have the right to record transactions on the chain chain, both of which are the cornerstone of security.
The new generation process is called mining because its incentive mechanism is designed for the speed reduction mode, similar to the precious metal mining process. Of the currency is issued by mining, similar to the central bank through the printing bank notes to issue currency. The miners are reduced by about half every year (or exactly every 210,000 blocks) by creating a new block. At the beginning of January 2009 for each block reward 50, and then by November 2012 halved for each block reward 25. Will then be halved at a certain time in 2016 for each new block reward 12.5. Based on this formula, the mining incentives were exponentially decreasing until 2140. All the (20,999,999.98) all the issue is completed. In other words, after 2140, there will be no new generation.
The miners also get the transaction fee. Each transaction may contain a transaction fee, the transaction fee is the difference between the input and the output of each transaction record. Miners who successfully "dug up" new blocks in the mining process can get all the tips included in the block. At present, this cost accounts for 0.5% or less of the miner's income, and most of the proceeds are still rewarded from the mining. However,Mining Tools with the decline in mining incentives, as well as the number of transactions included in each block increases, the transaction fee in the proportion of miners will gradually increase. After 2140, all miners' earnings will consist of transaction fees.
The word mining is somewhat misleading. It is easy to cause the association of precious metal mining, so that our attention is focused on each new block on the reward generated. Although the reward of mining is an incentive, but its main purpose is not to reward itself or the emergence of new currency. If you only regard mining as the process of producing new coins, then you are the means (incentives) as a purpose. Mining is a process of centralizing the settlement, and each clearing house verifies and settles the processed transactions. Mining protects the safety of the system and achieves a consensus in the absence of a central organization.
The invention of mining has become very special, and this de-centered security mechanism is the basis of point-to-point electronic money. Casting new coin bonus and transaction fee is an incentive mechanism that can adjust the miners' behavior and network security while also completing the currency issue.
In this chapter,Mining Tools we first look at the currency issue mechanism, and then come to understand the most important function of mining: to support the safety of the central to the spontaneous consensus mechanism.