As we already know, a node is an electronic device with an IP address that is connected to blockchain — that is, a computer, a laptop, or even a smartphone. Bound together, nodes form a decentralized network that works without a server, all information is stored on nodes directly. There are different types of nodes that vary by technical characteristics, the amount of time spent online, and visibility. In this article, we will be talking more about how nodes work and how to use them for cryptocurrency mining.
To understand the concept of mining, we need to remember how blockchain works. Basically, blockchain is a growing list of blocks — data records — all of which are connected, forming the said ‘chain’. Due to every block storing some data from the previous block and the following block, the whole chain is immune to external data modification, which makes the network very secure. To maintain this security, the transactions are expected to be ‘validated’ by the members of the chain — full nodes. Lite nodes don’t carry out validations, due to them being vulnerable to data modification themselves.
As a full node starts generating hashes looking for vulnerabilities in the network, once a vulnerability is found, the node is rewarded with coins. This process of obtaining cryptocurrency is called mining and basically exists to stimulate blockchain users to contribute some of their computing resources to the network. Once bitcoin — the first modern cryptocurrency — was launched, mining used to be easy, and almost every user could do it. Nowadays, bitcoin mining needs a lot of dedication, costly computers, and Internet bills. Why is that?
In fact, mining difficulty is the actual official term rather than a subjective assessment. Like we mentioned above, nodes, while mining, generate hashes in order to detect blockchain vulnerabilities. For every node, there is a set number of how many times per second a hash can be generated — this is one of the fundamental node characteristics, hash rate. In other words, the hash rate of a node expresses its computing power. To mine successfully, you’re going to need high capacity devices, the hash rates of which being above 10 megahashes per second (MH/s).
What about the difficulty though? It is a parameter expressing how difficult it would be to be rewarded with a coin, which depends on the hash rate of the whole network and on the time spent on finding the previous blocks. The higher the hash rate, the more participants in the network, the shorter the amount of time spent on mining a new coin, the smaller the chance you’ll be rewarded — and, last but not least, the more electric power you spend. It is important to know the difficulty of mining to spot the most effective devices and to redistribute the resources you spend if needed.
The fact that mining popular cryptocurrency is becoming more difficult and demanding, can be illustrated by another fundamental characteristic of any blockchain — block height. Roughly speaking, a block height is an amount of all the blocks (which are effectively just bunches of transactions) that have been created since the launch of the coin. For example, every ten minutes a new block is generated by the Bitcoin protocol. The generation rate is even higher in the Ethereum protocol: once in every fifteen seconds. Even though the block height is a worse security indicator than the hash rate, it is an important parameter, for it demonstrates how quickly popular cryptocurrencies are being spread.
In conclusion, we would like to mention that despite the fact that running a full node is serious business nowadays, it doesn’t mean you shouldn’t get into cryptocurrency at all. NOWNodes provides access to full nodes of the most popular cryptos, making your blockchain experience easy and fun.
Originally published at https://nownodes.io on September 11, 2019.