BECOME A BLOCKCHAIN EXPERT
starts with a specific number of zeroes. They will keep trying different nonces until they get the necessary hash value. This trial-and-error computation is shown in Step 1 and Step 2 in the diagram on the next page... All the miners are in a race to find the correct hash value. This is because the miner who finds it (Step 3) will broadcast the correct solution to the network (Step 4), which will verify it is correct. The new block then gets added to the blockchain (Step 5), and the winning miner gets awarded 12.5 bitcoin by the blockchain for his success. (The miner who successfully finds the block also receives all of the fees from bitcoin transactions that were included in that block.) Sally’s bitcoin transaction is now recorded in the blockchain. Sally’s bitcoin wallet is now credited a bitcoin, and Jim’s is debited one. The mining process then starts over again, with a whole new bunch of transactions bundled into a new block, and the miners all compete again to find the correct hash value. In the media, bitcoin tends to dominate the headlines when it comes to cryptocurrencies. But Bitcoin itself is just the beginning for blockchain. Bitcoin’s success has shown the world it is possible for independent and fragmented entities (miners) to enable strangers to exchange value with no need for an intermediary. And it can be done in a completely transparent, verifiable, and open way.
A “hash value” is a series of numbers and letters strung together that looks something like this: 1gwv7fpx97hmavc6inru z36j5h2kfi803jnhg. A hash value is generated by pushing data through a mathematical formula called a “hash function.” Another way to think of this is like the ingredients for a smoothie and a blender. You take your ingredients (your data), put it through a blender (the hash function), and you get your smoothie (the hash value). Hashing is a one-way process. When you give me a hash value, I can’t turn it back into its original input data, in the same way I can’t turn my smoothie back into its original ingredients.
INPUT DATA
HASH VALUE
HASH FUNCTION
1gwv7fpx97hmavc6i...
When miners are given a block of transactions to try and add to the blockchain, they are using a hash function to try and solve a cryptographic puzzle. The miners take the new block with all the transactions in it, combine it with a randomly generated string of numbers (called a “nonce”), put it through a hash function, and then get a particular hash value. The miners are trying to find a hash value that Full Nodes (Miners)
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November 2019
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