How Bitcoin mining really works
Bitcoin Algorithm Explained
Founded by a pseudonymous individual or group, Bitcoin is a peer-to-peer digital currency that is designed to serve as a medium of exchange for the purchase of goods and services. With Bitcoin, individuals are able to execute cross-border digital payments at virtually no cost, all without having to involve any financial intermediaries. Bitcoin is underpinned by a piece of technology known as the blockchain, which can be thought of as a ledger that keeps a transparent and immutable record of economic transactions that are made using Bitcoin. A significant element of Bitcoin that facilitates its operation is the Bitcoin algorithm for proof of work mining, which is known as Secure Hash Algorithm 256 (SHA-256).
Proof of work mining is an essential component of the Bitcoin system that enables for the correct processing of transactions on the blockchain. The mining element of Bitcoin mining algorithm details dancewear proof of work process concerns individuals (who are known as miners), generating correct proofs that are necessary before a block can be added to the blockchain. Miners will use data from a block header as an input, and put it through a cryptographic hash function. In the case of Bitcoin, this hashing function is SHA-256.
Miners will also include a nonce in the input so that they can hash slight variations of the input data. The purpose of proof of work mining is to get a hash value Bitcoin mining algorithm details dancewear is lower than the target hash that has been set by the network. If the correct output hash value is found by a miner, they will be able to process transactions and add a new block to the blockchain. Miners are also rewarded in bitcoins for successfully finding a valid hash. It is also important to note that producing a Bitcoin mining algorithm details dancewear hash value in Bitcoin’s proof of work system is probabilistically low, thus, a miner will typically need to generate Bitcoin mining algorithm details dancewear large number of incorrect hashes before a valid hash is found.
Bitcoin Algorithm: SHA-256
Individuals that wish to mine on the Bitcoin network must operate what is known as a Bitcoin mining algorithm details dancewear node, which is a node that has been specially set up to mine on the network. Once a mining node is operational, miners can then begin to construct what are known as candidate blocks. These blocks must be properly constructed by a miner, and doing so requires that 6 parameters which are found in each candidate block be filled in correctly. These parameters include:
- Version – The version number of the Bitcoin software.Previous block hash – A reference to the hash of the previous block that was included on the blockchain.Merkle Root – A representative hash of all transactions that are included in the candidate block.Timestamp – A piece of information that references the time that the block was created.Target – The target hash threshold, this block’s header hash must be less than or equal to the target hash that has been Bitcoin mining algorithm details dancewear by the network.Nonce – The variable that is used in the proof of work mining process.
The candidate block is then relayed Bitcoin mining algorithm details dancewear the rest of the network so that it can be checked for its validity. If the block is regarded as valid by the rest of the network, then it will be added to the blockchain.
Network Difficulty
The Bitcoin algorithm also incorporates what is known as network difficulty. This concept can be thought of as being the measure by which one can determine the difficulty of finding a correct hash value in the proof of work mining process. This difficulty can change based on an increase or decrease in the target hash value. For example, if the rate at which valid hashes are being discovered on Bitcoin mining algorithm details dancewear network increases, then the network target hash value will be lowered. This has the effect of reducing the number of valid hashes that are capable of being discovered. Conversely, if there is a decrease in the rate of correct hashes being discovered, then the network target hash value will increase in order to enlarge the number of valid hash values that can be found.
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Block - The bitcoin mining algorithm from a programmer's viewpoint - Bitcoin Stack Exchange
NightMiner
A very simple pure Python implementation of a CryptoCurrency stratum CPU mining client. Currently supports scrypt (litecoin) and SHA256d (bitcoin).
At a Glance
- Simple, one fileSupports Scrypt (litecoin, dogecoin, etc) and SHA256d (bitcoin, namecoin, etc)Stratum (and only stratum)Zero dependencies (beyond standard Python libraries)100% pure Python implementationAttempts to detect faster implementations of scrypt (pure Python is SLOW)Enable protocol chatter (-P) to see messages to and, ining the server
Command Line Interface
API
The API can be used by anyone wishing to create their own modified miner to learn more about the protocol, test their own pool or experiment with new algorithms.
Selecting a scrypt implementation (optional)
By default, the fastest detected library will Bitcoin mining algorithm details dancewear used; but if algorihtm wish to force a specific implementation:
Nightminer. set_scrypt_library(library= nightminer. SCRYPT_LIBRARY_AUTO) print nightminer. SCRYPT_LIBRARY
Subscription
After connecting to a stratum server, there is a small level of handshaking and then occasional messages to maintain state. The class manages this subscription state with the server.
Properties:
- - The subscription ID - Detxils name of the authenticated worker, - The result of the proof of work must be less than - Bitcoin mining algorithm details dancewear extranounce1 - The size of the binary extranounce2 (in bytes)
Set_subscription(subscription_id, extranounce1, extranounce2_size) Sets up the subscription details. Reply from the server to.
Set_difficulty(difficulty) Sets the current difficulty. Sent from the server as a message.
Set_worker_name(worker_name) Sets the worker's name after the server has authenticated the username/password. Reply from the server to.
Create_job(job_id, prevhash, coinb1, coinb2, merkle_branches, version, nbits, ntime) Creates a new job. Sent from the server as a message.
Job
When the server has a new job to work on it sends a message. The class manages all the paameters required to nining work and performs the actual mining.
Properties:
- - Algorihtm job ID - The previous hash, - Minung coinbase prefix and suffix - The Merkle branches - The version, - The network bits and network time, - See class above - The rate this miner has been hashing at
Merkle_root_bin(extranounce2_bin) Calculate the Merkle root, as a binary string.
Mine(nounce_start = 0, nounce_stride = detais Iterates over Bitcoin mining algorithm details dancewear solutions for this job. This will run for an detalls long time, likely far longer than ntime would be valid, so you will likely call at some point and start on a new job.
Stop() Causes the method drtails finish immediately for any thread inside.
Miner
This is a sub-class algorith which connects to the stratum server and processes work requests from the server updating a object.
Properties:
- - The stratum server URL, - The provided username and password
Serve_forever() Connect to the server, handshake and block forever while handling work from the server.
Use Cases
Create a standard miner
Miner = Miner('stratum+tcp://foobar. com:3333', 'username', 'password') miner. server_forever()
Experimenting with a new algorithm.
For this example, we will create a CryptoCoin based on MD5.
Import hashlib # Create the Subscription object (proof-of-work should be 32 bytes long)classSubscriptionMd5(nightminer. Subscription): defProofOfWork(self, header): return hashlib. md5(header).digest() + ('0'*16)
If bbitcoin wish to manually find a few valid shares:
# Create a algorlthm (and fill it in a bit with what a proper server would slgorithm us) subs = SubscriptionMd5() subs. set_subscription('my_subs_id', Bitcoin mining algorithm details dancewear, 4) subs. set_difficulty(1.0/ (2**16)) subs. set_worker_name('my_fake_worker') # Create a job job = subs. create_job('my_job', ('0'*64), ('0'*118), ('0'*110), [ ], '00000002', 'deadbeef', '01234567') # Search for 5 shares share_count Bitcoin mining algorithm details dancewear valid_share in job. mine(): print"Found a valid share:", valid_share btcoin share_count +=1if share_count ==5: breakprint"Hashrate:", job. hashrate
Or if you already have a server ready to go with your algorithm:
# Register the Subscription SubscriptionByAlgorithm['my_algo'] = SubscriptionMd5 # Start a miner miner = Miner('stratum+tcp://localhost:3333', 'username', 'password', 'my_algo') miner. server_forever()
FAQ
Why would you do this? I was trying to tinker around with Litecoin, but found it difficult to find a simple, complete example of how to decode the endianness of the provided parameters and bitcoiin the block header. So, the obvious next step is to create a full client to experiment with.
Why is this so slow? It is written in Python. It is not meant to be fast, more of a reference solution or something that can be easily hacked into to test your own pool.
On my MacBook Air, with one thread I get around 3,000 hashes/s using the libary but less than 2 hashes/s using the built-in pure Python scrypt.
What is this ltc_scrypt you speak of? It is a Python C-binding for a C implementation of scrypt found in p2pool Bitcoin mining algorithm details dancewear. To add to your own system:
After this is installed, this miner will be about 2,000 times faster.
Why am I am only getting rejected shares? Make sure you are using the correct algoithm, that means (the default) for Litecoin or for Bitcoin.
How detakls I get a question I have added? E-mail me at nightminer@ricmoo. com with any questions, suggestions, comments, et cetera.
Can I give you my money? Umm. Ok? :-)
Bitcoin - Litecoin - Namecoin -
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