The Salad Guide to Cryptocurrency Share Tracking – SaladChefs
There are few emerging technologies that can match Cryptocurrency for potential, impact, and applicability. Crypto has the capability to radically alter finance, privacy, and even gaming forever. Cryptocurrency is exciting. Cryptomining is not. Well, unless you work at Salad.
Today we’re going to walk through some of the nuances of mining, blockchain, and how mining pools work. These subjects are a tad obtuse, even for the relatively aware Crypto enthusiast, and we’d like to make the process as anti-esoteric as possible. Let’s start at the beginning, shall we?
Weird word, isn’t it? You ever see a chain of blocks in real life? Me neither. Throw in all that business about mining and hashing, and I don’t know whether my Graphics Card (GPU) is digging for digital gold or slinging cyber-hashbrowns. And well, it’s a little bit of both.
So what are blocks?
While the specifics vary from coin to coin, a block is essentially an encoded data file. Originally, these included little information beyond basic transactions. For instance, let’s say Bob has 2 Bitcoins (BTC) and Tim has just baked a pizza. Bob offers him a BTC for that legendary pie, and Tim agrees to deliver it once he’s got his coin.
With fiat currency, the transaction would be as simple as Bob wiring some mula to Tim’s bank or shoving a few green ones into his pocket as he dropped off the pizza. However, with crypto, there’s no intermediary institution (discounting Libra and a few others), and physical coins aren’t readily exchanged. Business is conducted digitally. So how does Tim know that Bob gave him his hard-earned BTC?
Blockchain is both the mechanism and the solution to this issue of trust. Bob sends a message to the network that contains the transaction information “Bob sends 1 BTC to Tim’s wallet for 1 pizza.” This data is then encoded by Bitcoin’s hashing algorithm called SHA-256. We could go on for hours just about SHA-256, but the basics are this — data goes in and a unique, 256-bit hash ID comes out. Your name has a unique hash. The quadratic formula has a hash. Bob’s pizza purchase now has one too, and it’s contained in a pending Bitcoin transaction.
Cool, we’ve made a transaction. Trouble is — there’s no bank to process this transaction. Bob needs some third-party assistance to get his BTC over to Tim’s wallet. This is where miners come in.
How do miners “solve” or “win” blocks?
Miners lend their processing power to help sort, record, and verify these transactions. But now we’ve run into another problem: what’s in it for the miner? Electricity is expensive, and they have myriad uses for which they can ply their powerful machines. Why bother with Bob’s pizza? Bob would be screwed, if it weren’t for his clever solution: bribery!
Bob offers 0.1 BTC from his remaining stash to any miner who “solves” a block with his transaction. His transaction is encoded into the block from the beginning, and will automatically resolve once someone “wins” it. Now miners have a bit of incentive to process his transaction and set their machines to the task.
To win Bob’s block, all a miner has to do is guess the correct hash ID for that block. This “solves” the puzzle created by the hashing algorithm, and once accomplished Bob’s transaction will be one step closer to resolution. The longer a blockchain has been around, and the more miners are present, the harder this is (for reasons we’ll visit later).
Let’s assume Bob’s job is relatively easy and Arlo’s machine guesses the hash ID in a couple seconds. Think we’re done? No way bucko. Now the network needs to verify that Arlo has indeed guessed the correct ID. Other miners on the network check his work and eventually admit defeat by agreeing that Arlo got there first. He wins the block and the BTC reward that Bob encoded into it.
And the Blockchain? You skipped that part.
Ah yes, the nail in the coffin. Once Arlo has won the block and the miners have all agreed that he got the right number, Bob’s block becomes the next block in the chain. In this way, all blocks are linked to one another and a permanent record is established of every transaction with that coin to date.
This means that Bob’s block now includes every previous transaction on the Bitcoin blockchain. Furthermore, every subsequent block in the chain will include Bob’s block, cementing his pizza purchase as part of the history of Bitcoin. Ain’t that cool?
Why are blocks worth money?
This answer varies depending on the coin, but the basic premise is the same. Why is the dollar worth anything? Because people trust in its value. Crypto adds an extra layer of value to the proposition, again depending on the specific coin:
They offer a fair and simple way to transfer funds, along with measures to bolster privacy, protect your money, or ensure trust through smart contracts. Each “block” won by a miner represents an investment of trust, processing power, and time into the coin’s value system. That’s why people are willing to fork over “real” dollars for “internet monopoly money.”
A warning, a thorough examination of this subject requires a healthy dose of math. I’m fairly allergic to the subject, so I’ll keep it sparse. If that sort of thing tickles your fancy, I’d highly recommend reading either of these articles for the 411 on Crypto math:
Hashing is the process by which blocks are won, chains are established, and miners make bank. In simplest terms, it’s how fast your hardware can guess the correct string of characters that solves a puzzle.
Technically you and I have our own unique hashrate. We could easily sit down and type out random strings of numbers and letters in the vain hope of winning a block. I say vain because we have absolutely no chance in hell of beating a machine running the same calculations. Even this Minecraft computer would blow our efforts out of the water.
Why, you say? Simple — humans are not very good at running parallel computations. We’re quite good at figuring out 1 + 1 = 2. We can even mix it up and tell you that 1 * 1 = 1, and that 1 / 1 = 1. However, if you ask the average joe to do all these equations at once, there’s a decent chance he’ll be perplexed and just do em the old fashioned way: one at a time.
Computers, on the other hand, especially GPUs, are great at this kind of thinking. Yeah, they can’t tell you the meaning of life (yet), but they sure as hell can churn out thousands of numbers and solutions per second. This includes guesses for the hash ID of a particular block.
So, a miner’s GPU, CPU, or ASIC will have a specific hashrate determined by the hardware’s processing power. This roughly equates to how much one can earn with a given coin. If you can hash more than the other miners, you increase your chances of winning a block. Of course, like everything else in life — luck plays a part. Which leads us to share tracking.
Let’s start with Joe. Joe has the biggest, baddest gaming rig in town, and he decides to start mining with it. He doesn’t care about doing all the complicated bits, so he joins a mining pool to expedite the process. Joe sits back and dreams of all the sweet cash his 2080 Ti’s are gonna rake in. He comes back, refreshes the page, and finds… a big fat 0 in his account. Looks like Cassie and Maria won all the recent blocks.
“But how!” Joe exclaims. “Cassie and Maria have plebeian 1050 Ti cards!” Well, what Joe failed to realize is that lady luck plays a large part in miner’s fortunes. His cards may have come up with more solutions faster than Cassie’s and Maria’s GPUs, but they did not come up with the right solutions. In fact, they didn’t even submit a single share.
So no mula today Joe. Why? Because hashrate is not equivalent to “earning rate.” Your hashrate simply measures the number of hashes (guesses) your computer can churn out. Miner’s earning rates depend on several factors:
- The coin being mined
- Mining pool rules
- Luck of the draw
When you add these factors together you (roughly) derive a coin’s mining difficulty. Things begin to get a little weird here — as coins and pools each have their own set of rules for how and when miners are rewarded. Just look at the variability between all these coins:
If you were only rewarded for winning a block, then your chances for earning on a popular network would be astronomically low. Luckily, mining pools make up their own rules when it comes to payout. Let’s return to Joe and his big fat 0.
Let’s say Joe was mining for Ethereum on Nanopool (the pool Salad uses). The hash ID that his rig attempted to discover began with two zeros. Cassie’s PC figured it out first, so she wins the block. However, since she’s using a pool, she’s not entitled to the full earnings from that block. Maria’s PC got very close to the number as well, and the pool wants to reward her for that effort and support. Nanopool awards her a “share” for her proof of work.
Joe’s PC, sadly, was nowhere near the right ID, and therefore he earned no shares. There are other ways to earn shares, including some weird examples like uncle blocks that we’ll visit in a different article, but this is the basic outline.
Fortunately, lady luck hates no one — except maybe this guy. If Joe keeps on chopping, over a long enough timeline he will show more earnings than either Cassie or Maria. His machines simply have a higher hashrate, and therefore more chances to submit shares.
When share tracking is enabled on a pool or mining app, all that means is that your earning rate indicates your actual earnings, not your projected or average earnings.
Published at Fri, 16 Aug 2019 17:48:02 +0000
Bitcoin Pic Of The Moment
✅ This image from Marco Verch (trendingtopics) is available under Creative Commons 2.0. Please link to the original photo and the license. ? License for use outside of the Creative Commons is available by request.
By trendingtopics on 2019-04-03 11:26:38
