Book Image

Bitcoin Essentials

By : Albert Szmigielski
Book Image

Bitcoin Essentials

By: Albert Szmigielski

Overview of this book

Blockchain is being billed as the technology of the future. Bitcoin is the first application of that technology. Mining is what makes it all possible. Exploring mining from a practical perspective will help you make informed decisions about your mining setup. Understanding what the future may hold for blockchains, and therefore for mining, will help you position yourself to take advantage of the impending changes. This practical guide starts with an introduction to Bitcoin wallets, as well as mining hardware and software. You will move on to learn about different mining techniques using the CPU, GPU, FPGA, and ultimately the ASIC as an example. After this, you will gain an insight into solo mining and pool mining, and see the differences between the two. The book will then walk you through large-scale mining and the challenges faced during such operations. Finally, you will take a look into the future to see a world where blockchain-based applications are commonplace and mining is ubiquitous.
Table of Contents (15 chapters)
Bitcoin Essentials
Credits
About the Author
About the Reviewer
www.PacktPub.com
Preface
Index

Pool mining discussion


Pool mining started to appear in 2010. When you compete against other miners as a solo miner, your proportion of network hashing power may be small. As a result, you may only solve a block perhaps once a month or even once a year (depending on your hashing power). We can only calculate what the expected time to solve a block will be; however, we cannot predict exactly when it will happen.

To smooth out this variance, miners started to organize themselves into pools. In pool mining, a large number of miners work together to solve a block. Once someone in the pool finds a block, the rewards are shared among all miners belonging to the pool. This makes the payout more frequent, albeit smaller, and more predictable.

Mining pools

There is a variety of mining pools, with a variety of strategies. Perhaps the most popular (and fair) is the proportional pool. Here the reward is distributed to miners based on how much work they have contributed. How is a contribution calculated...