Book Image

Bitcoin Essentials

By : Szmigielski
Book Image

Bitcoin Essentials

By: 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 (10 chapters)
9
Index

Elimination of PoW


Proof of work may not be the best algorithm to secure a blockchain-based system. There are aspects of PoW that leave a lot to be desired. However, PoW is a good way to distribute a digital currency. Perhaps PoW will be replaced in the future by something different, but at this time we cannot say for certain what it will be.

Inefficiency of PoW

Proof of Work is really inefficient; it wastes a lot of electricity and computing power. However, it is inefficient by design. We do want competition between miners because that is precisely what makes the blockchain ledger secure. Miners keep other miners honest because they are all competing for the same block reward. We believe that PoW is the best way to distribute a cryptocurrency, initially. Perhaps after bitcoins are fully, or almost fully, distributed, it will make sense to switch to another algorithm to secure the blockchain.

Replacement of PoW

Currently, we are not sure what should be used instead of PoW. There are candidates...