A in-depth look "Proof-Of-Work" in Cryptocurrency(Digital Currencies) Econmy.

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Written by

Dreamy Girl ❤

3 years ago

In community: Cryptocurrency for beginners(a74f)

In this article I discusses the economics of how cryptocurrency achieves highest level of data immutability and also discuss "Proof-Of-Works".

Bitcoin os also known as a Block Reward.

By the research of Internet, Bitcoin and other cryptocurrencies are populer in late 2017.

People use Bitcoin and other currencies to buy and sell things.

No of the system represent the highest term point on the chart.

A value of "100" is the highest popularity of the term
A value of "50" is the half of the attractive term compare to value of 100
A value of "0" is that ther was not enough data for this term.

Google start searches for Bitcoin,Euro,Gold and USD in 5 November 2018.

No Bank Account Included:

The Fact that There is no goverment needed to issue them they can be held and trade currencies without bank account.They can also exchange these currencies via some simple and easy technical protocols for comunication between diffrent participants and they also share tha data transactions by using willet like "Blockchain".

Blochain is updated by diffrent networks via costly income or computations i.e "Proof-Of-Work".

The quistion is what is the aconomic potential of this new mean of Exchange?

Lets see about this question!

Firs we discuss the future of the all type of Cryptocurrencies in global.

Our focus always lies on the technical elements like Blockchain and bitcoin.

The cloud of the future of Cryptocurrencies based on the Proof -Of -Works in fundamental economics.

The first limitation of proof-of-work rquires high transaction cost.

The second fundamental economic limitation that there is no fees about the goal of payment security and the transaction.

The fundamental economic set very low transaction fees for system works below for the users.

The Answer is that in our economical era the solve the worls biggest problem of exchange currencies.We easily exchange money from one person to another by using our computer and smatrphone.

PROOF-OF-WORKS:

It is a cryptographic tool to send a signal to other for money transaction.

The transaction is applied in a form of bloks.
Each block is a file.
The maximum size of any block is 1MB.
Each transaction included digital signature verification.
The new block added to the blockchain only one time after every 10 minutes.
Adding a new block in existing blockchain requires aome proof-of-works.

1MB Block size limits allows 2000 transactions.

The buyer's (Cryptographic) publicaly announce the payment transaction by using willet, paid amount and and the transaction fee which willet wiiling to pay.
The selection of the miner transaction that will also maximize the income from fees via some valid proof of works.
The successful proof-of-work allow the miner to add a block of transaction to the blockchain.
Collecting the fees of the transactions and also include the block reward.
The updated blockchain is shared with the networks of miners and other users who also verify the update,Signature,proof-of-works and absense od double spending.
The majority of miners keep enjoy on adding to it.

Mining serves as two purposes:

To verify the legitimacy of a transaction called "double-spending".
To create new digital currencies by rewarding miners for performing the previous task.

When you want to set a transaction what happens behind the scenes:

Transactions are bundled together into what we call a block.
Miners verify that transactions within each block are legitimate.
To do so, miners should solve a mathematical puzzle known as proof-of-work problem.
A reward is given to the first miner who solves each blocks problem.
Verified transactions are stored in the public blockchain.

By reading above steps we know that:

Any bitcoin owner shoud be able to spend funds only one time.
To verify these transaction payments the "Cryptographical digital signature" is used such as "C payes A to B".
The cryptographic digital signature proofs that the payment which being spend has been authorized.
The double spending problem is solved.

Each block is a small file which include a Number of payment transactions.

The cryptocurrencies like as cryptographic payment system who exchange freely independent currencies.

The current status of is roun abount 5 billion USD and average number of per day transaction is round about 50,000.

The money is transfered between two authorized parties they do not trust any thirt party.

Cryptocurrency and bitcoin work as peer-to-peer network.

The diffrences from proof-of-work:

These all proof-of-work is more efficient.
A lot of people is encoureged to run this node.
These nodes work efficiently.
Thwre is no need of electricity and hardware.
Proof-Of-Work is not ideal for distributed protocols.
This can be avoid in many ways.

End Note:

Everythig I have disscused about are quick overview of the concept.I wanted to explain this thread in easy way for all users to educate.For the technical aspects on various concept please read the paper if u have any problem then i give some link to more knowledge.