Over time, a large number of people are coming to believe in the use of blockchain technology and cryptocurrencies. Miners typically have a tougher time competing with other miners for the opportunity to add a block to the chain. Technology evolution, on the other hand, ensures that there is enough for everyone while reducing congestion in primary blockchains. As a result of the problems, sidechains were introduced to improve the flexibility of the primary chains.
The idea of merged mining is becoming more common as sidechains grow. Auxiliary Proof of Work (APoW), also known as merged mining, is when a miner can mine two separate digital coins at the same time. It allows the miner to work on several blockchains at the same time. When one does this, they add to the overall hashrate of both chains, thus increasing the protection of both chains.
The technology necessitates the use of the same Proof of Work consensus algorithm by both chains. The idea of merged mining arose from the need to resolve chain integrity attacks for newer chains until they reached a sufficient hashrate to ensure their security. It's important to remember that increasing computational power without lowering both chains' efficiency is not a viable option.
What is the Process of Merged Mining?
To understand how merged mining works, you must first understand the fundamentals of the operation.
Merged mining necessitates the existence of both the parent and secondary blockchains. They must use the same Proof of Work consensus algorithm to enable miners to create blocks in both chains.
Mining takes place in the parent chain, which is unaware of the secondary chains' mining. Despite this, since the main chain has a higher hash power, the secondary chain is reliant on it for additional protection. It also needs additional feedback to verify the parent chain's mining. Each block submitted to one of the blockchains is unique.
The process
To begin, the miner must obtain transaction sets for both chains from the mining pool. The miner generates a transaction hash and adds it to the parent block header, which the miner ignores. As a result, the parent chain has both the transaction and the auxiliary block transaction hashes, while the second chain only has the transaction hash.
The work is then spread through both chains, allowing other merge miners to solve Proof of Work's various levels of difficulty.
When solving the difficulty level, three different outcomes are possible. The first requires the miner to surpass both the parent and auxiliary chains in terms of complexity. After that, the miner will be rewarded for both the primary and secondary chains.
The second result entails solving a problem of a lower difficulty level that is appropriate for the secondary chain. The miner can only earn incentives from the auxiliary chain in this situation.
The third scenario is when the miner reaches a difficulty level for both chains that is too poor. To continue solving the problem, the miner must enter a new nonce value before they reach a difficulty level suitable for either chain.
Merged Mining's effect to investors
Miners profit more from merged mining than investors. It gives them a great chance to gain more money without having to compete with other people. With the advancement in technology, it does, however, hold a lot of promise for investors in the future.
With chains forming merged mining, a few scenarios are possible. After incorporating the APoW algorithm, merged mining will automatically increase the value of a coin. In this case, the Litecoin-Dogecoin merger is a good example. A well-known currency serves as a forum for a new coin to gain traction with the public. Short-term investments will eventually pay off for them.
Other coins, whose growth is still ongoing, have the potential to become successful in the future. Their value has a good chance of skyrocketing once they merge with a parent blockchain. To prevent losses, it is essential to survey all logistics surrounding them before beginning investments.
Some chains have the ability to lose value over time, rendering them untrustworthy for long-term investment objectives. Namecoin is a prime illustration of a cryptocurrency that has lost value and has a poor acceptance rate.
Benefits
Power efficiency: Joint mining between a parent chain and auxiliary chains does not increase the amount of computational power required for the operation. This is due to the fact that both chains' processes are running at the same time.
Auxiliary Chain Recognition: Since the secondary chain is newer than the main chain, it has the potential to grow in popularity. As a result, their valuation has a chance to rise, which is important for their future development.
Security: With mining adding to both chains' hashrates, the security of both chains improves. Furthermore, the auxiliary chain, which is more vulnerable to attacks, benefits from the main chain's higher hash strength.
Increased Fluidity: The chains are moving faster because miners are clearing blocks at a faster rate. They can also pick any coin they want, ensuring that they are not limited to just one.
Drawbacks
New Attack Vectors: By mining empty blocks, miners can launch attacks without impacting the financial status of both chains.
Operating Costs: Establishing a merged mining network is costly and time-consuming. It begs the question of whether the procedure is appropriate.
Auxiliary Chain Problems: They can be too reliant on the main chain, causing it to malfunction. Furthermore, miners may have doubts about the auxiliary chain's ability to grow.
The Bottomline
Blockchain technology has a promising future thanks to merged mining. Mining on two or more chains has a lot of benefits for both the chains and the miners. It will aid auxiliary chains in improving security, visibility, coin value, and functionality, among other things.
People are debating whether it is worthwhile to invest in it because of a few problems that come with it. The complex method has a long way to go until it improves in several ways, giving investors the opportunity to see the countless advantages that come with it. Nonetheless, the long-term results of the current merger pairs will say.
