Which algorithm is used in blockchain?

Build a token bridge This event is awaited with great expectation at a global level: the cryptocurrency sector has suffered a black 2022 . A tremendous earthquake wiped out almost a trillion dollars from the market, crushing the savings of thousands of people. Likewise, dozens of companies in the crypto constellation went bankrupt.

For this reason, the expected update of the ETH software , which constitutes the technological backbone of thousands of crypto projects, is considered by many as a possible 'salvage table'. We know that Ethereum, a platform created in 2013 by the then teenager (today a billionaire programmer), is a blockchain, a kind of public ledger where digital currency exchanges are recorded. Transactions on the chain are done in Ether.

the transition will allow to modify the reward system of those called in the jargon , those in charge of validating transactions and generating new blocks in the blockchain . The process does not represent a mere anecdote... It has taken a long time due to the high risk involved: a failed operation could paralyze thousands of cryptographic projects and cause an even more resounding fall in the market. It must be remembered that the thousands of cryptocurrency applications that work with Ethereum manage, together, close to 50,000 million euros in user funds.

Ethereum will thus change its mining system, which will mutate from the 'proof of work' format , which uses a common consensus algorithm based on complex mathematical calculations (for which miners receive rewards) , to the 'proof of stake' model .

The latter uses the number of cryptocurrencies of the miner to validate the transactions and create new blocks in the blockchain and thus receive the rewards. In this way, according to its promoters, a model that has been highly criticized for its high impact on the environment will no longer be used, due to the large energy expenditure it entails, for a less polluting one, since it does not need as much computing power to solve cryptographic calculations. The new technological infrastructure was designed precisely in order to reduce more than 99 percent of its energy consumption.

Algorithms, in the core structure for cryptocurrency mining

The word 'algorithms' highlighted above is not accidental. It is inevitably associated with the scaffolding and core structure for the operation of cryptocurrency mining. Crucially, technology supports and paves the way for the future of these currencies . The Ethereum network, which is a chain of blocks that works for an infinity of cryptocurrencies or tokens -some of them are among the main ones in the market- is sustained and fed precisely by strategic algorithms.

In other words, the impending big event 'The Merge' of the most popular cryptographic platform on Earth is nothing more than a colossal and complex update of its software… and its algorithms.

a specialized journalist who covers the cryptocurrency and Fintech section of The New York Times, explains in this article, after being updated (with specific algorithms that have been previously tested for at least five years), this initiative aims to provide benefits long-term. Build a cross chain bridge Reducing the high commissions charged for making transactions in Ether is another one of them.

As defined by the Royal Spanish Academy, 'algorithm' is an “ordered set of systematic operations that allows a calculation to be made and the solution to a type of problem to be found”. In blockchain, mining algorithms are the algorithms or functions that make the task of mining cryptocurrencies possible. There are many , and each one has its own characteristics adapted to the cryptocurrencies that make use of them.

These algorithms perform very complex cryptographic hash functions. Your mission? They can adjust the mining difficulty. In other words, this process serves to make it more or less difficult to decode the puzzles that must be solved by the miners .

the 'historic' star algorithm of Ethereum:

In the case of Ethereum, himself created which had been his star algorithm. “One of its main features is its high memory requirement thanks to the use of an extended DAG for mining. However, the cost of memory is so high that mining is still possible with GPUs, where they benefit from the large amount of memory they have, which facilitates the creation of the DAG for mining, "says the specialized site bit2me Academy by describing the 'Top Most Used Mining Algorithms in Blockchain'.

There are other key mining algorithms at a historical level, since the first petals of the crypto world flourished, and more recently, in permanent evolution. SHA-256 , the Bitcoin algorithm, allows you to take a certain amount of information and summarize it in a single alphanumeric block with a length of 64 characters that is generated in a deterministic way. This means that if the same data is entered an infinity of times, it will have the same output each time.