Cryptocurrency mining is at the core of blockchain technology. Mining opens up the process of confirming new transactions and the creation of new coins. Bitcoin’s security is tied to its mining. Several miners scattered all over the world have to perform complex calculations to be able to confirm transactions and create new blocks which contain transactions. Miners are incentivized in transaction fees to confirm new transactions and block rewards to find new blocks. Only the best or fastest miners can be rewarded for these operations for it is always a competition between numerous miners. It is a race fit for the most powerful miners.
Application-Specific Integrated Circuits (ASIC) miners are the commonest mining hardware used to mine Bitcoins today. The most recent Antminer S9 and Antminer R4 are well known for their speed and computing power. BitInfoCharts reported that a miner capable of 1THash/s can make an average of 0.1639 $/Day. Miners combine their mining powers or hash powers into pools to stand a better chance of confirming new transactions and finding new blocks to be rewarded. Rewards are shared between members according to the power contributed.
Bitcoin Mining Centralization
Facts have also revealed that the most Bitcoin mining Hash power is coming from China as most of the largest mining pools are located there. This brings the concern for many enthusiasts and experts that: ‛if bitcoin is said to be decentralized, why is it that its mining is quite centralized’. The effects of this kind of centralization were seen towards the end of last year as the Chinese government considered a ban on cryptocurrency mining. The news impacted the whole crypto markets as prices responded moving into the red zone. ‘What if it had been a nationwide electromagnetic outage through a powerful EMP or a natural disaster?’ is a question most experts begin to ask themselves. China became one of the most suitable places to mine bitcoin because of the low cost of electricity considering huge power consumption by powerful miners.
Solutions to Mining Centralization
Many cryptocurrencies nowadays through innovative implementations are looking for a way out for these loopholes. It is sure that NO cryptocurrency can replace bitcoin, because it is the father and the most widely adopted as at today and besides, each successful Cryptocurrency today is unique in their approach, application, and solve a unique problem. But we are confident that other cryptos have done and are doing something about this major challenge in bitcoin.
Digibyte, for example, has created a mining algorithm that solves the basic challenge of having whales or the rich control the mining operation. Odocrypt, the latest mining algo by Digibyte that changes its hashing algorithm every ten days which discourages the development of specialized ASIC miners to prevent mining centralization. Thus it makes it impossible for ASIC miners to keep bullying the mining operation. This is because Miners can use FPGA hardware which costs a little above 100$ to mine Digibyte to encourage home-based mining.
Another basic superpower of Digibyte Blockchain is a very supportive community as Jared Tate said in a tweet:
Josiah Spackman, a writer and strong supporter of the community, also confirmed this truth in his article about what got him interested in Digibyte. He said that the digibyte community members gave generously even when they had so little.
PoS: I/O Coin and Its Superpower
Apart from proof of work algorithms as in Digibyte, there are other implementations on Proof of Stake algorithm that are looking into solving mining centralization. An example is the I/O Coin. The project has a vision of making their PoS algorithm available for everyone everywhere no matter the location. Their wallet can be run on almost all laptops and Raspberry Pi which is known for its low cost and computational power. They are moving and making their visions achievable thus making decentralisation not just on papers but in reality. In a tweet, I/O coin announced a great feat that many blockchain communities have not been able to achieve:
The superpower for this project is relentlessness as they proceed and progress through thick and thins to create, recreate, invent and reinvent their visions not looking at the fluctuating nature of the cryptocurrency markets. This is also confirmed in a tweet by one of the community members:
Are Lists Exhausted?
There are other examples of blockchains that seek to make physical crypto mining and staking operations through hardware less costly and readily available for home-based users to encourage decentralisation, but this article cannot contain them. And there are other blockchains that seek to reward their members for their commitments through a leasing proof of Stake algorithm to promote decentralisation, and such is Every Day Coin (EDC). Each of these blockchains is unique in their own way as we have pointed out by explaining their superpowers and innovative ideas.
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