DAY 3 - Blockchain Essentials - Consensus Algorithms & Mining

This is our Blockchain Essentials Course which introduces Consensus Algorithms & Mining.

Learn how to mine with The Whive Protocol on your CPU machine(laptop)!

Download 133 Pages of Notes for the Module Here: http://bit.ly/TABOEBOOK

Apply For Training & Internship Here: https://bithub.africa/academy/

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Transcript

1. BLOCKCHAIN ESSENTIALS
   CONSENSUS ALGORITHMS & MINING
   Twitter: @BitHubAfrica
   Telegram: t.me/BitHubAfrica
   Website: www.BitHub.africa
   Course: www.Melanin.academy
   

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2. MINING
   Proof-of-work is called “mining” for a very good reason. Like with
   physical mining, there is something that miners are searching for.
   A typical gold mining operation processes 45 tons of dirt and rock
   before accumulating 1 oz of gold. This is because gold is very rare.
   However, once gold is found, it’s very easy to verify that the gold
   is real. There are chemical tests, touchstones, and many other
   ways to tell relatively cheaply whether the thing found is gold.
   Similarly, proof-of-work is a number that provides a very rare
   result. To find a proof-of-work, the miners on the Bitcoin network
   have to churn through the numerical equivalent of dirt and rock.
   Like with gold, verifying proof-of-work is much cheaper than
   actually finding it.
   SOURCE: Vijay Mukhi The Undocumented Internals of the Bitcoin, Ethereum and Blockchains
   

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3. What is Bitcoin Mining?
   • Primary Method of Securing the Bitcoin
   Network.
   • Use of specialized computers(ASICs) to solve
   a puzzle built into the protocol.
   • Miners get rewarded for each block mined.
   • Rewards consist of transaction fees generated
   within the network.
   • Involves costly “Work” that uses Electricity!
   

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4. WHERE MOST GET IT WRONG!
   The purpose of mining is not the creation of new
   bitcoin. That’s the incentive system!
   Mining is the mechanism by which bitcoin’s
   security is decentralized over a large network!
   https://www.youtube.com/watch?v=kZXXDp0_R-w
   Source: Mastering Bitcoin (Page 276)
   

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5. BITCOIN MINING ISSUANCE SCHEDULE
   The maximum amount of newly
   created bitcoin a miner can add to a
   block decreases approximately every
   four years (or precisely every 210,000
   blocks). Based on this formula, bitcoin
   mining rewards decrease
   exponentially until approximately the
   year 2140, when all bitcoin (21
   million) will have been issued. After
   2140, no new bitcoin will be issued.
   Source Mastering Bitcoin (Page 277)
   

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6. CONSENSUS ALGORITHIMS
   A consensus mechanism is a fancy way of describing
   rules that everyone agrees on, in regards to who gets
   to update the ledger. There are many types of
   consensus mechanisms. For example:
   
   Proof-of-Work(PoW) [Egalitarian]
   
   Proof-of-Stake (POS) [Rich get Richer]
   
   Hybrid PoW/PoS Consensus [Best of Both Worlds]
   
   Byzantine Fault Tolerance (BFT) [Speed L1 BSC]
   

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7. PROOF OF STAKE (PoS)
   Proof of stake uses a set of validators to reach consensus on
   the main chain. These validators deposit an amount of the
   blockchain’s cryptocurrency and cast votes weighted by their
   stake. Not much electricity is consumed.
   Hybrid PoW/PoS Consensus
   The objective of hybrid Proof of Work and Proof of Stake
   systems is to capture the benefits of the respective
   approaches and use them to balance each other’s
   weaknesses. Decred is among the few cryptocurrencies to
   utilize both PoW and PoS in recognizable forms and merge
   them together to produce a multi-factor or hybrid consensus
   mechanism.
   

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8. Mining: CPU, GPU & ASIC
   
   Blockchains fall into two categories, PoW and
   PoS. Bitcoin, the first ever cryptocurrency, runs
   on a PoW consensus mechanism.
   
   This is a form of mathematics known as
   cryptography.
   
   Cryptography uses very difficult mathematical
   equations that can only be solved by computers.
   

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9. CENTRAL PROCESSING UNIT (CPU)
   
   It is considered the brain of a computer because
   it controls the operations of all parts. CPUs
   perform all types of data processing operations;
   without one, a computer cannot work properly.
   
   In the early days of Bitcoin, you could mine it on
   your CPU. As mining became more competitive,
   this was no longer feasible.
   
   However, there are still other blockchains that
   can be mined using a CPU today, such as the
   Whive protocol.
   

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10. GPU(GRAPHIC PROCESSING UNIT)
    
    GPUs are more powerful than CPUs in executing some
    very specific functions. GPUs are meant to be effective at
    doing massive amounts of calculations. This feature
    makes them well suited for mining certain blockchains,
    such as Ethereum.
    
    Although it’s technically possible to mine Ethereum using
    a CPU, it is discouraged. GPUs are far more effective for
    mining Ethereum and other cryptocurrencies such as
    Ravencoin and Beam.
    
    There are different models of GPUs. Websites such as
    WhatToMine allow you to input different GPU models and
    estimate which will be the most profitable
    cryptocurrencies for you to mine.
    

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11. GPU MINING RACK
    

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12. APPLICATION-SPECIFIC INTEGRATED CIRCUIT ASIC
    
    An ASIC is a chip that can be used for one
    purpose only. It used to be possible to mine
    bitcoin using a CPU/GPU. But this changed
    as it got more competitive.
    
    Today, Bitcoin is mined using ASIC chips.
    Litecoin is another popular cryptocurrency
    that is mined using ASIC chips.
    
    The majority of large-scale blockchain
    mines are running ASIC machines. Because
    these machines are purpose built, they
    prove to be more effective and reliable at
    mining.
    

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13. ASIC MINER
    

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14. POW - MINING
    Solo Mining: Mining directly on the
    network with your hashpower.
    Pool mining: Coming together with
    other miners to combine hashpower
    and increase your chances to mine
    block; rewards are shared.
    

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15. Hardware Requirements
    CPU Mining (Laptop, Cloud)
    ASIC Mining ( ASIC Miner, Motherboard
    GPU Mining: Mining Rigs ( RX 450,
    Motherboard, Power supply, Memory
    

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16. MINING POOL
    A mining pool is a joint group of
    cryptocurrency miners who combine
    their computational resources over a
    network to strengthen the probability of
    finding a block or otherwise
    successfully mining for cryptocurrency.
    

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17. HOW A MINING POOL WORKS
    Individually, participants in a mining pool contribute their
    processing power toward the effort of finding a block. If
    the pool is successful in these efforts, they receive a
    reward, typically in the form of the associated
    cryptocurrency.
    Rewards are usually divided between the individuals
    who contributed, according to the proportion of each
    individual's processing power or work relative to the
    whole group. In some cases, individual miners must
    show proof of work in order to receive their rewards.
    whivepool.cointest.com
    

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19. BITCOIN ENERGY CONSUMPTION
    Bitcoin may be a useful way to send and receive money, but
    cryptocurrency isn't created for free. The computer-based miners
    who create bitcoins use vast amounts of electrical power in the
    process. The energy-heavy process leads some experts to suggest
    that bitcoin harms the environment.
    The creation process, known as "mining" requires computers around
    the world to complete rapid calculations to try to solve the same
    mathematical puzzle. It always takes 10 minutes, and the winner is
    rewarded with some digital bitcoin. Then a new puzzle is generated,
    and the whole process repeats for another 10 minutes.
    According to the University of Cambridge’s bitcoin electricity
    consumption index, bitcoin miners are expected to consume roughly
    130 Terawatt-hours of energy (TWh), which is roughly 0.6% of global
    electricity consumption.
    

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21. BITCOIN NODE
    Some estimate that there are over 10,000
    operational full nodes on the Bitcoin network.
    These nodes then propagate the blockchain to all
    other nodes on the network to ensure the most
    trusted blockchain is maintained.
    The more nodes, the more decentralized the
    network, and the harder it is to hack.
    

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22. DRIVING FINANCIAL & ENERGY ACCESS!
    .
    Peer-to-peer model Bitcoin brings allows people who are
    financially excluded to enter the Global Digital Economy,
    Nigerians in 2020 moved $500 Million Dollars…
    Bitcoin as a settlement monetary network is very
    efficient recently $2.4 Billion Dollars was moved on the
    network for $26 in transaction fees. Lightning Network
    scales this to allow for Automated M2M transactions
    Bitcoin Mining is currently using 74% renewables in its
    energy mix. This is making redundant energy projects
    more viable and also innovations in computer
    processing.
    

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23. WHIVE PROTOCOL
    
    Whive, is an open source & peer-to-peer
    blockchain protocol that is incentivizing
    the building of sustainable distributed
    solar energy solutions through Trustless
    Rewards.
    
    The Whive protocol’s mining is biased
    towards smaller mobile computing CPU
    devices built on the ARM architecture to
    encourage fast & sustainable growth of
    the solar energy sector
    

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24. YESPOWER PoW SCHEME
    Yespower is a proof-of-work (PoW) focused fork of yescrypt, which
    in turn builds upon scrypt. While yescrypt is a password-based key
    derivation function (KDF) and password hashing scheme, and thus is
    meant for processing passwords, yespower is meant for processing
    trial inputs such as block headers (including nonces) in PoW-based
    blockchains.
    Why Yespower?
    Different proof-of-work schemes in existence vary in many aspects,
    including in friendliness to different types of hardware. There's
    demand for all sorts of hardware (un)friendliness in those - for
    different use cases and by different communities.
    yespower in particular is designed to be CPU-friendly and GPU-
    unfriendly. In other words, it's meant to be relatively efficient to
    compute on current CPUs and relatively inefficient on current GPUs.
    

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25. WHIVE PROTOCOL FEATURES
    Efficient ARM Focused CPU Mining
    The Whive protocol’s mining is biased towards smaller
    mobile computing devices built on the ARM architecture to
    encourage fast & sustainable growth of the solar energy
    sector
    20 Year PoW Mining Schedule
    Mining of 100M Whive Rewards ends in the year 2040
    ensuring maximum distribution of solar micro-grid
    ecosystems across the World
    Bitcoin Fork & Auxiliary Chain
    18,500,000+ Whive Rewards can be claimed by Bitcoiners
    hodling 0.2 or more bitcoins starting April 2021, learn more
    at https://whive.io/claim
    

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26. WHIVE MINING SCHEDULE
    Figure 3: 2020-2021 Whive Development Timeline
    YEAR BLOCK REWARD TOKENS
    2024 200 60,598,000
    2028 100 21,024,000
    2032 50 10,512,000
    2036 25 5,256,000
    2040 12.5 2,628,000
    

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27. WHIVE MINING SCHEDULE
    Figure 3: 2020-2021 Whive Development Timeline
    0
    10,000,000
    20,000,000
    30,000,000
    40,000,000
    50,000,000
    60,000,000
    70,000,000
    2024 2028 2032 2036 2040
    WHIVE REWARDS ISSUANCE SCHEDULE
    

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28. WHIVE NETWORK STATS
     Launched 02/02/2020 No Premine/ No ICO
     MAX Supply – 100,000,000 (5x Bitcoin)
     Circulating Supply - 13,216,400 (5/15/2021)
     Block Reward – 200
     Mined across 15+ countries globally
     Mining ends sometime in 2040
     18,500,000 WHIVEs can be claimed by BTCers
     Unclaimed WHIVEs will be redistributed incl
    contributor(in 2022)
    whiveexplorer.cointest.com
    

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29. WHIVE MILESTONES
    Figure 3: 2020-2021 Whive Development Timeline
    Apr-20 Jul-20 Oct-20 Jan-21 May-21 Aug-21 Nov-21
    Analysis Processor & Timezone Optimization v1
    Developing Processor Optimization v2
    Testing & Release of Processor Optimization v2
    Developing Whive Oracle Location API
    Integrating Location & Processor Optimization v2
    Testing Location Optimization
    Whive Protocol V3 Complete Feature Release
    WHIVE PROTOCOL ROADMAP
    Start Date Days
    

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30. MINING EXERCISE
    
    Go to:
    
    https://github.com/whiveio/whive-v1-beta-
    release
    
    Download Whive Beta V1 based on your
    operating system.
    

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31. COURSE REFERENCES
     The African Blockchain Opportunity, Karanja 2017,
    http://TheBlockchainOpportunity.com
     The Whive Protocol Greenpaper, Shurn & Karanja 2020,
    https://www.scribd.com/document/483596804/The-Whive-
    Protocol-Greenpaper-Version-2-17
     Mastering Bitcoin by Andreas M. Antonopoulos (O'Reilly)
     Programming Bitcoin: Learn How to Program Bitcoin from
    Scratch [Song, Jimmy]
     Nakamoto, Satoshi 2008, Bitcoin: A peer-to-peer electronic
    cash system”, Citeseer, http://bitcoin.org/bitcoin.pdf
     Yespower, 2014, What is Yespower?
    https://cvsweb.openwall.com/cgi/cvsweb.cgi/projects/yespowe
    r/README?rev=1.3
    

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32. ASANTE
    www.BitHub.africa
    @BitHubAfrica
    jambo@BitHub.africa
    Join The Discussion
    www.T.me/BitHubAfrica
    

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