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Cryptocurrency mining is one of the ways to get coins in personal possession. It happens with the help of special encryption algorithms that are created by cryptographers for certain coins. Some algorithms can be used for a range of coins. Miners are engaged in their decryption and — on a good schedule — receive a reward for this. This is how blockchain develops and functions.
What cryptocurrency mining algorithms have won the hearts of avid crypto miners? Let’s look at this issue in more detail.
Digital currency hashing algorithm: what is it and what is it intended for?
Cryptocurrency algorithms are formed as a set of special cryptographic mechanisms and rules, thanks to which digital money is encrypted.
One of the important concepts in mining is a hash, which is a unique combination of symbols in the form of mathematical and alphabetic notations. After processing the incoming information by a cryptographic function, a hash is obtained, and the processing itself is called hashing.
The first property of hashing is that with the slightest change in information, the hash will be different. The second is that regardless of the type of information, the hash length is constant. For example, after hashing a photo of a cat, we get a hash like 1jkh32jpiv849m, i.e. a string of 14 characters. If we hash Tolstoy’s “War and Peace”, we get a hash of the form lkm39s9nr54ma – also a string of 14 characters, but completely different. When we hash War and Peace again, adding an extra dot somewhere in the middle of the 2nd volume, we get a 14-character hash, unlike the previous 2. In this case, the reverse operation with a hash always accurately reproduces the original information.
So, the essence of mining is to use a simple enumeration of hashes to get one that matches a predetermined value. The faster the search, the more likely it is to be the first to find the desired hash. This is done using equipment suitable for this purpose: video cards, processors or ASICs.
Once the correct hash is found and validated, a new block will be generated on the blockchain. It will save all the data of the previous block:
- All Transactions;
- reward amount.
And the user whose equipment found the hash will receive a proportional reward. In general, this is how the process of cryptocurrency mining looks simplified.
What is a consensus mechanism?
The next concept is a consensus mechanism, or a rule by which one network node can check the information received from another network node for validity. The most common consensus algorithms are:
- PoW (confirmation of completed work);
- PoS (proof of stake);
- DPoS (Delegated Proof of Stake), etc.
Basic Cryptocurrency Hashing Algorithms
Cryptocurrency mining includes a huge number of hashing algorithms, but not all of them are the most reliable. Which of them are most often used by miners?
Let’s look at the list of relevant and popular algorithms for mining top cryptocurrencies. The list below is based on user requests. However, to obtain the expected mining result, each user must decide on the choice of the algorithm on their own. In this case, it is necessary to take into account not only the chosen cryptocurrency, but also the installed equipment.
Equihash is an anonymous hashing algorithm for virtual money that started its work seven years ago on the basis of the Zcash blockchain. The hashrate is measured in millions of hashes per second, and one hundred and fifty seconds is enough to add a block. The principle of the hash function is based on the concept of the “Birthday Paradox”.
It is important for the algorithm that the computing device has enough video RAM, but does not perform mathematical calculations quickly. Thanks to memory, the network is considered more secure from control by a large miner or their group. The ideal choice for Eqiuhash is to include video cards with 2 GB or more memory in the farm, for example, NVidia.
Coins running on Equihash:
- Comodo Coin;
- Bitcoin Private;
- Bitcoin Gold;
X11 is a unique encryption algorithm that provides a high degree of security due to the presence of 11 functions. To hack it, you will need to go through 11 obstacles – without this, hacking by intruders will be impossible. The main feature is that already during the passage of the first function, problems will be noticeable, and specialists will be able to strengthen protection.
Another advantage of the algorithm is its efficiency. You don’t need to spend a lot of energy to mine coins: using this bitcoin algorithm, the same amount of coins is mined with a 50% reduction in electricity consumption.
Today, developers offer other encryption mechanisms based on X11, namely X12 and higher.
Ethash, or Dagger Hashimoto
Ethash was created by the developers solely to receive Ethereum. It combines two different algorithms – Dagger and Hashimoto. Measurements are in Megahash/second. Let’s consider each of them separately.
A feature of Dagger is the exceptional memory criteria of the PC video device. At the same time, its performance remains high even with an increase in the complexity of the network. It is worth noting that the algorithm is not used alone, because it has vulnerabilities. Dagger works great with Hashimoto. A feature of the latter is the use of a large amount of memory. Therefore, it slows down mining, resulting in an infinite number of I / O operations failing. Due to the impossibility of using the method of infinite selection of random values, it was impossible to use ASICs for mining Ethereum.
By combining the two encryption mechanisms into one, the device required additional memory. In addition, it regularly increased due to the complexity of the network.
Coins running on the algorithm:
- Etherium Classic;
- Quark Chain;
This unique encryption mechanism is, in fact, historical, as the SHA 256 bitcoin mining algorithm is the first of its kind. The abbreviation SHA in the name stands for Secure Hash Algorithm, and the number 256 indicates the generation of a 256-bit hash. Calculations occur in Gigahash per second.
The algorithm is considered the safest of the family, which is confirmed by the preimage and collision resistance test. Due to the popularity of bitcoin mining, it is only profitable when using ASICs. It is not used to calculate the hash on other devices.
SHA-256 today is not only a bitcoin mining algorithm. With its help, the following coins are mined:
- Bitcoin Cash
- Bitcoin S.V.
- Litecoin Cash;
For networks with anonymous cryptocurrencies, Cryptonight is the perfect solution. The principle of its functioning is the technology of ring signatures and the use of one-time addresses. First used for the Monero token. With this cryptocurrency algorithm, a block is generated in sixty seconds. Such properties of the algorithm are due to the CryptoNote protocol, created back in 2012.
Due to the absolute anonymity of transactions, each coin that operates on the algorithm is considered fungible. Processors and video cards are used to mine coins. A prerequisite is a sufficient amount of RAM – at least 2 GB. That is why asics for this algorithm are economically unprofitable, because they are characterized by a high speed of mathematical calculations.
The reason for this is that the search for a given parameter for the appearance of another block in the network consists of creating random blocks stored in the memory of a computing device. This increases the level of decentralization of the network. It is impossible to allow such a state of affairs in which 50% of the computing power is provided by one miner.
An additional attraction of the algorithm is the minimum heat generation during the operation of computing devices. Therefore, miners choose it in hot climates and limited access to electricity.
Coins using this algorithm:
- digital note;
The Scrypt hashing mechanism is most often used by single crypto miners. This is due to the fact that it is resistant to “hardware attack”. The algorithm creates one block on the network in thirty minutes, and the hash rate is measured in millions of hashes per second.
Among algorithms for mining cryptocurrencies, it is Scrypt that has become popular due to the need to increase the exactingness of the calculated power of the appearance of blocks when mining bitcoin. This was done in order to prohibit the organization of digital gold monopolization. Today, the amount of video memory is important in the functioning of the mining of Scrypt-cryptocurrencies.
Coin mining on the algorithm is carried out both on processors / video cards, and on ASICs. However, when choosing it, you need to take into account that it heavily loads the memory of devices.
Coins that are mined on Scrypt:
Cryptocurrency mining algorithms: table
In order to rationally use the installed computing system, it is necessary to choose the most appropriate algorithm for a particular cryptocurrency. Since the same coin can be mined using different algorithms, it is worth considering all the parameters of the farm. Further in the table, we will consider cryptocurrencies and their algorithms.
You need to understand that every year the mining of coins becomes more difficult, which is confirmed by the dynamics of the hashrate. Algorithms are being changed and modernized, defects and vulnerabilities are being eliminated. That is why every miner should monitor changes in this area.
Disclaimer. Investing in any financial asset carries the risk of losing capital. Nothing in this text can be considered an investment recommendation or an offer to buy/sell any financial instruments. For all their actions in the stock market, each investor bears full responsibility independently.
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