Making Some Hash

What are the mathematics behind mining, and how do they affect the mining process overall? Coin Pursuit will fill you in on the mysteries of “hash.”

Before you start slicing potatoes, onions and corned beef into a frying pan, we'd like to clarify that's not the kind of hash we mean. With digital currency, like Bitcoin, “hash” is an elaborate and complex set of mathematical equations that must be resolved in order to successfully mine a data block. Once the hash is solved properly, the chain is considered complete, and whoever mines it can collect their coin and/or transaction fee percentage reward. Hashes are complex by design, so they can assure transaction security; if they were too simple, bogus transactions could slip through undetected.

There's a fine balance to maintain when it comes to hash's complexity, and some digital currencies have been tweaking their formulas in order to strike this balance more fairly. If the hash is too simple, security is compromised, as we discussed in the last paragraph. Transaction validity is crucial, so the hash must be intricate enough to assure it. On the other side of the coin (no pun intended), if the hash is too complex, the data blocks become difficult to mine effectively. Check out any alternative currency forum, and you'll find miners discussing the difficulty of a given currency's hash. If it's too difficult, miners aren't gonna bother, and that can be disastrous to the currency's well-being.

The “hash rate” of a digital currency network is the speed at which transaction data can be processed by its miners. Again, balance is needed: you want it to be fast enough that transactions have good turnaround times, yet you don't want it to be so fast that security is weakened. Volume plays a role, too; Bitcoin, for example, has a hash rate of over 10 Th/s (Terrahash per second), which means ten trillion calculations per second could conceivably be made. That's a lot of hash.
Next Mining Topic: Proof of Work and Proof of Stake Mining

Share This Page