How Bitcoin network uses hashrates to transact securely
Bitcoin has become the most sought cryptocurrency in the world today and everyone wants to own it.
Bitcoin (BTC) is a very popular cryptocurrency in the world today, it has been programmed and designed in such a way that even after 13 years, the Bitcoin network has never run into any security problems or been hacked during its long track record.
What is hashrate?
The real power of Bitcoin lies in its hashrate, which is what enables it to transact securely. Built on blockchain networks that utilize the Proof-of-Work (PoW) consensus algorithm, miners are required to use their computational power to solve complex mathematical problems to verify transactions and add new blocks to the distributed ledger.
The speed at which each miner's mining equipment solves the mathematical puzzle is called hashing, which is also called hashrate or hash power.
While this measurement worked decently in the very early years of Bitcoin, the BTC network has grown significantly in the past 13 years.
Mining technology has advanced rapidly during this period with specialized, high-performing Application-Specific Integrated Circuit (ASIC) equipment dominating the Bitcoin mining space, which led to the BTC community introducing new units to quantify hashrates.
The current Bitcoin hashrate (BTC hashrate) is 166.5 EH/s at block height 710,263 with a difficulty of 22,674,148,233,453.11.
Hashrate units below for reference
• 1 Hash per second (1 H/s)
• 1 Kilohash per second (1 kH/s) = 1,000 H/s
• 1 Megahash per second (1 MH/s) = 1 million H/s
• 1 Gigahash per second (1 GH/s) = 1 billion H/s
• 1 Terahash per second (1 TH/s) = 1 trillion H/s
• 1 Petahash per second (1 PH/s) = 1 quadrillion H/s
• 1 Exahash per second (1 EH/s) = 1 quintillion H/s
• 1 ZettaHash per second (1 ZH/s) = 1 Sextillion H/s
• 1 YottaHash per second (1 YH/s) = 1 Septillion H/s
In terms of hashrate, for converting larger units to smaller units you have to multiply the larger unit by 1,000 to calculate the value of the smaller unit (e.g., 10 TH/s x 1,000 =10,000 GH/s).
Hashrate & security
The total hashrate of the Bitcoin network influences multiple components of the cryptocurrency’s ecosystem.
Miners are required to leverage their computational power to solve complex mathematical puzzles in PoW ecosystems to add new blocks to the chain.
If a cybercriminal seeks to take over the Bitcoin network, he has to purchase mining equipment that has the computational power equaling or exceeding 51% of the total hashrate within the BTC ecosystem.
Therefore, the attacker has to invest a huge deal of money to take over the cryptocurrency’s network. When the hashrate is low, though, malicious parties have a higher chance of conducting a successful attack as it requires a smaller investment on their end.
With major cryptocurrencies like Bitcoin where millions of mining rigs are constantly running to secure the network, it’s nearly impossible for hacker groups to possess the hashrate they need to conduct a successful 51% attack.
As the total hashrate of the Bitcoin network stands at 166.5 quintillion EH/s at the time of writing this article, the attackers have to possess more than half of this 166.5 quintillion EH/s of computational power to take over the network.
Bitcoin is built on a blockchain network that keeps on updating itself with new blocks if there are any updates made in the network. Every time someone purchases Bitcoin or uses it as payment, the transaction is recorded on the blockchain. All transactions can be viewed publicly (though anonymously), and they cannot be changed.
Being a decentralized, digital ledger containing a record of all past transactions, the network confirms those transactions, and since the network is decentralized, the ledger’s record is secure.
Since a lot of data needs to be updated and verified, a huge amount of hashing power is required to process the transactions. As a reward for hashing, miners receive BTC.
To successfully mine a block and receive BTC, a machine has to hash the block’s header, which is a summary of the information contained within a given block (similar to metadata).
It’s a complex process, but the important thing to know is that the Bitcoin network is designed to make sure that a consistent number of BTC are released into the market over time. To keep this consistent, BTC mining becomes more difficult over time.
The miners always begin with a nonce of zero, and increase it each time they guess, until the target is reached.
The Bitcoin hashrate is a measurement of how many times the Bitcoin network attempts to complete those calculations each and every second. It’s the approximate average of all the hashrates of each individual miner in the network.
Impact of hashrate on BTC mining
Bitcoin uses the PoW algorithm for reaching consensus, which requires miners to compete with each other to generate new blocks and earn block rewards for their efforts.
Block generation takes approximately 10 minutes on the BTC network.
To maintain the 10-minute block generation time, the Bitcoin network is utilizing a self-regulating mechanism to adjust the mining difficulty every 2,016 blocks, which comes down to about two weeks.
If the total hashrate increases in the ecosystem, the Bitcoin network will raise the difficulty of finding a new block for miners to keep the time to generate a block at (roughly) 10 minutes.
Therefore, we can safely say that the total hashrate of the network has a great influence on Bitcoin's mining difficulty.
Bitcoin halving’s effects on the hashrate
The next Bitcoin halving date is on 8 April 2024 and the miners will get a reward of 3.125 BTC, currently, miners are getting 6.25 BTC.
When Bitcoin started in 2009, the block reward was 50 BTC and it was set in such a way that after every four years it would become half. The Bitcoin halving is a major event in the cryptocurrency’s ecosystem, which cuts the number of block rewards by 50% every four years.
Everyone is amazed and puzzled how Satoshi Nakamoto Kleverly designed the future money and just published an 8-page whitepaper, clearly explaining each and every aspect of Bitcoin.
Really Satoshi has a Klever mind!
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