Tweet
Today, miners play an important role in making sure ethereum works.
This role isn’t immediately obvious, though.
Many new users think that the sole purpose of mining is to generate ethers in a way that doesn’t require a central issuer (see our guide “What is Ether?“). This is true. Ethereum’s tokens are created through the process of mining at a rate of 5 ether per mined block. But mining also has another at least as important role.
Usually, banks are in charge of keeping accurate records of transactions. They ensure that money isn’t created out of thin air, and that users don’t cheat and spend their money more than once.
Blockchains, though, introduce an entirely new way of record-keeping, one where the entire network, rather than an intermediary, verifies transactions and adds them to the public ledger.
Although a ‘trustless’ or ‘trust-minimizing’ monetary system is the goal, someone still needs to secure the financial records, ensuring that no one cheats.
Mining is one innovation that makes decentralized record-keeping possible.
Miners come to consensus about the transaction history while preventing fraud (notably the double spending of ethers) – an interesting problem that hadn’t been solved in decentralized currencies before proof-of-work blockchains.
read more
This role isn’t immediately obvious, though.
Many new users think that the sole purpose of mining is to generate ethers in a way that doesn’t require a central issuer (see our guide “What is Ether?“). This is true. Ethereum’s tokens are created through the process of mining at a rate of 5 ether per mined block. But mining also has another at least as important role.
Usually, banks are in charge of keeping accurate records of transactions. They ensure that money isn’t created out of thin air, and that users don’t cheat and spend their money more than once.
Blockchains, though, introduce an entirely new way of record-keeping, one where the entire network, rather than an intermediary, verifies transactions and adds them to the public ledger.
Although a ‘trustless’ or ‘trust-minimizing’ monetary system is the goal, someone still needs to secure the financial records, ensuring that no one cheats.
Mining is one innovation that makes decentralized record-keeping possible.
Miners come to consensus about the transaction history while preventing fraud (notably the double spending of ethers) – an interesting problem that hadn’t been solved in decentralized currencies before proof-of-work blockchains.
read more
Comment