How Mining Secures Blockchain Networks to Protect Their Integrity
The crypto networks like the Bitcoin network are secured by mining amongst other things. Mining is the process that validates transactions on the network as well as mints new bitcoin at the same time. Mining crypto ensures that no one entity controls the protocol or blockchain that governs it. This makes crypto resistant to being shut down or controlled by a central authority or any government.
Mining crypto validates transactions on the crypto network. To mine cryptocurrency, computers on the network/node known as miners compete to solve a Proof of Work (PoW) puzzle which is computationally intensive. The fastest miner to solve the puzzle that is accepted by the majority of miners is permitted to write a block of new transactions to the blockchain. In this post, we will discuss the network security design of crypto and the risks it solves for.
Risk: Mining Centralization
The way cryptocurrencies are mined, Bitcoin, for example, takes away the risk of mining centralization. If a majority of the network’s hash rate were to be centralized by concentrating mining in one or a few jurisdictions, there is a higher chance that a government or cooperating governments will meddle. But because cryptocurrencies like Bitcoin are not centralized, if the government should ban Bitcoin, they will simply be shutting down miners within its reach and the Bitcoin network will not be affected. And if the government coerces miners into censored transactions, it may detract from Bitcoin’s permissionless and fungibility promises, but the community would fork the coin, thereby preserving its latest unadulterated blockchain.
If miners were to acquire the majority of the Crypto network, such miners will have the processing power measured in hashrate to spend the Crypto more than once, this is known as the double-spending problem. But the crypto network solves this problem with incentives. Firstly, the security scale of Crypto is in perfect step with the price of the Crypto. As the price increases, so does a block reward arbitrage opportunity appear. Secondly, if miners were able to acquire the majority of the network’s aggregate hashrate, and over the figurative proof of work energy wall, such miners will be heavily incentivized to play nice. This is so because mining Crypto is capital intensive.
Risk: Quantum Computing Attacks
Another way Crypto mining helps secure the network is by offering protection against quantum computing attacks. Quantum computing is a potential threat to the public key cryptography scheme of crypto like Bitcoin which it uses to secure itself. With post-quantum cryptography, crypto that uses quantum computing can resist quantum computing attacks. Most times, the quantum attack can be seen miles away, giving the crypto ample time to adapt. Moreover, if any quantum threat should materialize overnight, it would affect way more than the crypto network. For example, command and control military systems and all satellites will be vulnerable to quantum computing attacks.
Risk: Hard Forks
Even though the Bitcoin community has resisted increasing the block size beyond 1-megabyte, but not without agitation and controversy. At a time, tension built, and the community had to split into Bitcoin Cash hard fork which spawned into an incompatible blockchain with an 8-megabyte block size. Note that the majority of the community are in favor of keeping the crypto decentralized, have it at the back of your mind that there could be a disagreement in the community which could result in another design decision in the future, which could result in a portion of the crypto’s community hard forking in dissent.
What the cryptocurrency projects have adapted to recently is to ensure that there are multiple uses that stakeholder can put the blockchain to apart from just mining. Projects like BoliesTv incentivize users to play interactive online games on its platform, utilize its native coin BOLC as a means of exchange by trading it and using it to exchange value. As more cryptocurrencies find multiple use cases, their visibility will increase globally, and hence their acceptability.