The Difficulty of Mining Cryptocurrency, a talk by Sam Werner (Imperial College London)
Abstract
The introduction of Bitcoin in 2008 not only created a decentralised payment network, but also gave rise to the lucrative business of cryptocurrency mining. Mining is the process of guessing the solution to a cryptographic computationally-intensive puzzle, where the miner that generates a solution is rewarded for their invested computational efforts with an amount of newly minted coins of the underlying cryptocurrency. Each time such a puzzle is solved, a block of unconfirmed transactions is processed by the network. The hardness of mining a block, or solving a puzzle, is dependent on the difficulty adjustment algorithm, which modifies the difficulty with the aim of maintaining a stable block production rate. However, some of these algorithms actually result in very unstable block production and therefore low transaction throughput.
In this talk, I will explain the general workings of Bitcoin with a particular focus on mining. Additionally, I will discuss how some cryptocurrencies have problems maintaining stable transaction throughput due to miner behaviour in the wake of not so stable difficulty adjustment algorithms.
About the Speaker
Sam Werner is a second year computer science PhD student at Imperial College London in the Centre for Cryptocurrency Research and Engineering. He is supervised by Professor William Knottenbelt and focuses on fairness and forms of manipulation found in protocol designs and incentive mechanisms in cryptocurrencies. Previously, Sam worked as a software engineer for the enterprise blockchain company R3. He obtained his MSc in Computing Science from Imperial College London in 2017.
The talk will be followed by the London Branch AGM, to which all are heartily invited.
No charge is made to attend meetings; non-IMA members are welcome.
