Register at exchange that trades cryptocurrencies Coinmarketcap provides helpful info Need to verify your identity Might need to buy Bitcoin first in order to buy other currencies

Home / Summaries / Class notes - Practice of Financial Markets / miners-block-nonce

Digital Currencies

5 important questions on Digital Currencies

Verifying Crypto transaction

Done by miners with help of digital signature

Check if private key created the signature

Miners need proof of work (that's costly)

Confirm transaction by reverse-engineering cryptographic algorithms

Certain amount of transactions (block): miners look for input string to hash function -> string for black data and a nonce
Nonce: string that returns desired hash output

Find suitable nonce by trial-and-error

Once all is verified in that block -> block added to blockchain and miner compensated

Overview mining and transactions

You decide to send money with your wallet
Transaction is sent out by wallet application and is awaiting confirmation by (multiple) miners
Miners select transactions and add them into a 'block'
Actual mining is done: miners look for correct nonce to add a block to blockchain
Miner that's found correct nonce broadcasts it to all other miners
Other miners verify the solution of the miner (run hash function with nonce)
If majority of miners agree, block is added to blockchain