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Merged mining is mining for more than one cryptocurrency, that works on the same algorithm. The concept was a mining model that came about around 2014 with the Auxiliary proof of work (AuxPoW) protocol. While it was not something contemplated in the original white paper on cryptocurrency by Satoshi Nakamoto, he mentioned it on a Bitcointalk thread a few years later. Merged mining allows a miner to mine in more than one blockchain simultaneously. The cryptocurrencies operate on a shared algorithm basis.
Merged mining also assists in warding off security concerns like chain attacks. It is now generally done through merged mining pools without additional resource investment by a user. This post discusses merged mining and its nuances.
What exactly is merged mining?
Merged mining, in technical jargon, is also called ‘Auxiliary Proof of Work,’ which is the protocol it is based on. A rather rudimentary understanding of the concept involves using the work done on one primary blockchain in another auxiliary blockchain(s). These blockchains, however, have to be operating on the same hash algorithm as the primary blockchain. The computational work done over the primary network is essentially shared across other auxiliary networks and leveraged accordingly. It does not require additional computational effort to conduct merged mining, just supporting architectural changes in the auxiliary networks to accept the PoW done for the parent blockchain.
The primary blockchain does not require any major modification for merged mining. For the auxiliary blockchain network, however, you will have to use the assistance of something called a ‘hard fork’ to modify it. Forks are usually introduced to add new features to a blockchain. A rudimentary understanding of it- forks introduce a new set of rules for the crypto to follow.
The auxiliary blockchains also have an increased amount of security due to operating on the same hashing power as the primary blockchain. Auxiliary blockchains sometimes also gain more traction as crypto coins owing to being associated with the primary blockchain. Namecoin, for instance, gained some ground after being merge-mined along with Bitcoin. It was also one of the first implementations of merged mining. It was followed by the public merge-mining of Dogecoin with Litecoin in 2014 as well.
As a result of which, Dogecoin, which was the auxiliary cryptocurrency, witnessed exponential growth in the following weeks. It was a successful enterprise in merge-mining as it also led to Dogecoin’s position being cemented as a popular crypto coin for years to come. The combination mining also led to improvements in its security network over time.
There is a high incentive for merged mining, as the rewards are extra for no additional hours to be put in by the miner. There is, however, extra maintenance work required in maintaining two networks for the miner.
Pros of merged mining:
- It allows the same mining equipment to be used to generate new blocks in several different networks simultaneously.
- Due to merged mining, the power of the hash in blockchain networks increases. It helps to generate greater computational power for networks and an increase in their level of difficulty, which makes the networks more secure and robust by having a larger computational capacity or, in other words, hashing. It can become a great advantage for small blockchains with less hashing power and a low level of security. It can also reduce the probability of suffering attacks. Namecoin became secure in the same way.
- The same mining equipment used for block mining in several networks increases the profitability and performance of the mining equipment. And therefore mining activities as well.
- Miners who execute merged mining get many opportunities to generate new blocks using the same mining algorithm, e.g., SHA-256. It will benefit the miners in receiving rewards for block mining, too.
What is a merged mining pool?
A merged mining pool is created out of combining the resources of a large number of people. The idea behind creating a pool is to increase the probability of finding the solutions to a block. Combining computational resources results in better facilitation of this goal.
With merged mining network complexities in 2021, solo mining is gradually becoming unfeasible for generating any profit. With a merged mining pool, miners also collectively devise rules of the pool for a more constant source of revenue. Some amount of mining fee is charged for the maintenance of the pool, as well as for the services provided. The remaining mining rewards are divided among the participants.
Before selecting a merged mining pool, ensure your blockchain software is compatible with the pool. An overall assessment of the pool’s security, server location, fee, and reputation must also be done before deciding.
The size of the mining pool is also a factor to look for while choosing a suitable mining pool. Small mining pools have fewer miners and low hash rates. Suppose you choose to join a large pool; you have to be aware of the mining difficulty, especially if your equipment isn’t powerful enough. Thus, a balance is required between the size of the pool and your hashing power. If you wish to learn more about cryptocurrency mining pools, you should check out our blog.
Conclusively, merged mining is a process by which the computational work over one network can be harnessed over others. Miners might sometimes create a combination of networks called a merged mining pool. This aids faster mining and provides additional resources. The onus lies on the miners to pick a merged mining pool that suits their needs.
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Frequently Asked Questions
What Is Bitcoin?
Bitcoin is a decentralized digital currency that may be purchased, traded, and traded without intermediary like a bank. Bitcoin is built on the blockchain, which is a distributed digital ledger. Wei Dai suggested a new kind of money that relies on cryptography rather than a central authority to oversee its production and transactions on the cypherpunks mailing list in 1998. Bitcoin was the first application of that notion. In 2009, Satoshi Nakamoto sent out the first Bitcoin specification and proof of concept to a cryptography mailing group.
Is Bitcoin And Cryptocurrency The Same Thing?
Bitcoin is a cryptocurrency that was designed to facilitate cross-border transactions, eliminate government control over transactions, and streamline the entire process without third-party intermediaries. The absence of intermediaries has resulted in a significant reduction in transaction costs. Satoshi Nakamoto, the creator of Bitcoin, created the first cryptocurrency in 2008. It began as open-source software for money transfers. Since then, plenty of cryptocurrencies have emerged, with some focusing on specific fields.
How Many Bitcoins Will Ever Be Created?
The source code of Bitcoin stipulates that it must have a restricted and finite quantity. As a result, only 21 million Bitcoins will ever be generated. These Bitcoins are added to the Bitcoin supply at a predetermined rate of one block every ten minutes on average. The supply of Bitcoins will be depleted once miners have unlocked this number of Bitcoins. It's possible, however, that the protocol for Bitcoin will be altered to allow for a higher supply.
How To Convert Bitcoin To Cash?
There are many ways of converting Bitcoin to cash, such as crypto exchanges, Bitcoin ATMs, Bitcoin Debit Cards, Peer to Peer Transactions. You can use cryptocurrency exchanges such as WazirX for this. Unlike typical ATMs, which allow you to withdraw money from your bank account, a Bitcoin ATM is a physical location where you may buy and sell Bitcoins using fiat currency. Several websites provide the option of selling Bitcoin in return for a prepaid debit card that may be used just like a standard debit card. You can sell Bitcoin for cash through a peer-to-peer platform in a faster and more anonymous manner.
Is Bitcoin Trading Is Legal In India?
In 2020, the Supreme Court of India lifted the RBI’s restrictions on cryptocurrencies. According to the Supreme Court, the existence of Bitcoin or another cryptocurrency is unregulated but not unlawful. The verdict has greatly aided the world of digital money in the country. To put it another way, investing in Bitcoin is perfectly legal, and you may do so through various apps and traders.
How Many Bitcoins Are There?
There are 18,730,931.25 Bitcoins in circulation as of June 2021. The total number of Bitcoins that would ever be there is just 21 million. On average, 144 blocks are mined every day, with 6.25 Bitcoins per block. The average number of new Bitcoins mined every day is 900, calculated by multiplying 144 by 6.25.
Can Bitcoin Be Converted To Real Money?
Crypto exchanges, Bitcoin ATMs, Bitcoin Debit Cards, and Peer Peer Transactions are all options for converting Bitcoin to cash. This can be accomplished by using Bitcoin exchanges such as WazirX. A Bitcoin ATM is a real place where you may purchase and sell Bitcoins with cash, unlike standard ATMs that allow you to withdraw money from your bank account. Many websites provide the option of purchasing Bitcoin in return for a prepaid debit card that works similarly to a standard debit card. Through a peer-to-peer marketplace, you may sell Bitcoin for cash faster and more privately.
Is Bitcoin Cash A Good Investment?
Bitcoin Cash is a hard fork of Bitcoin formed in 2017 to address Bitcoin's scalability and challenges. Bitcoin Cash seeks to make global transactions faster, cheaper, and more secure. Bitcoin Cash is now accepted by thousands of online and offline businesses all over the world. Studied correctly, Bitcoin Cash may be an investment worthy of consideration.
What Is The Meaning Of Bitcoin?
Bitcoin is a type of cryptocurrency that was first introduced in January 2009. It is invented based on the key concepts and notions presented in a whitepaper by Satoshi Nakamoto, a mysterious and pseudonymous figure. The name of the individual or people who invented technology is yet unknown. Bitcoin promises reduced transaction fees than existing online payment methods, and a decentralized authority controls it, unlike government-issued currencies.
How Does Bitcoin Work?
The blockchain, a distributed digital ledger, is what Bitcoin is based on. As the name suggests, blockchain is a linked database made up of blocks that store information about each transaction, such as the date and time, total amount, buyer and seller, and a unique identifier for each exchange. Entries are linked in chronological order to form a digital blockchain. Entries are linked in chronological order to form a digital blockchain. Blockchain is decentralized, which means any central authority does not control it.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
