What Is A Cryptocurrency
Cryptocurrencies were born out of the 2008 financial crisis as an alternative to government printed money, also known as fiat money. Monero was born out of a need to have a truly fungible cryptocurrency. Monero is an open-source decentralized digital currency that runs on a blockchain.
The source code is available to be audited, copied and even changed. Since it’s inception the Monero code base has not been broken.
Monero works via Peer-2-Peer technology. Each full node connects directly to another in order to share and validate the blockchain.
Something that has no physical representation. Monero only exists as software and can not be found in the physical world.
Whether it’s buying coffee from a local coffee shop or a house on the other side of the world. Monero is an excellent medium of exchange.
Monero’s transaction history is able to be validated thanks to the blockchain. The blockchain contains all past transactions done on the Monero network. It is made up of a series of blocks mathematically linked in order. Each full node on the network stores a copy of the blockchain and new blocks as they are created. The nodes compare and validate new blocks to make sure every node is providing accurate information.
Attributes of a Block
Click on each attribute to learn more about it.
The block hash is a long string of characters that is the result of taking all the data in the previous block and running it through an algorithm. Anyone who has a copy of the previous block is able to run it through the same algorithm producing the same result.
If a bad actor were to come along and try and change the previous block, the block hash would not match up and the network would reject the block from the bad actor.
Block height is the number in which the current block came. As of November 30, 11:17 am (EST), there are 1,709,964 blocks in the Monero blockchain.
The size of the block refers to the amount of storage space it takes up (measured in bytes). When Monero first launched, there were barely any transactions on the network and blocks were very tiny. Over time as more transactions happen on the network the block size will increase. For example, block 1,709,964 was 33.909 kB large
Each block stores transactions that have happened on the Monero network. Monero nodes store transactions in the memory pool until they are able to placed in a block by a miner. Block 1,709,964 had 15 transactions in it.
In order for transactions to be included in the blockchain. Senders are expected to include a small fee for miners as an incentive to include their transaction in a block. During high traffic times on the network when blocks can’t scale quick enough fees may raise as space in blocks becomes limited.
Each block contains a transaction that gives a reward to the miner that finds it. Over time this reward changes based off the blockchains emission rate.
Attributes Of A Blockchain
Click on each attribute to learn more about it.
The block time is the average time it is supposed to take miners to find a block. In the case of Monero that time is 2 minutes. When a block is found it needs time to spread to nodes all over the world in order to be checked for validity while at the same time maintaining a quick confirmation time for transactions to get into the blockchain
Miners are limited in the size they can make blocks. This is to prevent one miner from spamming the network with large blocks. If miners are expecting to download a 1 Mb block but instead get a 1 Tb block some of the nodes would not be able to keep up due to slower internet speeds. Imagine having to download 1 Tb every 2 minutes, then imagine trying to do it in a third world country.
Emission rate refers to how the block reward changes over time (if at all). Bitcoin’s emission rate is easy to understand. The block reward started at 50 BTC and gets cut in half every 4 years until 21 million BTC have been mined with a block being found every 10 minutes on average.
Monero’s emission rate is determined by a more complicated system. For information on it see this Reddit post.
The consensus mechanism refers to a combination of all the attributes of both a blockchain and the individual blocks. It represents the rules that miners must follow when submitting a block and how the nodes will verify the block. For example:
When submitting a block:
- It can not be larger than 2 Mb to ensure world wide participation.
- Each send and receive must equal to 0 to ensure no new Monero is created.
- The block reward can not be equal to more then the allowed amount.
- The block hash must equal to the data in the previous block
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