CCE Cryptocurrency Mining Principles 5 — Questions and Answers
Question 1: What is a '51% attack' and how does mining centralization enable it?
- When 51% of users vote to change protocol rules
- When an entity controls majority hash rate and can double-spend or reorg the chain (Correct answer)
- When 51% of mining pools merge into one entity
- When network latency exceeds 51% packet loss
Correct answer: When an entity controls majority hash rate and can double-spend or reorg the chain
Controlling over 50% of network hash rate allows an attacker to reverse recent transactions and perform double-spends on the blockchain.
Question 2: Which hashing algorithm does Bitcoin use for its Proof of Work mining?
- Scrypt
- SHA-256d (double SHA-256) (Correct answer)
- Keccak-256
- Blake2b
Correct answer: SHA-256d (double SHA-256)
Bitcoin applies SHA-256 twice (double SHA-256) to block headers during the mining process.
Question 3: What is 'Proof of Capacity' (PoC) mining and which storage medium does it use?
- Mining using CPU cache memory
- Mining where pre-computed plot files stored on hard drives determine block rights (Correct answer)
- Mining using RAM speed as the work measure
- Mining using SSD endurance as the proof
Correct answer: Mining where pre-computed plot files stored on hard drives determine block rights
PoC (used by coins like Chia/Burst) pre-computes hash solutions (plots) on HDDs and miners scan them to find valid block solutions.
Question 4: What is 'FPGA mining' and how does it differ from ASIC mining?
- FPGAs are faster than ASICs but consume more power
- FPGAs are reprogrammable chips offering flexibility; ASICs are fixed-function and more efficient for specific algorithms (Correct answer)
- FPGAs are designed exclusively for GPU workloads
- FPGAs require no cooling unlike ASICs
Correct answer: FPGAs are reprogrammable chips offering flexibility; ASICs are fixed-function and more efficient for specific algorithms
FPGAs can be reprogrammed for different mining algorithms, whereas ASICs are optimized for a single algorithm and cannot be repurposed.
Question 5: What does 'PROP' (Proportional) payout method mean in mining pools?
- Miners receive equal pay regardless of shares submitted
- Miners receive rewards proportional to their shares submitted in the round when a block is found (Correct answer)
- The pool takes a proportional cut of all mining rewards
- Miners are paid based on their hardware's proportional hash rate
Correct answer: Miners receive rewards proportional to their shares submitted in the round when a block is found
Under PROP, the block reward is split among miners based on the fraction of total shares each submitted during that round.
Question 6: What is 'RandomX,' and which major cryptocurrency uses it?
- A random number generator for wallet security; used by Cardano
- A CPU-optimized Proof of Work algorithm designed to resist ASICs; used by Monero (Correct answer)
- A random block selection mechanism; used by Tezos
- A randomized difficulty algorithm; used by Dash
Correct answer: A CPU-optimized Proof of Work algorithm designed to resist ASICs; used by Monero
RandomX uses random code execution and memory-hard techniques to favor general-purpose CPUs over specialized ASICs, and Monero adopted it in 2019.
Question 7: What is the 'mempool' and how does it influence miner behavior?
- A shared memory chip in ASIC miners for storing hashes
- A waiting area of unconfirmed transactions from which miners select based on fees (Correct answer)
- A pool of memory addresses for wallet generation
- A temporary storage layer for block headers between nodes
Correct answer: A waiting area of unconfirmed transactions from which miners select based on fees
The mempool (memory pool) holds pending transactions, and miners typically prioritize high-fee transactions to maximize block reward earnings.
CCE Cryptocurrency Mining Principles 5
What is a '51% attack' and how does mining centralization enable it?