100,000 Questions and Answers about Cryptocurrencies 71

What is Proof-of-Work (PoW)?

Proof-of-Work (PoW) is a consensus mechanism used by some blockchain networks, such as Bitcoin, to validate transactions and create new blocks. It requires miners to solve complex mathematical problems to earn the right to add a block to the blockchain.

How does Proof-of-Work (PoW) work?

Proof-of-Work works by having miners compete to solve a cryptographic puzzle associated with each block. The first miner to solve the puzzle and create a valid block is rewarded with cryptocurrency. The difficulty of the puzzle is adjusted over time to maintain a consistent block interval, ensuring the stability and security of the blockchain.

What is Proof-of-Stake (PoS)?

Proof-of-Stake (PoS) is an alternative consensus mechanism used by some blockchain networks, such as Ethereum 2.0. Instead of requiring miners to solve complex problems, PoS selects validators based on the amount of coins they stake, or lock up, in the network.

How does Proof-of-Stake (PoS) work?

Proof-of-Stake works by having validators stake a certain amount of coins in the network. These validators are then selected to validate blocks based on the size of their stake and other factors. Validators are rewarded for their participation and penalized if they act maliciously. This consensus mechanism aims to be more energy-efficient and secure compared to Proof-of-Work.

What is a blockchain oracle?

A blockchain oracle is a service that provides real-world data to smart contracts on a blockchain. It acts as a bridge between the blockchain and external data sources, enabling smart contracts to interact with and rely on off-chain information.

How does a blockchain oracle work?

A blockchain oracle works by aggregating data from various sources, such as APIs, web scrapers, or trusted data providers. It then verifies the data for accuracy and feeds it into smart contracts on the blockchain. Smart contracts can utilize this data to trigger actions or make decisions based on real-world events.

What is cross-chain interoperability?

Cross-chain interoperability refers to the ability of different blockchain networks to communicate and interact with each other. It enables the transfer of value and data across multiple blockchains, promoting interoperability and interoperability between different ecosystems.

How does cross-chain interoperability work?

Cross-chain interoperability works by utilizing various techniques and protocols to facilitate communication between different blockchain networks. These include sidechains, atomic swaps, bridges, and decentralized exchange protocols. These solutions enable the transfer of assets, execution of smart contracts, and sharing of data across multiple blockchains, enhancing the overall functionality and usability of blockchain technology.

What is a blockchain explorer?

A blockchain explorer is a tool that allows users to view and search the transactions and blocks on a blockchain. It provides a visual interface for exploring the blockchain and understanding its inner workings.

How does a blockchain explorer work?

A blockchain explorer works by connecting to a blockchain network and retrieving transaction and block data from the network's nodes. It then displays this data in a user-friendly interface, enabling users to search for specific transactions, view block details, and explore the blockchain's history and structure.

What is a token burn?

A token burn is the process of permanently removing tokens from circulation, reducing the overall supply. This is often done to increase the scarcity and potential value of the remaining tokens.

How does a token burn work?

A token burn works by having the token issuer or smart contract transfer a certain amount of tokens to a burn address, which is an address that cannot be accessed or spent. Once the tokens are sent to the burn address, they are permanently removed from circulation, reducing the overall supply. This process can be used to adjust the tokenomics of a project or as a reward mechanism for token holders.

What is a gas fee in Ethereum?

A gas fee in Ethereum is the cost required to execute a transaction or smart contract on the Ethereum blockchain. It is paid in Ethereum's native currency, Ether (ETH).

How does a gas fee work in Ethereum?

A gas fee in Ethereum works by requiring users to specify a gas price and gas limit for their transaction. The gas price represents the amount of Ether willing to pay per unit of gas used, while the gas limit sets the maximum amount of gas that can be consumed by the transaction. The total gas fee is calculated by multiplying the gas price by the amount of gas used by the transaction. This fee is paid to the miner who includes the transaction in a block and helps secure the Ethereum network.

What is a blockchain gas limit?

A blockchain gas limit refers to the maximum amount of gas that can be consumed by a transaction or block on a blockchain. It helps prevent excessive resource usage and ensures the stability and security of the network.

How does a blockchain gas limit work?

A blockchain gas limit works by setting a maximum amount of gas that can be consumed by a transaction or block. When a transaction is submitted, it must specify a gas limit that does not exceed the network's gas limit. If a transaction consumes more gas than its specified limit, it will fail and not be included in a block. The gas limit for a block is set by the network and helps ensure that blocks do not become too large or resource-intensive.

What is a mining pool?

A mining pool is a group of miners who combine their computing power to increase their chances of mining a block and earning the block reward. Mining pools distribute the block reward among the participating miners based on their contributed hashing power.

How does a mining pool work?

A mining pool works by having miners join the pool and contribute their computing power to the combined hashing power of the pool. When the pool mines a block, the block reward is distributed among the participating miners based on their contributed hashing power. This allows miners with less hashing power to earn rewards more consistently by pooling their resources with others.

What is a DDoS attack on a blockchain?

A Distributed Denial-of-Service (DDoS) attack on a blockchain is an attempt to overwhelm the network with a flood of requests, making it difficult or impossible for legitimate users to access or use the blockchain.

How does a DDoS attack on a blockchain work?

A DDoS attack on a blockchain works by having attackers send a large number of requests to the network's nodes, overwhelming their resources and causing delays or failures in processing legitimate transactions. This can disrupt the normal operation of the blockchain, making it difficult for users to access their funds or conduct transactions. Blockchains are designed to be resilient to such attacks, but severe or sustained DDoS attacks can still pose a threat to the network's stability and security.