In my previous blog, I touched a little bit on miners but did not show exactly how they work. Miners are special nodes which can hold the ledger. Together with an open ledger and distributed ledger, miners play a vital role in blockchain technology. Miners are responsible for synchronizing the ledger by validating the transactions and putting them on the open ledger.
This is how it works. The miners compete among themselves to validate transactions and put them on the ledger. This depends on how fast you are as the first miner to validate the transaction will get a financial reward. In order to be the first to take the transaction and put it on the ledger, a miner needs to do two things:
- Validate the new transaction: This is easy. We have identified that it is an open ledger. This means that anyone can immediately calculate whether the sender has the funds in order to make the transfer.
- Find a special key that will enable to take the present transaction, add to the previous transaction, and lock it. This is where the loads of work is as the miner needs to invest computational power and time because the search for the key is random. The miner is repeatedly guessing new key, until he/she finds the key that matches the random puzzle. The first miner to do that will get financial reward. This economic incentive essentially ensures that collectively they agree on what is the official ledger that should be used by everyone.
By synchronizing the ledger across the network, a miner will be able to solve the transaction and add it to the ledger. The miner will then broadcast that information to the entire network. He will say, “Here is a validated transaction and here is the key that enables everyone on the network to take it and add it to their own ledger.”
Once this is done the other miners will see that the transaction is already validated and added to the ledger. This means that there will be no point in trying to solve a transaction that has been solved already. The other miners will immediately take this transaction, add it to their own ledger and will look for another transaction to work on, and hopefully get a reward next time.
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