Decentralization was a key component of the original cryptocurrency vision. To make that happen, a method of confirming transactions independent of financial institutions was required. The first solution to this problem was the development of a system that enables consensus among all the computers of the crypto network to concur on which transactions were valid. This system was called proof-of-work (PoW).
Proof-of-work (PoW) is a cryptographic consensus mechanism used to ensure the validity of digital transactions. The algorithm is used to verify and keep track of the production of new crypto coins that take place on the blockchain. To validate and record cryptocurrency transactions, the Proof-of-work consensus mechanism necessitates that network participants put forth an effort to solve highly complex mathematical equations. For these equations to be solved, the network needs a significant amount of processing power, hence the name "proof-of-work."
Proof-of-work and mining are concepts that are closely connected. PoW's algorithm determines the rules and difficulty of mining operations on the blockchain. On the other hand, mining is the actual "work." It is the process of adding legitimate blocks to the chain.
The processing of Ethereum PoW transactions results in blocks. Each block in the proof-of-work Ethereum protocol contains:
Block difficulty: Block difficulty is a metric that is applied to the mining of cryptocurrencies. It measures how difficult it is to solve complex cryptographic equations to create a block. The quantity of miners on the network determines the block difficulty. The greater the number of miners, the more difficult finding the block.
Nonce: Nonce is a method of grouping and arranging transactions on the Ethereum blockchain. Every transaction on the Ethereum PoW algorithm has a nonce. The nonce is the sum of all transactions sent from a particular address. Every transaction from an address is assigned a sequential numbered, starting with 0 for the first transaction. The nonce is required to keep track of multiple transactions from the same address.
mixHash: mixHash is a 128-byte intermediate hash value created by nonce when Ethereum PoW mining computations are carried out. The network may be subject to an attack similar to a Denial-of-service (DoS) attack if blocks request PoW calculations with false or malicious nonce values. Therefore, the mixHash computes through several intermediate steps to ensure that there is no problem by calculating the proof-of-work.
Blockchains, open ledgers made up of transactional blocks, are present in every cryptocurrency. Each transactional block of a PoW cryptocurrency has a specific hash. In this case, "the work" is producing a hash that corresponds to the current block's target hash. To confirm the block, a crypto miner must create a target hash that is less than or equal to the block's hash. Before the Merge, Ethash was Ethereum's proof-of-work mining algorithm. Ethash makes finding the nonce for a block a difficult race for miners. As a result, only blocks with valid nonce are added to the ETHW chain.
A miner uses mining equipment that can perform computations quickly as they compete to create a block. The goal is to be the first miner to match the block's target hash. Achieving this will allow the miner to update the blockchain and earn cryptocurrency rewards. Finding the target hash is challenging, but verifying it is straightforward, which is why proof-of-work in cryptocurrencies works well. The procedure is difficult enough to guard against transaction records being altered. However, once a target hash is located, it's easy for other miners to verify.
The proof-of-work protocol's high computing resource requirements create a secure cryptocurrency network. The proof-of-work protocol makes it almost impossible to add new blocks that would either delete existing transactions, add fictitious ones, or generate a second chain on the ETHW mainnet. This is because a malicious miner would have to consistently solve the block nonce faster than other miners. A malicious miner would require more than 51% of the network's computing power to outperform every other miner and produce consistently negative but legitimate blocks. It would take a lot of expensive computing power to complete that amount of "work," and the energy expended might outweigh the gains.
The PoW mechanism is also in charge of issuing new crypto coins into the system and providing incentives for miners who successfully created blocks. Successful block miners would receive newly created Ethereum PoW (ETHW) tokens and a portion of the transaction fees as payment.
You can purchase Ethereum PoW and a variety of other cryptocurrencies on Swapzone. Swapzone is a non-custodial, fast crypto-to-crypto exchange aggregator that assists users in making informed decisions when trading crypto assets. It gathers information about exchange providers, provides comparative parameters, aggregates and ranks available deals, and provides the ability to make a swap using the providers' API all-in-one interface.
An exchange rate is the rate at which one cryptocurrency can be exchanged for another through a certain crypto exchange provider. Cryptocurrency exchange rates on Swapzone reflect current prices of crypto assets and are updated every 30 seconds for you to keep track of any market changes and fluctuations to profit when buying the dip or going with the best exchange rate and the lowest exchange fees. All cryptocurrency exchange providers have their own rates, which depends on supply and demand, mining rewards, costs and so on. See what else might affect the rate in our article on prices.
There are two types of exchange rates aggregated by Swapzone – fixed rates and floating rates. To receive the exact amount of crypto that is displayed at the beginning of the exchange and shield yourself against the market's volatility, opt for fixed-rate offers. If you're ready to take a risk and receive less or more than the sum displayed, go with floating-rate offers but bear in mind that floating rates may drastically change any second. You can refresh your memory on how to get the best exchange rate here.
Crypto transaction fees may vary depending on the network (Ethereum transaction fees tend to spike during the congestion on the network), your chosen cryptocurrency, an instant exchange provider as well as its transaction processing speed and internal policy. These fees may be relatively low but it’s crucial to know they may be imposed in the first place.
If you want to exchange cryptocurrency with the lowest fees, beware of the offers with a grey-colored “Transaction fees are not included” label displayed under the exchange rate. To avoid having to pay an unexpected amount of fees during the exchange, opt for those that do not have that label. Read our articles to learn more about how to exchange cryptocurrency with the lowest fees and find out which assets have the lowest transaction fees.
Transactions usually take from 5 to 30 minutes to be processed, especially if you choose currencies with speedy networks. However, there are several factors that may affect and slow down the exchange process, i.e. transaction volume, blockchain capacity, network updates, cryptocurrency itself and the capacity or chosen exchange platforms.
The processing may take longer due to the large transaction volume, congestion of the network, blockchain overload and market overload, technical issues or system failures, lack of liquidity or network maintenance.
The transaction may be also stuck if you forget to add a required Extra ID, mistake networks or use the wrong wallet for a chosen crypto asset. If you worry that the exchange processing is taking too long, please, contact us at [email protected] or via our live chat on the landing page.
To exchange, buy, sell or trade cryptocurrency and store your crypto keys safely and securely, you need a crypto wallet. Choosing the best cryptocurrency wallet is a question of preference and need. To learn more, read our guide on how to choose the best cryptocurrency wallet for your needs.
There are several types of wallets for different crypto assets and tasks. Software wallets, or hot storage wallets, are connected to the Internet and come in many forms: Web, Desktop, Mobile or Browser Extensions. If you want to build a large crypto portfolio, you might want to look at multi currency wallets like Exodus, MetaMask, TrustWallet, Atomic or Guarda. If a coin or a token of your choice isn’t available there, you can always opt for a single-currency wallet that is usually designed by the project that launched the asset.
If you take safety and security matters seriously, go for hardware wallets, or cold storage wallets, like Ledger or Trezor, or even paper wallets. We strongly recommend you to do your research before creating a wallet: read the reviews to see what the community thinks, learn about the fees a particular wallet imposes for performing transactions, check out supported currencies and networks and see its security policy.
There are loads of different crypto exchange services, with new platforms emerging every month. Exchange providers differ by supported currencies, liquidity providers, fees, customer support, user interface, level of privacy and anonymity and customer support, which makes it hard for beginners to understand which one to choose. To learn more about what these exchanges offer and how you can assess them, read our guide on how to choose the best exchange platform.
To navigate them through the field full of services, we conduct research and thorough analysis of the market & list both prominent and promising exchange providers, keeping in touch with their teams 24/7. We give you all the necessary data on the offers they provide as well as their brief history, KYC/AML policies, reliability and advantages, while also indicating their downsides so that you don’t have to do that yourself.
Swapzone is an instant non-custodial cryptocurrency exchange aggregator that helps users make an informed choice when exchanging crypto assets. To make this possible, we gather the information on the exchange providers, select the parameters for comparison, aggregate and sort available deals & give an option to make a swap through providers' APIs in the same interface with a common user flow for every exchange. Still have doubts? Here's 9 reasons why you should use Swapzone to exchange crypto.
Learn how to exchange cryptocurrency with the lowest fees or zero fees as well as how to find the best crypto exchange rates and choose the safest cryptocurrency exchange provider.