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Crypto Intro: Merged Mining

Crypto Intro: Merged Mining

Note: This article is an adaption of a piece produced for the Elastos Community Writer series. The original can be found here. As a reminder, you can find the rest of the CryptoIntro series by clicking the Introduction label just above this note. Please follow me on @FlatOutCrypto

What is merged mining?

Merged mining is where more than one cryptoasset is mined without any additional computing power or effort. It essentially enables a Proof of Work (PoW) network to take advantage of ongoing mining activities of a larger PoW network (such as Bitcoin). As such, a miner creating and validating blocks for the Bitcoin blockchain will simultaneously create and validate blocks for the other network too. It was first used in 2011, when NameCoin used it in conjunction with Bitcoin. 

This provides the secondary network with increased security. Bitcoin, as the largest and most valuable network, is better protected against attacks (and in particular exploits which rely on brute power such as a 51% attack). By merge mining, a second network can also take advantage of this. Instead of having to take over a minimal amount of hash power, as with other networks, someone wishing to attack for example the Elastos network would have to have enough hash power to attack the Bitcoin network too. This would cost hundreds of millions of dollars.

It also provides stability. Smaller networks, lacking the mining operations committed to Bitcoin, are susceptible to miners redirecting their mining operations to a different cryptoasset or simply turning off their operations. By using Bitcoin as a parent blockchain, Elastos is less at risk of this threat.

Merged mining also reduces the expense and resource intensive nature of PoW. The environmental impact of Bitcoin’s PoW mining operations are frequently discussed. By merge mining with Bitcoin, a second network is able to achieve security through PoW without any additional energy or capital being required.

How does merged mining work?

An introductory look at PoW and how it works can be found here but PoW is essentially a mechanism which enables network participants to come to consensus on what the current ledger looks like. Miners use (now specialized) hardware in conjunction with a computer program in order to find the solutions to increasingly difficult mathematical problems, the answer to which is known as the hash.

With merged mining, miners simply duplicate this process. The computer program they run is modified slightly so that a miner can process blocks for both chains at the same time, with the discovered hash securing both blocks. Discovered proofs are submitted to both the Bitcoin blockchain and the secondary blockchain simultaneously.

Despite this, the second chain remains wholly independent from Bitcoin. Barring some minor information (such as an extra hash and Bitcoin header), no information from the Bitcoin chain is imported into the other network. This ensures that the other network doesn’t become overloaded and slowed down by unnecessary information.

As cryptoassets increase in value, the motivation to attack them similarly increases. They are 24/7 targets for a host of well-resourced and highly capable malicious actors worldwide. Bitcoin, by virtue of its size and associated mining operations, is as well protected from 51% and double spend attacks as any network. With merged mining, networks like NameCoin and Elastos are able to co-opt resilience and protection from launch, benefiting from an existing and large mining community. 

Note: If you would like to read further on the subject I recommend the paper Merged Mining: Curse or Cure? by Aljosha Judmayer, Alexei Zamyatin, Nicholas Stifter, Artemios Voyiatzis and Edgar Weippl.

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