A large number of websites, including real money online casino, now accept cryptocurrency for their businesses. The thing is that it can also be a gateway for hacking — cryptocurrency is a sure magnet to invite people who will cause security problems.
The solution that many experts tout is hash rate. It is a computational power to show proof of work in the cryptocurrency network. What is hash rate, and can it really work as a security precaution in the cryptocurrency industry?
What Is a Hash Rate?
A hash rate is a measurement of computational power. The temperature has hot or cold, which is measured in Celsius and Fahrenheit. On the other hand, a hash rate is an indicator of security in the mining of cryptocurrency.
The hash rate represents the computational power of the computer that mined the cryptocurrency, which is used in the proof of work.
Cryptocurrencies are digital assets. You can buy and sell them without a middle person or a financial institution. To make this transaction happen, you need to complete transactions in a blockchain. This blockchain is comprised of millions of cryptocurrency miners globally.
The next level of security is the cryptographic layer, which is added to every transaction. The miners have to solve highly complex mathematical problems before they can generate it in a blockchain. This solution, once completed and validated, is called a hash.
The security of the cryptocurrency’s network has to be measured using the hash rate or the number of miners working together to verify that a transaction is legitimate. Hash rate also includes the speed by which these miners generate proof of work.
How Is a Hash Rate Measured?
The measurement of hash rate has something to do with the number of calculations that miners or computers can do per second. These transactions can be in the billions or trillions per second.
For example, a kilo hash means 1,000 hashes per second. A Giga Hash — a billion transactions per second, and so on and so forth. The largest is an Exahash, which equates to one quintillion transactions per second.
Why Is a Hash Rate Important?
Hash rate is important to miners because they want to be able to solve complex mathematical equations first — if they do, they can produce proof of work and generate bitcoin or a new cryptocurrency.
If a miner’s hash rate is low, then the person cannot compete against the others. He will not win the race of solving complex mathematical equations. As such, he cannot really make a profit from it.
In essence, a hash rate measures the likelihood of a miner being the first one to solve a problem and then create a block or mine a new blockchain. Think of it as the speed of a car — the fastest car is likely, but not always, to win the race.
A high hash rate is important, especially in bitcoin, where the number of blockchains that can be generated is pre-determined. People who compute for the blockchain are competing to get that fixed share of the new Bitcoin that is mined.
How Does Hash Rate Help in Security?
A high hash rate, not from the miner but in the blockchain network, means there is a requirement for more computing power. Now, if the computing power requirement is high, there is also little likelihood that it can be hacked. It is much more difficult to verify the transaction, and therefore it is safer.
A cryptocurrency network with a high hash rate requires more miners. As the network requires more miners, the network also needs more energy to compute. As such, it is safer. Think of hash rate as a combination in a safe — the more digits required, the harder it is to crack.
Does a Hash Rate Change?
Yes, it does. There are many things that can affect the speed by which a blockchain is solved. Miners, for one, have the option of which cryptocurrency to mine. For example, they can choose Bitcoin, Ethereum, etc.
Now, mining involves the use of high-power computers. These computers use a lot of power. To get inventive for this effort to solve mathematical problems, the miners receive a cryptocurrency — that is the reward for their investment.
If a network’s hash rate is high, it is an indication that there is high competition — more and more miners are getting involved in solving a complex mathematical problem. Because of this, the reward is shared among all the contributors who solved the problem.
If the hash rate is slow, it means that there are only a few miners. It also means that if there are few miners, the problem is not as complex, and it may be easy to crack.
People who invest in cryptocurrencies must watch the hash rate of the network. A low hash rate is an indicator that less computing power is required to solve and add a new blockchain. It also means that the particular crypto is not as decentralized as the others because it takes a lesser number of miners to solve the equation.
Always remember: the higher the hash rate, the more difficult it is to solve the transaction equation. As such, it is safer.