Proof-of-work

Its founder Jared Tate envisioned DigiByte as an improvement to Bitcoin, and while both have some technical differences between, the two share some similarities. For instance, both of them use proof-of-work as a consensus mechanism. Proof-of-work is used to determine how the blockchain reaches consensus, which is when a majority of the participants in the network agree on validating information. As a result, it confirms it and adds it to the blockchain. This consensus mechanism uses an advanced form of mathematics called cryptography; the mechanism uses mathematical equations that are so difficult that only powerful computers can solve them. 

In the Proof-of-work system, thousands of individuals compete to become the first to solve the cryptographic algorithm. Still, only the user that first solved the equation and “mined” the block is rewarded for the services they provide to the network. While this system is used to ensure the network’s security, it is theoretically possible to successfully tamper with a blockchain. Nonetheless, to do so, you would need to take control of more than 50% of the network, and only then verify a tampered block. In other words, it is nearly impossible to achieve such a feat.

Cryptocurrency mining

The process of solving complex computer equations is commonly known as mining or cryptocurrency mining. This is achieved by dedicating a certain amount of computing power to the task in order to create a cluster of transactions or blocks, into a growing chain of blocks. Thus forming the blockchain.

To form said blockchain each block is linked with other blocks with similar information, it is this action that makes blockchain technology so secure and trustworthy. Once the information is recorded on a block it becomes irreversible, that means that once a transaction is sent it is sealed and cannot be reversed. Information cannot be altered without having to change every block that came after it making it impossible to tamper block without it being noticed by other participants on the network.

The way that cryptographic puzzles are created allows them only to be solved by trial or error. Computers can guess millions of different combinations per second, which requires such a large amount of electricity. So generally speaking, the individual or individuals that have the most powerful and expensive hardware devices will always have the edge on the rest of the network, and thus a higher chance of winning the reward. 

Mining hardware

Mining was envisioned as a very democratic process where anyone with a computer could contribute to the network and get rewarded for their services, reality tuned out to be very different. The individual or individuals that have the most powerful and expensive hardware devices will always have the edge on the rest of the network, and thus a higher chance of winning the reward.

Over the time more specialized pieces of hardware with the sole purpose of mining have been created thus making far less accessible for the average joe. Although mining can still be approached in different ways. 

The simplest and most general hardware available for mining is the general purpose CPU present in every computer. A CPU is designed to be versatile but offers less efficiency than a GPU, which is designed to rapidly calculate millions of vectors in parallel. While specific CPU instruction enhancements related to cryptography such as AES or AVX can provide a decent boost, GPUs offer a significant performance increase due to their multiple pipelines capable of processing the predictably repetitive calculations associated with cryptocurrency mining. Finally, ASICs are relatively inflexible and can only process the specific function(s) for which they were designed, but at an even faster rate than the more general purpose GPUs and CPUs.

Mining Algorithms

Now, up until this point, DigiByte and Bitcoin share similarities in mining, nevertheless the critical difference relies on the type of algorithm that they implement for proof-of-work. In contrast to Bitcoin, the DigiByte blockchain uses five different cryptographic algorithms and real-time difficulty adjustments to prevent malicious mining centralization and hash power fluctuation. The various algorithms are SHA-256 (the one Bitcoin employs), Scrypt (the one Litecoin employs), Skein, Qubit, and Odocrypt. There is no priority given to one or another; each of the five algorithms has an equal 20% chance of finding every single block. 

Activated in September 2014 from Myriadcoin source code, the MultiAlgo hard fork allowed for multiple algorithm mining. Its purpose was to create several different proof-of-work (PoW) mining methods to accommodate the different types of mining capabilities that exist, such as dedicated ASIC mining, GPU, and CPU mining. The implementation of multiple algorithms allows a more significant number of people to access the DigiByte mining pools and therefore create a more decentralized blockchain.

Each algorithm has its own difficulty adjustment that is weighted against other algorithms in a dynamic process know as MultiShield. Although initially known as DigiShield, the hard fork activated in February 2014, allowed for the DigiByte blockchain to protect against multi-pools that mine large numbers of DigiByte at a low difficulty. It achieves this protection by recalculating block difficulty between each block, allowing for a faster correction when a multi-pool begins or ceases contributing to DigiByte, rather than recalculating once every fortnight (2 weeks) as is the case with Bitcoin. 

MultiShield is just the next step, an evolved version of DigiShield. Activated in December 2014, this hard fork worked to enable DigiShield across the new MultiAlgo platform and accomplish the same goals on all five mining pools. 

These are the five individual mining algorithms that are equally weighted:

SHA-256

The SHA (Secure Hash Algorithm) is one of several cryptographic hash functions. A cryptographic hash is like a signature for a text or a data file. SHA-256 algorithm generates an almost-unique, fixed-size 256-bit (32-byte) hash. Hash is a one-way function – it cannot be decrypted back. This makes it suitable for password validation, challenge hash authentication, anti-tamper, digital signatures. It is one of the most potent hash functions available.

Scrypt

Scrypt, named initially “s-crypt”, but pronounced as script, was developed in 2009 by Colin Percival. It is a password-based key derivation function. Scrypt serves to inhibit hardware scalability by requiring a significant amount of memory when performing its calculations. While the algorithm does employ SHA-256 as a subroutine, it also depends on fast access to large amounts of memory rather than depending just on quick arithmetic operations. In other words, it was designed to fend off ASICs and avoid mining centralization. It is commonly related to Litecoin as its mining algorithm.

Odocrypt

Odocrypt is a unique GPU / FPGA-friendly hashing algorithm designed by the DGB developers for DigiByte that changes itself every ten days as an anti-ASIC method. If they didn’t change, it would be easy to create an ASIC that significantly outperformed any other hardware, but because they change, the ASIC would need to be able to reconfigure itself. There’s already hardware that specializes in being able to reconfigure itself – the FPGA. Additionally, FPGAs are good at implementing small s-boxes, so while an ASIC could, in theory, be built, the advantage over FPGAs would be much lower than for typical proof-of-work algorithms.

Skein

Skein is a cryptographic hash function. Its design combines speed, security, simplicity, and a great deal of flexibility in a modular package that is easy to analyze. The name Skein refers to how the Skein function intertwines the input, similar to a skein of yarn.

Qubit

Qubit is a fast and super secure hashing algorithm. Initially, this algorithm was only suitable for CPU mining. Later, GPU miners appeared and made CPU mining profitless. Then ASICs became available and made GPU mining less effective. Thus making this algorithm only suitable for ASIC mining.

Mining rewards

Miners that contribute to the DigiByte network are currently awarded 679.34705114 DGB per block, an amount that gets reduced by 1% each month. The DigiByte network is scheduled to produce a maximum of 21 billion DGB. According to the DigiByte Core team, this was intentionally chosen as a 1000:1 ratio compared to Bitcoin’s 21 million. All 21 billion DigiByte will be mined by the year 2035. After 2035 the miners will then rely on transaction fees alone.

How to mine DigiByte

While the DigiByte mining industry isn’t as developed as Bitcoin’s, there are still some options that make it fairly accessible for the average joe. There are fundamentally three mining setups: 

  1. Solo mining
  2. Mining pool
  3. Cloud mining service

Let’s analyze each of them.

Solo mining

If you want to go solo (pun intended) and mine on your own, it is essential to take into consideration some things. Using specialized hardware designed for mining cryptocurrencies or ASICs will be far more efficient and powerful than using regular computers. With ASICs, you’ll have a better chance of earning rewards, than to use your standard CPU or graphics card.

For you to be able to be successful and make a profit out of mining, you’ll need to consider investing ASIC mining rigs. And while you don’t have to share your mining rewards with anyone else. Investment has to be handled on your own. This includes buying separate power supply and fans to prevent the mining rig from overheating or needing to pay for the electricity required to run the rig. It is also important to mention that you won’t necessarily always earn a reward; there will be periods where you won’t earn anything at all.

To start solo mining, you’ll need to follow all of the following steps:

  1. Create a DigiByte wallet: Before you start mining, you’ll have to set up a private wallet where you can securely store your DGB. You’ll need to research the different options and chose the one that suits you the most; luckily for you, we have a guide where discuss the different DigiByte wallets.
  2. Choose your hardware: This is a crucial decision to take; you’ll have to carefully analyze the different options and choose the one that is suits you best. You must take into factor cost, efficiency, power consumption, and other variables. For example which algorithm will you set up mining hardware for, or will you invest in an ASIC miner? These are the questions you must answer.
  3. Installing software: If you chose an ASIC miner, your mining rig would most likely come with pre-installed mining software. On the other hand, if you have decided to mine with a graphics card, you’ll need to download and install free mining software. Always make sure to research your options, and only download from trusted websites.
  4. Ready, set, mine!: Carefully follow the instructions included on your hardware of choice and start mining! Remember to store your rewards in a secure wallet, also regularly monitor the performance of your mining rig and the price of DigiByte to ensure that you make a profit out of it.

Mining pool

Joining a mining pool means you join forces with other fellow miners, combining computing power to mine DigiByte. This means that you’ll have a higher chance of earning a reward as opposed to going solo. This also means that the DGB rewards are going to be shared amongst the members of the mining pool. While that does mean that you’ll receive a lower amount, it also means that you’ll receive payout much more frequently.

Before you join a mining pool, you must take into consideration that each mining pool is run differently and other variables:

  1. The pool’s reputation is something you must certainly consider. For how long has the pool been operating? Does it have a reputable operation? This does not necessarily mean that newer options are not reliable; you just need to study your options carefully.
  2. The larger the pool, the higher chances you have of earning DigiByte. The mining pool’s size is something you must always consider. Because, although that means more rewards, it also means you have to share the profits amongst more members, thus reducing your personal DGB rewards and gain.
  3. Mining pools often charge fees for joining the pool; you’ll need to carefully revise which is the price and how often it must be paid.
  4. Finally, some mining pools have minimum payouts. What this means is that there is a minimum threshold that applies to your balance before you are allowed to transfer your DigiByte mining rewards to your wallet.

To start pool mining, you’ll need to follow all of the following steps:

  1. Create a DigiByte wallet: Before you start mining, you’ll have to set up a private wallet where you can securely store your DGB. You’ll need to research the different options and chose the one that suits you the most; luckily for you, we have a guide where discuss the different DigiByte wallets.
  2. Choose your hardware: This is a crucial decision to take; you’ll have to carefully analyze the different options and choose the one that is suits you best. Take into factor cost, efficiency, power consumption, and other variables. For which algorithm will you set up mining hardware for, or will you invest in an ASIC miner? These are the questions you must answer.
  3. Installing software: If you chose an ASIC miner, your mining rig would most likely come with pre-installed mining software. On the other hand, if you have decided to mine with a graphics card, you’ll need to download and install free mining software. Always make sure to research your options, and only download from trusted websites.
  4. Choose your preferred mining pool: As previously stated, you must take into consideration a series of variables and characteristics for choosing your preferred mining pool. Some mining pools might require the use of specific software to mine. 
  5. Ready, set, mine!: Carefully follow the instructions included on your hardware of choice and start mining! Remember to store your rewards in a secure wallet, also regularly monitor the performance of your mining rig and the price of DigiByte to ensure that you make a profit out of it.

Cloud mining service

Getting access to the latest mining rigs seems very expensive, especially acquiring and then maintaining the rigs. But to avoid all of the hassles but still getting to use the newest hardware for mining, cloud mining is the choice. Providers such as HashFlare, or Genesis Mining allow you to lease DigiByte mining rigs for a set period. 

Leasing the mining rigs is far cheaper than buying them. Although, this also means that you will be avoiding the hassles that come with giving maintenance to these devices and the electricity cost that comes with them. Nonetheless, these services come with some downsides, like depending on them to deliver, surrender a level of control to the service that you chose, or getting scammed. That is why you always have to research the service that you are hiring. 

The cloud mining pool’s reputation is something you must certainly consider. For how long has the cloud pool been operating? Does it have a reputable operation? This does not necessarily mean that newer options are not reliable; you just need to study your options carefully.

To start mining on a cloud service, you’ll need to follow all of the following steps:

  1. Create a DigiByte wallet: Before you start mining, you’ll have to set up a private wallet where you can securely store your DGB. You’ll need to research the different options and chose the one that suits you the most; luckily for you, we have a guide where discuss the different DigiByte wallets.
  2. Choose your preferred cloud mining company: Do your research to find out what services are available and what benefits they offer. Remember that cloud mining scams are a genuine risk, so it’s essential to make sure you’re dealing with a reputable provider.
  3. Select a mining package: Take a look at the mining contracts on offer from your chosen company. How much do they cost? For how long will it run? What mining equipment will be used? What sort of payout can you expect? Is it possible to customize a package that better suits your requirements?
  4. Choose your preferred mining pool: After selecting a mining package, sometimes you’ll be asked to choose a mining pool. As previously stated, you must take into consideration a series of variables and characteristics for selecting your preferred mining pool. 
  5. Ready, set, mine!: Now that you are mining, just make sure that you are securing your assets in a secure wallet.