Blockchain technology has boomed over the years, revolutionizing several industries, and directly threatening traditional financial systems like banks and brokers with its decentralization and trustless systems.

As regards blockchains, there is one concept you should be aware of:

Consensus Mechanisms.

Blockchain consensus mechanisms are the rules by which the nodes that make up a blockchain network agree on which transactions are valid, and which blocks should be added to the blockchain.

Imagine a group of friends trying to decide where to go for a Friday night-out.

In the real world, one person might suggest a club or bar, and have the others agree to it, depending on how popular he or she is in the group (even if Segun, Tunde and Jide would rather go home and binge on crackers and old TV series).

However, in a decentralized model like blockchains, the group would need to reach a "consensus" on where to go. Meaning that everyone would have to suggest something and have their voices heard.

And at the end of the day, the group reaches a "concensus" between going home to feed the cat and eat crackers, or having a terrible Saturday-morning hangover.

Bringing us to...

The Concept Of Proof of Work

Proof of Work is one of the most popular consensus "mechanisms" used in blockchain networks today. Heck, Bitcoin, the oldest and largest blockchain in the world uses this mechanism between its nodes.

In Proof of Work, network participants compete to solve a cryptographic puzzle, and the first participant to solve it is given the authority to add the next block of data to the "block-chain".

A simple real-world example of Proof of Work would be a treasure hunt.

Imagine a group of people searching for a treasure in a large field. The first person to solve a puzzle or riddle and find the treasure would win a prize.

In this scenario, the search for the treasure is similar to the process of "mining" for new blocks in a blockchain network like Bitcoin.

Each participant in the treasure hunt would be working on solving the puzzle on their own, using their own resources (such as their knowledge and physical ability).

Similarly, in Proof of Work, participants (called miners) use their computing power to compete in solving the cryptographic puzzle to winn the prize.

Bringing us again, to the reason we're both here:

What is Hashrate?

Hashrate is a measure of the computational power used by "miners" to solve these complex mathematical equations and validate transactions.

Back to our treasure hunt example, hashrate can be likened to how quickly a treasure hunter can climb a hill, figure out the combination to a chest that holds the next clue, or avoid obstacles along the way.

In simpler terms, hashrate is the number of attempts a miner can make to solve the mathematical equation, necessary to create a new block per second. It is measured in hashes per second (H/s) and is a critical factor in the functioning of a proof of work blockchain network.

To understand how hashrate works, let us consider Bitcoin as an example.

Miners on the Bitcoin network compete to solve a cryptographic puzzle using their own electricity, cooling systems, money and computational power. And the first miner to solve the puzzle adds the next block to the blockchain and receives a reward in the form of Bitcoin.

The difficulty of the puzzle is adjusted every 2016 blocks (roughly every two weeks), depending on the total hashrate of the network. If the hashrate increases, the difficulty of the puzzle also increases, making it harder for miners to solve the puzzle.

Okay, But Why Is Hashrate Important?

Hashrate is a critical factor in ensuring the security and integrity of a Proof of Work blockchain network.

A higher hashrate implies a more secure network as it would be more challenging for an attacker to accumulate enough computational power to carry out a 51% attack.

For context, A 51% attack is an exploit in which a single entity or group controls more than 50% of the network's computing power, giving them the ability to manipulate the network's transactions and create new blocks at will.

A simple real-world example of a 51% attack is a bank robbery.

Imagine a group of robbers that manage to gain access to a bank's vault and control more than 50% of the bank's assets. With this level of control, the robbers can manipulate the bank's records, withdraw funds, and potentially cause the bank to fail.

Similarly, in a 51% attack, a malicious actor with more than 50% of the network's computing power can manipulate the network's transactions, reverse previously confirmed transactions, and potentially double-spend coins.

This can lead to financial losses for other network participants and undermine the security and integrity of the network.

Hashrate also impacts the time it takes to mine new blocks, which affects the block rewards and transaction fees for miners.

If the hashrate increases, the "difficulty" of the puzzle also increases, and it takes longer to solve the puzzle and mine new blocks.

As a result, the block rewards and transaction fees may increase to incentivize miners to continue validating transactions and securing the network.

Therefore, hashrate is the number of times a miner can attempt to solve the blockchain's mathematical equation, and get the rights (and reward) to add the next block to the chain.

Aand... That's it.

If you've been hearing about "hashrates", exa-hashes and whatnot for a while now and didn't know what the heck those were...

You're welcome, haha.

See you next time, dear reader :)