This article is about ‘hash rate’ of digital currencies such as Bitcoin.
What is Hash Rate?
Users who participate in this process are known as ‘miners’. All of the transactions which take place on the network are divided into blocks which cover a fixed average amount of time, and which together make up the ‘blockchain’. For example, in Bitcoin each block includes an average of 10 minutes of transactions. Miners compete to win the right to ‘mine’ a block of transactions and earn the block reward, which may include newly generated coins and fees from each transaction which they include within the block.
This competition requires the miners to perform relatively simple calculations over and over again, using a hashing algorithm. Each time they perform a calculation a single hash is produced, and thgis output is compared to a target value set by the network. If the value produced is lower than the target then the miner wins the right to mine that block, but if it is higher then they must continue calculating more hashes. The target value is adjusted by the network in order to keep the average block size at the correct target value.
The hash rate of a cryptocurrency is a measure of how many proof of work calculations are being performed by all the miners participating in the network. It is measured in terms of hashes per second, but because such as large number of these calculations are performed it is more usual to see values in larger units such as Gigahashes per second (GHS) or Terrahashes per second (THS).
Advantages of a High Hash Rate & Implications of a Low Hash rate
Miners perform an important role in proof of work currencies. They are the ones who aggregate the network’s transaction history into blocks and submit them to the rest of the network for approval. It is therefore important to make sure than miners do not try to submit fraudulent histories to the network in an attempt to steal coins and defraud other users.
If it was cheap and easy to fill this role then there would be little to stop fraudsters from setting up a large number of malicious mining nodes and constantly submitting fake transactions histories. But by attaching a cost to participating in this process, through the large number of calculations which must be performed, you make it much harder for fraudsters to attack the network. In a proof of work network a miner would need to control 51% of the hash rate in order to attack the network. This is known simply as the 51% attack.
If a cryptocurrency network has a low hash rate then the cost for an attacker wanting to purchase enough hashing power to attack the network would be relatively low. As the hash rate goes up, so does the cost of attacking the network.« Back to Glossary Index