Mining in the context of cryptocurrency such as Dash refers to the process of searching for solutions to cryptographically difficult problems as a method of securing blocks on the blockchain. The process of mining creates new currency tokens as a reward to the miner. Mining is possible on a range of hardware. Dash implements an algorithm known as X11, which the miner must solve in order to earn rewards.
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 for predictable calculations of the type involved with mining. Finally, ASICs can perform a single operation only. A number of X11 ASICs are now available on the market, which are quickly making CPU and GPU mining uneconomic due to the increased difficulty of hashing arising from the rapidly increasing hash rate. The result is a currency, which is more secure against brute force attacks on the Dash blockchain.
Many people don’t know that the Dash features such as anonymity and transaction speed, are implemented on top of a network dedicated servers knows as masternodes. Masternodes are known only because of Dash in the crypto world and they are necessary for achieving the speed and privacy which Dash offers. Masternodes:
In fact, the entire network is overseen by the masternodes, which have the power to reject improperly formed blocks from miners. If a miner tried to take the entire block reward for themselves or tried to run an old version of the Dash software, the masternode network would orphan that block, and it would not be added to the blockchain.
Because Dash is two tier cryptocurrency, miners power the first tier – basic sending and receiving of funds and prevention of doublespending. Masternodes power the second tier which provide added features that make Dash different from the other cryptocurrencies. Mining computers cannot serve as masternodes and vice versa. Each masternodes is secured by 1000 DASH.
The proof-of-work system/protocol which is used by Dash, was first used in the mid-1990's for fighting spam emails. The idea never found a truly useful cause until 2009 when bitcoin was created. Bitcoin itself utilizes this protocol in its transaction blockchain and thanks to this we can witness the growth in bitcoin mining.
The base idea of this lies in a challenge and proof (or response). The challenge is a transaction, which is a specific cryptographic puzzle. The proof is that a miners computer cracks the puzzle, so the transaction goes through. And that is proof of the miners' work and him providing his hardware for the validation of transactions. The more hash power a miner can provide for validating transactions, the bigger his Dash reward for the service is.
The problem with PoW is that mining has become so large that miners are investing into giant A.S.I.C. hardware which is highly energy consuming. Many mining farms are built around the globe as bitcoin has risen in value.
