What is nonce? The importance of Nonce in blockchain

Nonce is a component that plays a very important role in blockchain networks using the Proof-of-Work (PoW) algorithm, typically Bitcoin. So what is Nonce in blockchain? How does it work and why is it important?
What is nonce?
Nonce (short for number used once) are random 32-bit numbers used in the process of mining new blocks in the Proof-of-Work (PoW) blockchain. Each block has a different nonce value, and miners must find a valid nonce number to create a new block, in return they will receive a block reward in the form of the blockchain's native token.
Finding the nonce value requires miners to invest relatively high hardware costs with significant computing power. At the same time, each nonce can only be used once and is fixed for a specific block. This helps:

• Guarantees the uniqueness and unpredictability of each block added to the blockchain.
• Ensuring the safety and security of blockchain.
• Protect blockchain from 51% attacks or double spending...

How Nonce works in blockchain
First, to understand how nonces work in blockchain, it is necessary to understand what the components of a block in the blockchain include.
Blockchain consists of “blocks” to form a “chain”. Each block will have two main components: the block header and all data about the transactions in the block. In particular, the block header is a hash code containing information to identify a specific block in the blockchain, including:

• Previous Hash: The hash code (or block header) of the previous block.
• Timestamp: Block initialization time.
• Nonce: Each block in a blockchain will have a unique nonce number. This nonce is calculated during the block mining process and helps create a unique hash value for the block.
• Merkle Root: The final hash value of the pairing and hashing of transactions in the Merkle Tree. *Hash (hash function) is a string of characters encrypted using cryptographic hash function technology from predetermined input information.

Thus, when starting to mine a block, miners will use a hash algorithm (eg SHA-256 for the Bitcoin blockchain) to run a hash function on the data of that block.
However, except for the nonce which is the number to search for, the remaining data is already available. To estimate the number of nonces to find, miners will use trial and error through a counter, starting from a certain value (usually 0).
First, miners will continuously try and change the nonce value (if wrong) to rerun the hash function until they find a hash value that meets the network's set conditions, for example this hash value must start with a certain number of zeros.

• More specifically, if the condition is that the hash value must start with 4 zeros, then a valid hash value could be "0000abcd1234...", but "1234abcd..." would be invalid. because it doesn't start with 4 zeros.
• These conditions will change over time to adjust the difficulty of mining, depending on the total computing power of the network (or number of miners).

This means miners may have to try millions or even billions of times to find the right nonce.
Then, when the miner finds a correct nonce and runs a valid hash function, that block is sent to other nodes in the network for checking. If the hashes match and all transactions in the block are confirmed to be valid, the block is added to the blockchain.
At this time, miners will receive a block reward, including a certain amount of blockchain native tokens and transaction fees from transactions within the newly mined block.
The importance of Nonce in blockchain
During the operation of a PoW blockchain network (typically Bitcoin), miners will not be able to create new blocks, validate and process transactions without finding a valid nonce. Thus, it can be seen that nonce plays a very important role in ensuring the operation of the entire blockchain.
Nonce is also evidence that miners had to go through a process with a certain amount of work to "dig" out a block. On the one hand, the process of finding a suitable nonce forms the basis for the mining process in the blockchain using the “proof-of-work” algorithm.
On the other hand, nonce also helps ensure the security, integrity and immutability of the blockchain network because changing data in an existing block will require recalculating the nonce. This is a task that requires enormous computing power at significant hardware costs, and it is completely infeasible in practical terms.
Nonce helps protect the blockchain from problems such as double spending, 51% attacks, network spam, distributed denial of service (DDoS) attacks... By sending fake data. Blocking and validating them also requires the attacker to become a miner, and to invest significant computing power to find a valid nonce. This creates a natural barrier against system abuse or attacks.
Difficulty finding Nonce
The difficulty of finding a nonce will be adjusted dynamically to maintain a stable block generation rate on the network (for example, on the Bitcoin network, a block will be mined every 10 minutes).
The difficulty of finding nonces will adjust to changes in the computational power of the network, to ensure that miners will face challenges whose difficulty is proportional to the total computational power on the blockchain network. This means:

• As more miners join the network, the total computing power of the network will increase. At that time, the difficulty will also increase, requiring more strength to find the appropriate nonce.
• Conversely, as the number of miners or the network's processing capacity decreases, the difficulty also gradually decreases, making block mining easier.

However, to solve the problem of increased difficulty, miners can increase computing power through upgrading their computer resources (also known as mining rigs), with more powerful hardware. and more suitable.
More advanced computing resources will help miners solve hash functions faster, and thus determine the valid nonce of the blockchain before other miners.
Besides, the difficulty of finding nonce is also partly related to mining difficulty, an index that shows the level of complexity when miners solve an algorithm to mine a new block on the blockchain.
Some frequently asked questions about
Nonce How are Nonce and Hash different?
Nonce and hash are two concepts that are very closely related to Proof-of-Work blockchain.
A nonce is a 32-bit string of digits that miners need to guess correctly to generate a valid hash for the block and add the new block to the blockchain, helping to ensure that each block has a unique hash.
Hash is a mathematical function, based on the input value of data of different sizes (including nonce), to create an output value of a certain fixed size (depending on the request and network conditions).
Both of these concepts work together to ensure maximum security for information stored on the blockchain.
How much money do miners make from finding nonces and mining blocks?
By finding a valid nonce and successfully mining a block, miners will receive profits according to the following formula:
(Transaction Fee x Coin Price) + (Block Reward x Coin Price) - Cost
In this section, we will take Bitcoin as an example to make it easier to visualize:

• The amount of new BTC created in the block reward is about 6.3 BTC/block as of June 2021, and it will halve after Bitcoin halving events (every 210,000 new blocks are created, or about four years). once), with the next installment in April 2024.
• The amount of transaction fees in each block will vary depending on the transaction volume and the transaction fee level in that block. According to Dune (here), in March 2023, the transaction volume on BTC was about 300,000/day, equivalent to a transaction fee of 23 BTC/day.
• Coin price is the value that directly affects miners' profits. At the time of writing (February 4, 2024), BTC price is at 43,068 USD. On November 10, 2021, BTC price reached its highest level (ATH) of 69,045 USD. However, there were also times when BTC price dropped sharply to $16,700.

In addition, the cost of mining is a difficult value to estimate, because it depends heavily on the quality and processing capacity of the hardware the miner invests in. However, this cost is often relatively large, about several thousand USD, even tens of thousands of USD.