What is CryptoNight Mining Algorithm? – Everything You Need to Know

All proof-of-work blockchains require miners to follow certain rules when validating transactions. Mining algorithms guide the miners. In this guide, we will discuss the CryptoNight mining algorithm. Keep reading to learn more.

Understanding Proof-of-Work (PoW) Consensus Algorithm

PoW consensus algorithm is adopted by several popular blockchains, including Bitcoin and Litecoin. For miners to validate transactions on PoW blockchains, they need to compete with each other to find the appropriate hash that generates a new block.

Miners on PoW networks use special machines called ASICs to confirm transactions. ASICs employ the SHA-256 hash functionality to ensure only legit transactions are added to a POW blockchain.

CryptoNight Algorithm Explained

Different PoW blockchains use different mining algorithms. Monero, for example, uses CryptoNight, which is ideal for GPU and CPU mining. This mining algorithm is intended to prevent mining power from being centralized and gives every miner a fair chance of getting a block to mine.

Moreover, CryptoNight offers extreme security, which explains why it has become popular among POW blockchains that prioritize user safety.

Interestingly, the creator of the CryptoNight mining algorithm has chosen to remain pseudonymous, just like Satoshi Nakamoto, the founder of the oldest blockchain, Bitcoin. Some crypto enthusiasts are convinced that Nakamoto could be the CryptoNight founder.

How CryptoNight Mining Algorithm Works

CryptoNight is popular among privacy coins. Its CryptoNote consensus protocol allows blockchain users to hide their transaction details. That means nobody can see which addresses are involved in a particular transaction.

As mentioned earlier, CryptoNight is perfect for CPU or GPU mining, allowing anyone with a powerful personal computer to mine crypto.

Now, here is how CryptoNight works:

Creation of a “Scratchpad”

During hashing, a massive memory containing intermediate values is stored. The hashing is done using the Keccak-160 function, which randomly generates 200 bytes of data.

Encryption Transformation

The initial 31 bytes of the generated data are then transformed into an encryption key for the AES-256 algorithm.

Final hashing

Next, CryptoNight combines the data in the encryption key and that generated in the first step then takes it through the remaining hash functions to get a final hash, which contains 64 characters.

The Importance of CryptoNight

CryptoNight has proven its importance in the crypto world since its creation. First, it is appreciated by privacy-concerned blockchain users, as it allows them to block third parties from tracing their on-chain activities.

Second, CryptoNight is actively addressing concerns over mining centralization, where only a few entities control mining processes. Since it supports CPU- and GPU-mining, the mining process becomes more decentralized, allowing anyone to take part.

Lastly, CryptoNight offers high efficiency and scalability. That means POW blockchains using this mining algorithm are able to process transactions quickly.

Which Blockchains Use CryptoNight Mining Algorithm?

Several blockchains employ CryptoNight. They include:

Bytecoin

Although not as popular as other blockchains in this list, the Bytecoin network was the first to apply the CryptoNight mining algorithm. It is worth mentioning that the network adopted ASIC mining in 2019 but has kept CryptoNight to offer anonymity and advanced security.

Monero

Monero adopted CryptoNight in 2014. A few years later, the privacy-focused blockchain upgraded the mining algorithm to create CryptoNight-R, essentially allowing ASIC mining.

Electroneum

This blockchain allows users to participate in crypto mining using their smartphones, thanks to its mobile miner.

Other blockchains that have implemented CryptoNight as their mining algorithm include Dashcoin, Pebblecoin, Boolberry, DigitalNote, and DarkNetCoin. Most of these networks suffered malicious attacks in 2018, causing many to wonder if the CryptoNight algorithm was reliable.

Besides CryptoNight-R, another version of the CryptoNight mining algorithm, called CryptoNight Heavy, exists. Projects that have adopted this version include Loki, Sumokoin, and Ryo Currency.

Conclusion

Since its launch in 2012, CryptoNight has rolled out several upgrades in an effort to accommodate various blockchains. The rising concerns around the centralization of mining power will likely drive massive adoption of the mining algorithm by future crypto projects.