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- Merged mining is the process of allowing two different crypto currencies based on the same algorithm to be mined simultaneously. This allows low hash powered crypto currencies to increase the hashing power behind their network by bootstrapping onto more popular crypto currencies.
- From this post by FlatOutCrypto (18-7-2019):
"Merged mining is where more than one cryptoasset is mined without any additional computing power or effort. It essentially enables a Proof of Work (PoW) network to take advantage of ongoing mining activities of a larger PoW network (such as Bitcoin). As such, a miner creating and validating blocks for the Bitcoin blockchain will simultaneously create and validate blocks for the other network too. It was first used in 2011, when NameCoin used it in conjunction with Bitcoin.
This provides the secondary network with increased security. Bitcoin, as the largest and most valuable network, is better protected against attacks (and in particular exploits which rely on brute power such as a 51% attack). By merge mining, a second network can also take advantage of this. Instead of having to take over a minimal amount of hash power, as with other networks, someone wishing to attack for example the Elastos network would have to have enough hash power to attack the Bitcoin network too. This would cost hundreds of millions of dollars.
How does merged mining work?
PoW is essentially a mechanism which enables network participants to come to consensus on what the current ledger looks like. Miners use (now specialized) hardware in conjunction with a computer program in order to find the solutions to increasingly difficult mathematical problems, the answer to which is known as the hash.
With merged mining, miners simply duplicate this process. The computer program they run is modified slightly so that a miner can process blocks for both chains at the same time, with the discovered hash securing both blocks. Discovered proofs are submitted to both the Bitcoin blockchain and the secondary blockchain simultaneously.
Despite this, the second chain remains wholly independent from Bitcoin. Barring some minor information (such as an extra hash and Bitcoin header), no information from the Bitcoin chain is imported into the other network. This ensures that the other network doesn’t become overloaded and slowed down by unnecessary information.
As cryptoassets increase in value, the motivation to attack them similarly increases. They are 24/7 targets for a host of well-resourced and highly capable malicious actors worldwide. Bitcoin, by virtue of its size and associated mining operations, is as well protected from 51% and double spend attacks as any network. With merged mining, networks like NameCoin and Elastos are able to co-opt resilience and protection from launch, benefiting from an existing and large mining community."