What is Nonce in Blockchain and How is it Used?

When you begin learning about cryptocurrency it can feel like you’re getting lost in a jungle of jargon. Words like DeFi, HODLing, and Consensus Mechanism can boggle your mind and make it difficult to understand exactly what’s happening in the world of crypto. 

In this article, we’re going to explain a term that is quite strange but is fundamental to understanding how crypto works: nonce. 

Let’s see why it’s important to know what nonce means, how it is used, and why it is fundamental in blockchain. 

Let’s begin: 

What is a Nonce in Blockchain?

When asking the question, “what is nonce in blockchain?”, the most common answer you’ll get is its definition. 

Nonce, Abrv. An abbreviation for the term “a number used once.” 

This definition, however, doesn’t tell you much—let alone give details about why nonce is so important to crypto technology.

 In fact, without this fundamental piece of the puzzle, many aspects of crypto would not exist. 

For example: 

• It would not be possible to validate transactions
• It would not be possible to mint new cryptocurrency tokens
• Miners could not receive rewards for validating transactions
• Blockchain security for proof of work blockchains would not exist. 

Why? Read on. 

What is a Nonce’s Purpose in Blockchain? 

Let’s review how a  blockchain operates so we can understand what a nonce is used for. 

A blockchain’s security relies on long, encrypted numbers that represent whole transactions. These numbers are referred to as a hash. A computer-based equation is used to generate a hash. The equation used depends on the blockchain. Different blockchains use specific equations. Each time a new number is plugged into this equation, a new hash is generated. 

Fast forward to when miners are validating transactions to earn cryptocurrency. Not much is widely known about mining crypto because it all happens behind the scenes on your mining computer/rig, but the steps are simple. 

First, the mining rig is given the blockchain’s specific equation. Then, it is given a list of transactions to validate, along with their hashes. In order to validate the transactions, it has to find the specific number that was plugged into the equation to generate the transaction’s hash. 

So, what do we call the number that plugs into the equation? 

We call it a “nonce.” 

Now, that was a very long, very complicated explanation. Let’s look at an example: 

Example of a Nonce

Let’s break it down step by step: 

Let’s say a transaction’s hash (or identifying code) is 4325.3. 

In blockchain, a hash is made up of a string of letters and numbers. In this example (to make it easier to understand) we are using numbers only. 

Now, let’s say that you’re mining on the XYZ blockchain. This blockchain uses the equation 3,358.3 +? = (Hash)

Keep in mind, that the equations most blockchains use are very complicated. There is no way to solve them normally, so your mining computer will estimate the nonce until it gets the right answer.  Then, it validates the transaction with that number. This is why it can take up to several minutes to validate one transaction. 

In other words, a computer trying to validate this transaction might try 968 first. After seeing that number is too high, it might try 966. Then, once it sees that number is too low, it would try 967 and find that number is correct. 

Please note: this is an extremely simplified version of the mining process. Real blockchain mining is much more complicated, which is why it is all done using computer algorithms.

 

Why is a Nonce Important in Blockchain? 

In addition to asking “what is a nonce in blockchain,” you also need to ask why a nonce is important. 

A nonce is fundamental to blockchain technology because transactions cannot be validated without it. Miners are not able to complete transactions without the specified nonce otherwise the entire cryptocurrency exchange process would come to a halt. 

A nonce adds an extremely high level of security to blockchain networks. They prevent hackers from double spending (or spending the same crypto twice). They also prevent people from duplicating their crypto because they assign a specific amount of crypto to every hash. 

To summarize, there are many reasons a nonce is important in blockchain. The most notable are: 

• Without a nonce to validate a transaction’s hash, miners cannot add a new block to the blockchain.
• Finding the “golden nonce” (the nonce that validates the transaction) is what allows miners to be rewarded for their work. 
• A nonce is a brute-force method of validating transactions on a POW (proof of work) blockchain (use CryptoSlate to find examples of POW cryptocurrencies). 
• A nonce allows new tokens to be minted because they prompt rewards to be given to miners. 
• A nonce is what renders a block unique, which is the foundation of blockchain technology. 

Final Thoughts

A nonce is an essential part of blockchain technology. Without a nonce, blockchains would not be able to function securely. It plays a crucial role in the proof of work mechanism that many blockchains use. It also ensures blockchains are not vulnerable to attack and are able to maintain their integrity. 

If you’re interested in learning more about blockchain systems and the way they work, be sure to Enter the Blockchain by visiting our illustrated chapters. Or, learn more about crypto lingo using our Cryptionary function! 

Dypto out!