About Cryptocurrency Mining and How it Works
Before we begin talking about what cryptocurrency mining is all about, especially for people who are new in the cryptocurrency world and who don’t know what it is, it is important to first understand what cryptocurrency is… cryptocurrency is basically a digital currency that is similar to the physical currency we use. As opposed to the physical currency, cryptocurrency like bitcoin, ethereum do not have a bank or a central entity that controls it and decides what happens… its strength is that is decentralized and on the blockchain, meaning that there is no central authority or central entity that controls or alter it. In order words, users have full control of their cryptocurrency assets by keeping them in a cryptocurrency wallet and having full control of their keys.
Mining in the cryptocurrency world or cryptocurrency mining is a term that isn’t new to the cryptocurrency world, in fact cryptocurrency mining is as old as cryptocurrency itself and is as old as bitcoin which is the first cryptocurrency to be created. Whenever the term cryptocurrency mining is talked about, bitcoin is the first name that comes to mind because it was the first cryptocurrency to utilize mining. Cryptocurrency mining is basically the process of minting new cryptocurrencies and validating transactions from the blockchain.
How Cryptocurrency Mining Works
Cryptocurrency mining that utilizes proof of work basically means the process of mining (minting new coins and validating transactions) using sophisticated hardware, high computation power and specialized softwares to validate transactions on the particular blockchain network. Bitcoin is the king when it comes to blockchains and cryptocurrencies that utilizes proof of work mining. Cryptocurrency miners receive rewards for making use of these required tools to solve complex mathematical problems and also validating the transactions for the blockchain.
A clear example of proof of work mining is bitcoin mining which is one of the most popular when it comes to cryptocurrency mining. The way proof of work mining work is that miners who already have the required tools and computational power can solve the complex mathematical problems and the first to solve these problems gets rewarded. This means that the more computational power and better the equipment, the faster it is to solve the complex problems and create the next block.
You did an excellent exposition on the concept of cryptocurrency mining, especially the one relating to proof of work, eg Bitcoin. I also think this type requires high computational dexterity, hardwares, and power. No wonder many projects are now into other mining protocols like the PoS.
Thanks for sharing buddy
That is very true... Proof of work consensus mechanism or mining is hardware intensive and requires a lot of computational power to process
Your post was upvoted and resteemed on @crypto.defrag
The fact that cryptocurrency mining is really expensive and it is requires highly sophisticated instruments to carry out is the reason why we have not too many people mining, although, I guess it will be good news for the miners who have the ability to make more money with less miner’s instead of having lot’s of miners with lesser income.
Yea... The mining rigs and the high computational power requirements makes it difficult for more people to become miners
Hello @chimzycash
Sometimes understanding.this is usually quite complex for people who are new to the world of cryptocurrencies.
But it is a base term to understand everything that has to do with Blockchain and cryptocurrencies.
However, the current trend is more the search to create projects more based on proof of Stake than on Proof of Work, as in the case of BTC.
That's true... the complexity and technical requirements makes it difficult for new people coming into crypto
Hi
Your post reminds me of the time when mining was not so complex and one could use a laptop or desktop to mine BTC incredible yet the truth of a few years back.
That is very true... Back in the days, it was much easier to become a miner with less rig because of the few numbers of miners and the lower level of mining difficulty... However mining currently has become more hardware intensive and requires a lot of computational power to process
I think this kind of informative and educative post is important given there are always new people coming into the space. Mining is one of the topics everyone in crypto should understand
Thanks for sharing :) @chimzycash
True... When venturing into the crypto space, it is important to understand some of the fundamentals to have a solid foundation when it comes to making good decisions in the crypto space