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Introduction to cryptocurrency
In this post, we will talk about Cryptocurrency Mining. Cryptocurrency refers to any digital asset that is created to function as a mode of exchange. If you are not very familiar with the term, think of it as a way of trading online with virtual currencies. One of the major advantages it offers is security, and it successfully does that by using cryptography to secure its transactions. Cryptography is simply the process of converting clear information into an almost unbreakable code, and it is used to track purchases and transfers.
Governments and Cryptocurrency
As a result of this very feature, even though the currency isn’t issued by any governmental body or authority, it is extremely difficult to create counterfeits of it. The cryptography is used to control the creation of additional units, and it also aids in the validation and verification of the transfer of assets. This form of currency is under the wide umbrella of digital currencies. A lot of times, the currency is also anonymous. While it was born out of the need for secure communication in the Second World War, today, it has transcended to be so many more things. The first of this currency to be released was Bitcoin, and while there are many more, it still is one of the commonest ones.
Related: BITCOINS AND ITS RISKS
Bitcoin and other Cryptocurrencies
Following the release of bitcoin in 2009, hundreds of other cryptocurrencies have been released. Since bitcoin, being the father of all cryptocurrencies, used a form of technology known as the blockchain technology, subsequent cryptocurrencies have followed suit. The blockchain technology is the basis of operation of most cryptocurrencies, and it makes the creation and management of the system to be efficient. This is really where mining in this unique form of currency, comes in. Cryptocurrency mining is basically the act of creating new coins and adding them to the number of already existing coins or to the blockchain of that coin.
Cryptocurrency Mining Explained
Just as regular mining is the extraction of valuable minerals or geological materials from the earth or a containment of deposits, mining with cryptocurrencies is a computationally intensive process whereby computer networks seek to verify the transaction record and receive digital coins in return. Here, transactions are verified and added to the public ledger, known as the blockchain, and it represents the means through which new cryptocurrencies are released.
The first digital currency to be mined was the bitcoin in the year 2009. For centralized cryptocurrencies such as Ripple (XRP) which have a governing authority, this is where mining ends while for decentralized cryptocurrencies such as bitcoin, there, litecoin and all the decentralized altcoins, mining goes beyond just the creation of new coins.
Decentralization and cryptocurrencies
The process of the transaction with decentralized digital currencies are really efficient even if there is no central regulatory body overseeing their operation and this is because there are some people called miners, who verify all transactions. Therefore, cryptocurrency mining in the broadest sense is the process of generating new currency and managing the transactions of the already created ones.
Where do the miners come from?
Well, cryptocurrency mining has become a full-time job in recent times and generally speaking, anyone can be a miner of cryptocurrencies. Most of the cryptocurrency miners are in China and the U.S.A and worldwide, about half a billion people are involved. In this mining, one can only guess how much income is generated by this activity. A miner can generate thousands of dollars mining digital currencies, and for every cryptocurrency transaction, a small fee known as miner’s fee is usually charged. It is also possible to make losses from crypto mining.
What does it take to mine cryptocurrencies?
Basically, a mining software, hardware, and electricity are enough for one who wants to start mining. Mining a cryptocurrency usually involves solving complex puzzles or equations which then allows new coins to be issued and that is where mining hardware is involved. Bitcoin remains the most difficult and costly coin to mine, and this is because of the bitcoin, just like a couple of other cryptocurrencies gets more difficult to mine as more of it is mined. This means that new technology is constantly invented to make cryptocurrency mining profitable. Currently, Browser crypto-mining has attached the highest number of peoples as anyone can now use special mining browsers to mine these currencies conveniently.
What are Mining Pools?
To mine alone is usually less profitable, so if you want to make the most out of mining, join a mining pool. A mining pool is just a group of miners who pull resources together and share the income generated. In less than a year, cryptocurrency mining has become a huge activity, and because miners check on each other’s work and have no overseer, this means of regulating the currency is reliable, efficient and will last longer and yes, new ways of mining are being introduced quite regularly to make the whole process better, so always check to the latest ways to mine the cryptocurrencies of your choice, so you can maximize profits.
Read about different mining pools and it’s technical requirements here:
Process of Mining Cryptocurrencies
There are some simple steps in the mining process for cryptocurrencies. For one, you need to know and go to trusted sites to purchase or sell your Bitcoins or other cryptocurrencies with which you want to mine. Some of the best are Coinbase and AlfaCashier. The basic process is simple. Competitors are at the head with one other to mine. They make use of certain software that is written specifically to mine blocks and in occasions where an individual or competitor successfully creates a hash, he or she is given a reward of 25 bitcoins.
Afterwards, the blockchain is updated, and everyone on the network would be told about it. It’s quite simple. Again, it is very important to emphasize that it is quite tough to mine coins for a profit. Reasons for this are because the required equipment to effectively handle it would cost more than when you want just to purchase a Bitcoin or similar currency. Rather, it is better to observe different exchange sites and see how you can obtain cryptocurrencies easily with your own money.
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