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How to Mine cryptocurrency

bitcoin, btc, cryptography

How to mine Cryptocurrency ?

Cryptocurrencies operate over a distributed network popularly known as a blockchain which consists of blocks. A blockchain gathers information in blocks and progressively chains them forming a large network. New blocks in the blockchain network rely on solving complex mathematical computations. Cryptocurrency mining is how people solve mathematical equations in the network upon which they receive a block or a fraction of it as a reward, this process also creates new cryptocurrency.

The process can be likened to extracting precious minerals from the ground through excavation, but in crypto mining, cryptocurrencies such as Bitcoin are the result.

Why is mining necessary?

Computation in the blockchain network is achieved through the mining process, which serves two purposes; authentication of transactions and creating new coins. The new coin is awarded to the person, the miner who resolves the crypto puzzle first. Transactions in the blockchain are set as complete through bundling operations to form a block, after which the miner verifies the validity of the block through the mining process.

How is cryptocurrency mining done?

Most people buy cryptocurrencies on exchange platforms, but it is also possible to mine the tokens. Cryptocurrency mining is done through the use of two algorithms; proof of work and proof of stake. Many miners in the blockchain network participate in solving mathematical computations for a given block by trying several times through brute force.

In a case where a miner gets a solution to the mathematical puzzle, the entire network is notified, and a reward is awarded. The number of attempts required in creating a new block is not fixed but depends on computational power in the network.

The computational power required to create a new block means that mining is a competitive exercise. The more the conditions or parameters to be fulfilled, the higher the number of calculations needed to get a solution and the more the cost of creating a block. Miners must invest in powerful machines with great processing power (GPU Graphical Processing Unit) and use lots of energy to achieve computational needs.

Proof of Stake and Proof of work algorithms are almost similar, only the procedure is different.

Proof of Stake:

Miners crack the complex cryptographic puzzles using high powered computer resources. Miners in Proof of Stake are also known as validators because they hold cryptocurrencies as their stake in the blockchain network. They place bets on the blocks they speculate on and get a reward based on their stake amount. Proof of Stake is secure because it requires miners to invest their stake, which deters attackers.

Proof of Work:

Process that checks the validity of transactions in a distributed network. It serves the role of a central authority to ensure adherence to protocols. Miners crack complex mathematical computations using computational powers they possess; cost of machines and electrical powers that run them. It requires lots of energy and therefore lacks energy efficiency.

Getting Started on Mining

The initial step is acquiring a computer with high processing power and then create a wallet to store the cryptocurrencies. Identify a mining pool, a group of miners who have come together to merge their mining resources to make mining easier and profitable.

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