What is cryptocurrency mining?
admin,May 3, 2018
In our previous articles, we have discussed various topics of cryptocurrency; cryptocurrency coin – altcoin-, ICO and the tokens, FOMO, and even cryptocurrency exchange. But have you wondered, how cryptocurrency is made? And if you have ever heard the term “cryptocurrency mining”, do you know what it means?
While regular money (paper money that you have in your wallet) is made and issued by a government of the country, Mining is the process of how cryptocurrency is made, without being subject to any government regulation. However before we discuss the mining process, we need to understand blockchain.
Blockchain is a public ledger (decentralised register) of every transaction that has been carried out in that cryptocurrency. A detail of every transaction will be saved in “Blocks”. These blocks are needed to verify the next transaction and to create new coin. To create a new block, a miner compiles recent transactions into blocks and tries to solve a computationally difficult puzzle. Once a miner has solved the puzzle, the next block will be placed on the blockchain. This is how cryptocurrencies are created and how new Crypto-coins are made.
In order to successfully find a new block, a miner must be able to cryptographic hash the puzzle. This takes a lot of time and effort, especially if done manually, so it is best done by letting computers do the calculations and get a matching hash. Graphics cards, or graphics processing units (GPUs) are important supporters of the mining process and as Bitcoin gained popularity, GPUs became more dominant. When the right hash is found, a new block is formed and the miner who found it is rewarded with units of cryptocurrency.
However, as the difficulty of hash matching the puzzle also increases, it becomes harder to mine a new block of bitcoins, since Bitcoins have a limited amount of units that can ever be generated – only 21 million Bitcoins in the world. After that, mining a new block will not generate any new bitcoins, as is the same with many other cryptocurrencies.
If you plan to become a cryptocurrency miner, beside preparing the Graphics cards, or graphics processing units (GPUs) equipment, you’ll need to run your machine 24/7 and keep it maintained. Most miners spend an overwhelming majority of their income from mining on paying to maintain and run their equipment – for some it is a lucrative industry…