What is cryptocurrency mining?

Cryptocurrencies | Cryptocurrency Mining | Guide

In this article we will talk about the process by which mining cryptocurrency is carried out all over the world – mining. So, what is mining and how it works, we will try to tell in simple words. For a better understanding, as an example, we will use Bitcoin – the most popular digital currency today.

Content

Mining – what is it?
Why is this process called mining?
How is cryptocurrency mining?
Why do you need mining?
What is mining done with?
Pula for mining

Mining – what is it?

In simple words, mining is the issue (release) of bitcoins, which is built on the solution of mathematical algorithms located at different ends of the Earth by computers. As a result of their decision, new bitcoins appear. No control is possible over this process due to the lack of a single emission center, and the considerable distribution of the network ensures its complete security.

Why is this process called mining?

Translated from English, “mining” means mining. Therefore, the analogy with the extraction of Bitcoin is obvious. Moreover, this cryptocurrency has recently been increasingly called “digital gold”. Bitcoin miners are accordingly called “miners”. This term is also used to refer to computing devices with which cryptocurrency is extracted.

How is cryptocurrency mining?

The essence the mining process is as follows – all bitcoin transfers are recorded available transaction log. Further along the chain they are redirected miners who with the help of special programs pick up a huge the number of combinations to get one single hash that turn goes to the secret key and all new transactions. Thus, a new transaction block is generated. At the same time found hash is a hash of the previous block. So they cling to each other, forming a chain of blocks called Blockchain. However, it can have a huge number of branches, however confirmation is received only by the branch over which the majority works. miners. Thus, self-regulation of the chain occurs.

So, By generating a new block, the miners receive as a reward the cherished bitcoins, filling up your wallet, and start searching for a new hash for next block. On average, new blocks are generated at intervals of 10 minutes.

It should be noted that the miner can use his reward only when he receives 120 transaction confirmations, which takes about a day.

Why do you need mining?

Mining process ensures the reliability, integrity and functionality of the entire system cryptocurrency (confirmation of transactions, protection of the network from counterfeit blocks and hacker attacks, support for bitcoin network decentralization, etc.).

Thus, a transaction between several network participants must necessarily be confirmed by their participation in the block. For example, having created a regular block, the miner accepts a transaction with another miner and includes it in his block, thereby the bitcoins that are involved in the transaction become available for further use. Thus, the fraudster, wishing to confirm a fake transaction, will be thrown back at the stage of creating the block.

What is mining done with?

Obviously, when confronted for the first time with Bitcoin or another cryptocurrency, there is a desire to start mining it yourself at home on a stationary computer. However, it is worth the upsetting enthusiasts. Due to the growing popularity of Bitcoin and the evaluation by experts of its potential, large investors have invested a large amount of funds in the development of special devices (chips) intended for mining and called ASIC (application-specific integrated circuit). Their appearance provided a multiple increase in the rate of production of “digital gold”, and also provided an opportunity to carry out mining in the face of a significant increase in Blockchain. Thus, the times when a stationary computer was used for mining were history.

Pula for mining

To extract cryptocurrency it is possible and “solo”, but it is easier to unite in a group with other miners in to increase the efficiency of the process.

Pool for mining is a website where small miners grouped for the purpose of extraction by common efforts of bitcoin or another alternative cryptocurrency. This is done in order to increase pool power and the probability of finding the desired hash for later formation of the next block of the chain, which in turn will allow to obtain as a reward cherished bitcoins.