Friday, 21 September 2018

What is Cryptocurrency mining?

The Cryptocurrencies or the digital currencies were introduced to provide the world an alternate mode of transaction. It was designed to work as a medium for facilitating transaction, when the first ever decentralized cryptocurrency got released in early 2009, it sent ripples across the world. It raised several questions which also led to several inceptions. One of the concepts which is integral to understanding about the cryptocurrencies is the cryptocurrrency mining and understanding how does it work.

The term mining refers to the process through which the Bitcoins or Alt coins are generated. Since, there is no central authority that issues the Bitcoins, they are created through cryptomining.

How does cryptocurrency mining work?

Cryptocurrency mining consists of two major functions, i.e. adding transactions to the blockchain (verifying and securing) and releasing a new currency. The process needs a computer and a particular software which aids the miners to stay ahead of their peers and solve mathematical equations. In regular intervals, a miner attempts to solve a block having the data required for transaction using cryptographic hash functions. A numeric value called the Hash value is of fixed length and it uniquely identifies data. Miners try to make the best use of computer to zero in on a hash value less than the target and the one who cracks the code first gets a reward. The reward for mining a block is roughly limited to 12.5 Bitcoins as of now.

With the growing popularity of the cryptocurrencies, mining has emerged as a lucrative business which is capable of generating good revenues. Earlier, people could mine their own cryptocurrency using standard PC, but now the quality and the quantity of the hardware has effectively increased in line with the number of people mining.

However, since the amount of electricity needed for cryptocurrency mining is massive, the industry has begun looking for alternate solutions for facilitating mining.

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