Crypto mining refers to the mining and subsequent verification of digital currencies, i.e. cryptocurrencies. It is a decentralised calculation process that enables the proper settlement of cryptocurrencies. Let's find out what cryptocurrency mining is and how it works, from the very basics to how to use a crypto mining pool.
Indeed, since the Bitcoin software was launched in 2009, the financial sector has been flooded with so-called cryptocurrencies.
So regardless of banking and national dynamics, anyone can generate cryptocurrencies to earn real currency. In this article, we will delve into this topic, explaining in detail what cryptocurrency mining is and how it works. So as to understand if everyone can have access to this process of creating new digital currencies.
What is cryptocurrency mining
Cryptocurrency mining is a decentralised computing process that aims to protect, process and verify every transaction involving cryptocurrencies. This is performed by virtual coin miners, who are empowered to perform transactions of any type of cryptocurrency by mining alone or in mining pools, providing the right computing power to solve more complex tasks.
Basically, it can be said that the meaning of 'mining cryptocurrencies' is precisely the creation of new units to validate transactions that are made on the blockchain.
The term mining means to extract, referring precisely to the gold mines so much in vogue in the late 19th century.
Mining therefore aims to identify the work done by computers, identifying nodes in the network with the aim of earning new tokens. In fact, miners only achieve the inherent goal of creating new virtual currency if they are the first to solve a series of highly articulated mathematical problems.
The question arises as to whether mining cryptocurrencies is safe, the answer is yes. For as we know, both Bitcoin and all other cryptocurrencies are decentralised, i.e. they are not subject to the control and supervision of government regulators. In order to ensure maximum reliability, all transactions are recorded on the blockchain, by means of a kind of public register in which executed transactions are marked in chronological order.
How cryptocurrency mining works – simply put
Cryptocurrency mining is supported by the blockchain ecosystem, thus facilitating the creation of new blocks. This is precisely the only way to generate new cryptocurrency units, all based on proof-to-work protocols. If one is wondering which cryptocurrency is worth mining, the answer is definitely Ethereum and Bitcoin, as they are the best known and most widely used for this purpose.
The ultimate goal of the mining process is to achieve the reward. To achieve this, miners have to solve mathematical algorithms and guess a particular value to add to the other information in the block, this then generates a code called a hash.
The hash code is a hexadecimal destination number consisting of 64 digits between letters A to F and numbers. It is a unique code, as if it were a sort of fingerprint that can be used to recognise the block and protect data transferred over a network.
The moment the miner finds the solution, i.e. one of the missing numbers in the hash, then the block can be validated and those on the network will have to confirm the accuracy of the result in order to attach the new block to the already existing chain. This particular mechanism is called proof-of-work and has as its end result the reward for the miner.
In the case of Bitcoin for example, a new block is generated every 10 minutes. It is estimated that by 2140, the last Bitcoin will be minted and put into circulation, making the mining process increasingly expensive and complex.
Which cryptocurrency is worth mining
The cryptocurrency par excellence that fits the rules of mining is undoubtedly Bitcoin. However, all virtual currencies that are decentralised and based on the proof-of-work validation system can be mined. The second most famous cryptocurrency is Ethereum, which is created precisely by mining, until the Ethereum 2.0 protocol is activated.
Others suitable for this include Bitcoin Cash, Litecoin and Dogecoin. For lesser-known cryptocurrencies for which mining is possible, it is always advisable to gather the right preliminary information before performing any operation.
In order to choose the most convenient cryptocurrency to mine, one must assess the hashing power provided by the network.