A Brief Overview on Mining Cryptocurrency
Posted On April 29, 2019
Cryptocurrency like Bitcoin (BTC) are all in the rage today. So it is impossible that any internet savvy individuals are not aware of its existence. However, what we can’t let slip are those folks who don’t have much idea how it is acquired or where it is used.
Let’s not Complicate our Lives Here
Speaking of which, it is used as a digital currency to make paperless transactions online. In fact, there are even other investors who use http://vipsignals.trade to trade cryptocurrencies much like when trading using real money in FOREX. It is just mind-blowing and almost impossible for average Joe to keep up-to-date with these digital currencies every minute and hour of the day.
But for sure, you do not want to be left out. As much as possible, you want to join the bandwagon or at least, know how you can use cryptocurrencies to make money and make paperless transactions. There are various types of cryptocurrencies such as Bitcoin, Litecoin, Ripple, Ethereum etc. just like the currencies used in different countries (HKD, SGD, USD). To minimize confusion, we will be using Bitcoin as an example for this article’s sake.
How it Started?
Cryptocurrency mining is the process used to which new coins are being introduced to existing circulating supply. This is the process used as well in securing the coin’s network. People who are mining coins are called as miners. Thus, rather than having central authority that’s controlling and securing the supply of money, this security and control is throughout the network to which miners help maintaining.
Any transactions occurred within the network is collected by miners and gathered into a block. Miners are verifying all transactions in the block as if he/she tries to submit the block with invalid transaction, it gets rejected.
Example of invalid transaction is when Person A sent 20 BTC to Person B despite not having 20 BTC to send in the first place.
Once the transaction is validated by the miner, he/she should compute cryptographic hash.
It is essential for miners to carry out this computation to be able to prevent anyone from creating blocks.
As a result, it maintains uncompromised network towards deceptive blocks.
Work Hard for Reward
As for the computation of cryptographic hash, it demands substantial computing power since hundreds of millions of calculations ought to be executed every second. This is otherwise called as proof of work. As soon as the miner solved the hash successfully, the block will be relayed to the network and be checked all over again in consensus rules. When accepted, the block will be added to blockchain network while the miner gets set amount of BTC as reward.