Cryptocurrency mining plays an integral role in how these digital currencies work. Cryptocurrency mining gets its name from the fact that, when new transactions are added to the public ledger, new coins are created. As such, the cryptocurrency networks rely on miners to verify and update the public ledger, as a safeguard against fraudulent activities. That said, this article looks at some fundamental aspects of cryptocurrency mining.
What is Cryptocurrency Mining?
Mining is a competitive process, where some cryptocurrency users compete against each other to mine or discover, new coins, before adding them to the cryptocurrency’s public ledger. Users are expected to initiate a transaction, broadcast it to the entire network, and wait for the trade to go through. In a nutshell, mining is all about adding new coins to the blockchain.
What Does a Miner Do?
All miners are expected to collect transactions broadcast by other cryptocurrency users and verify that they are valid, based on the blockchain. The algorithms that are used are designed to make mining difficult, which often requires the miner to solve a complex computational problem, known as a proof-of-work (POW). In other words, miners compete with each other to see who answers the puzzle first.
What Do You Need to Mine Cryptocurrencies?
Besides crypto coin wallets, there are a couple of other essentials required to mine cryptocurrencies. Here are some of the crucial items you might need for this:
- A powerful and custom built computer specifically for cryptocurrency mining
- A graphics processing unit for accounting and mining
- Mining software
- High-Speed Internet
- Currency Exchange membership
Getting all the equipment, and doing the job, are two different stories; no wonder not everyone mines cryptocurrencies.
Why Mine Cryptocurrency?
The possibility of getting rewards is the main incentive that drives people to the mining job. For instance, successfully solving bitcoin puzzles could mean gaining 25 bitcoins into your crypto coin wallet. Also, mining serves to add more coins to the market.