Cryptocurrency - What is mining
If you’re getting into cryptocurrency I know you’ve heard the term ‘mining.’ But, you might not know what exactly mining means and how it relates to you. In many ways it doesn’t concern you, but in some ways it really does. A contradiction...but that’s cryptocurrency for you.
What exactly does it mean when someone is ‘mining’ a crypto coin?
Mining is solving the complex cryptographic puzzles that make, update, and ensure the integrity of blocks in a blockchain. In return for this work, those who solve those puzzles are rewarded with new coin in that cryptocurrency.
Mining can be done by anyone installing certain software on their computer. Many people are a part of what’s called a mining pool. Which is a group of people putting their computing power together to solve the cryptographic puzzles that make up a blockchain ‘block.’The reason why people band together to build these ‘blocks’ is because the more of a coin that’s created, the more complex the ‘blocks’ get and the more computing power is necessary to build the next one in the chain. I’m pretty sure I’ve got a post coming up with info on how to mine, if you want to get into that.
That affects you because the more work that’s necessary to build (mine) those blocks, the longer it takes for transactions to be completed and the higher the potential intermediary fee is. Some of the forks in a cryptocurrency happened as a way to deal with issues such as this. Such as when Bitcoin did a hard fork and Bitcoin cash was created. Some alt coins were even developed specifically to make sure those blocks don’t get too big so that transactions can continue to be quick and easy even once all the coins have been distributed.
Right about here I want to take a quick pause because my head’s been developing a paradox related to all this and making it hard to finish.
How are miners going to be paid once all the coin has been released? I mean, if they’re being paid in the coin their mining but there’s no coin left….
From the research I’ve found, the tech people are hoping that once crypto currency is adopted as a working monetary system by the public-at-large, a solution will be found. I believe it will...and so do the big dogs behind money in the world. We’ve got a lot of time before that happens. For Bitcoin, I believe 2140 is the year the last Bitcoin will be released to miners. sooooooo...
To bring it all together...mining is the process in which the individual blocks of a blockchain are created/modified/maintained by computers dedicated to solving complex cryptographic puzzles that make up the data of the block. Coins are awarded to the miners for solving those puzzles. When all the coins been mined, we’ll figure out another way to pay the networks maintaining the coin.
That sure was a mouthful. Hope y'all found it useful. Safe trading out there!
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Great explanation! I think now that the media frenzy about Bitcoin has faded, and the price of the top currencies have leveled off, mining will become more popular.
Depends on which coin and whether or not you're doing CPU or GPU mining. A lot of the coins require dedicated rigs to get any real profits out of them. Going to be writing an article about that, hehe. Thanks for reading! Hope it was clear. Took me a long time to figure out how to distill all the info into something 'quick' to read.