The Concept Of Cryptocurrency Mining Explained

jueco (75)in Tron Fan Club • 10 months ago (edited)

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Hello crypto friends,

I believe you are all doing perfectly fine and are enjoying your activities in the community.

It is another great opportunity and I am here to discuss on an issue of great importance to you all.

Although, some are familiar with my topic of discourse while others aren't, however, I will proceed nonetheless.

Today, we shall be learning about cryptocurrency mining, kindly tag along as we shall unveil some important fa factors.

WHAT IS CRYPTOCURRENCY MINING

Cryptocurrency mining is a fundamental phenomenon that explains the basic operation of most digital currencies.

It often involves the validation of transactions and adding of new blocks in a blockchain, which is an immutable and distributed ledger that helps to record all transactions in a transparent and distributed manner.

A powerful computational resource and specialized hardware is needed for the cryptocurrency mining process.

The cryptocurrency mining helps to serve two purposes which are consensus mechanism and transaction validation.

TRANSACTION VALIDATION

A cryptocurrency transaction is said to occur when a user carries out a transfer of digital currencies from a wallet to another.

To prevent double-spending of these transactions, it need to be verified and recorded.

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Banks is mostly relied on in the traditional Financial system for recording and verifying transactions, but the crypto currency makes use of a decentralized approach which is mining.

When a transaction is initiated by a user on the network, validators in the network then compete to provide a solution to the mathematical puzzle associated with transaction data.

Then the winner of the competition will then be given the validate transactions and add a new block to the chain.

CONSENSUS MECHANISM

Different consensus mechanism is being used by the blockchain to get to an agreement on the state of the blockchain.

One very popular consensus mechanism that we should know about is Proof Of Work (POW) which is being used by bitcoin and many other cryptocurrencies.

Pow often require miners to use trial and error to provide solutions to these puzzles and this solution often serve as as a proof that the transaction has been validated.

This proof is then added to the blockchain and the miner gets their reward, often times in transaction fees or minted new cryptocurrency.

To ensure that new blocks are being added to the blockchain every 10mins approximately, the complexity of this puzzle of the mechanism has been reduced.

The more validators that joins the network, the more competitive the system becomes, thus strengthening the security of the network.

CONCLUSION

We have seen that cryptocurrency mining is very important as it helps in transaction validation and blocks growth.

Join me for more cryptocurrency related articles

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10 months ago in Tron Fan Club by jueco (75)

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