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Cryptocurrency mining - How it works?

Oct 26, 2017

Cryptocurrency mining today is one of the most interesting area on Internet. Few years ago it was just a silly idea, but early birds are maybe millionaires today. That simple fact why more and more investor or explorer try to find out how crypto mining works, and how can anybody generate money with cryptocurrencies. Maybe the first question is what cryptocurrency mining exactly means.

What is cryptocurrency mining?

When we think about our "normal" money world goverment or national banks just print more money if they need it. Quite simple description but this is how regular financial world works. If we talk about cryptocurrencies we need to learn a total different way. In crypto world we do not print money than discover it. Thousand of computers work on to find coins by working together. Millions of people uses Bitcoin, Ethereum or any altcoin to pay. All of these transactions need to be handled and this is what miners do. Cryptocurrency miner's job is to support and confirm these transactions, and all of the miners get a reward for their work.

Millions of transactions during a special time and period. We call these blocks now. The general ledger is a really long lost of blocks, and that's we can call as blockchain as well. This list can be incredibly long and every participant get this list. This amount of data can't be stored or manage it. Here come the miners. With personal work frome very block they create a shorter and valuable information that's we call hash. In this hash there are a lot of important information and one of them the value of the stored block.

Miner's task is to confirm all of the blocks, and all of them compete with each other who do it faster using a special software to mine blocks. The "race" is for the reward. Everytime someone creates a hash they get a reward. It depens on which cryptocurrency they mine it can be different, and minig become more and more difficult with time and you need to count with halving as well. Halving means that rewards will be divided after time and... but... let'S explain this in another article.

To mine it could be simple. Our personal computers have the power to create simple hash in seconds. Cryptocurrency owner or creators needs to "complicate" this process to prevent miners to mine every coin in few days. It is quite complicated and maybe not the most important for you beside that information that it can be really hard to mine valuable amount of cryptocurrency.

Mining has a really dubious side where people try to mine new cryptocurrencies and wait maybe it will explode as Bitcoin in the past few years. Beside Bitcoin and other "big" cryptocurrency mining new altcions can be a good opportunity as well to jump into the cryptocurrency market. But how to do it? 

HashFlare

Mining possibilites

It is fact if you start to mine Bitcoin 5 years ago surely you are a millionaire today how I mentioned at the beginning of the article. You could mine Bitcoin with a single Pendrive miner, or CPU and it was possible to buy a pizza for 10-15 bitcoins. Right now it seems to be that was one of the most expensive pizza knowing that 1 Bitcoin is near to USD 6.000 now. Incredible. Today we have really difficult situation when we try to mine. 

We will continue... ;)

 

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