How Does Cryptocurrency Mining Work? Your Full Guide
Before we talk about mining, we must first talk about what cryptocurrencies are, since the emergence of bitcoin, cryptocurrencies became the talk of the world. they are digital currencies that are fortified by encryption, and this means that they are almost impossible to forge. Electronic currencies offer an insane promise of a financial currency that is not under the control of any country or institution around the world, and its trading price is governed by market demand. This money is used in the electronic world, but it is not physical at all, it has some characteristics of paper money, such as the possibility of obtaining, transferring, or exchanging it. It is possible to use cryptocurrencies to complete payments that allow their use.
What are Blockchains ?
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These coins are based on a revolutionary technology called Blockchain. The name Blockchain comes from the fact that data is stored in blocks, and each block is connected to the previous block, forming a chain-like structure. With blockchain technology, you can just add (append) new blocks to the blockchain. You cannot modify or delete any block after it has been added to the blockchain. Most types of cryptocurrencies operate on a public blockchain that is governed by rules or consensus algorithms.
Learn about the most popular currencies - Bitcoin and Ether
Bitcoin is a peer-to-peer cryptocurrency that is circulated over the Internet, which means that all financial transactions occur directly between two equal and independent parties in the network, without the need for any intermediary to make transactions possible as it was developed to allow payments to be sent directly over the Internet. From one end to the other without going through a financial institution such as banks in any way. Bitcoin is the most famous and most valuable cryptocurrency and was originally launched by a person or group of people under the pseudonym Satoshi Nakamoto. Bitcoin has succeeded in creating a global community of millions of people who create, invest, and use Bitcoin and other cryptocurrencies in their daily lives, especially with dreams of getting rich quickly by selling at high prices.
Why bitcoin is the most expensive?
Although it is the oldest and the one with the highest value, there are other currencies that appeared after Bitcoin and managed to prove themselves and create demand, such a cryptocurrency goes with the name ether which is used to complete financial transactions on the Ethereum network. Ethereum is an open-source blockchain-based platform used to create businesses and financial services and is the second most expensive cryptocurrency after Bitcoin, its value in the current year 2021 has exceeded about 3 thousand dollars. Ethereum supports smart contracts that enable developers to write code for numerical value programming using the Solidity programming language and the Vyper programming language. A programmable smart contract allows the terms of a transaction to be placed between two parties without having to trust another third party for execution.
Cryptocurrency Mining
Cryptocurrency mining is a process that allows computers to generate a series of complex computational sequences in order to bring a new coins and document the network's financial transactions, which is a task that requires huge amounts of electrical energy and very large computing power. For many years, Bitcoin mining was an easy activity to get quick profit, however, finding the coins has become more difficult than before as more than 16 million bitcoins have been produced so far. The goal of Bitcoin, as explained by the mysterious Satoshi Nakamoto, is to provide a decentralized medium of exchange on the Internet without having to rely on a third party or a Bank.
In the world of Bitcoin, transaction records are kept in a decentralized ledger called “Blockchain” that can be accessed by millions of devices on the Bitcoin network and keeps the history of all transactions. But if there is no central authority, so who decides whether transactions made in bitcoin are valid and should be added to the blockchain? How can you ensure that the system is not tampered with? Or how to be sure that the same bitcoin will not be spent twice? The answer is mining. Bitcoin miners get paid for their work as system monitors, as they validate previous transactions made in the cryptocurrency, thus maintaining the credibility of the system, and also helping to prevent the “double-spending” issue.
The Jewel of mining Ethereum
Ethereum mining is one of the most profitable mining operations at the moment, Ethereum mining using central processors was possible in the past, but now this is no longer cost-effective due to the great complexity of the calculations. Graphics card farms took the place of Ethereum-mining CPUs before Chinese engineers created Ether-mining ASICs and now they're traded on the Internet. Nevertheless, Ethereum mining using graphics cards is still possible and still profitable. Of course, not all types of graphics cards are suitable for this process because mining requires a lot of processing power and bandwidth. When comparing video cards for mining in 2021 in order to choose the most suitable among them, you must take into account the electrical power consumption and the price of the device, Nvidia graphics cards give the best results with mining at the moment.
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