What Is Crypto Mining? How Does Crypto Mining Works?

Once you know that Cryptocurrency is a peer-to-peer decentralization network, without the need for a third-party central authority; Many of you may think what is the process behind making cryptocurrency a decentralized system. Let me clear this…. The process that allows cryptocurrency to be a peer—to—peer decentralized system is ‘cryptocurrency mining’.

Mining in the crypto world is the process of keeping blockchain data in check. It involves hard work (done by computers) and results in a slow accumulation of resources, just like mining for minerals. You can also say that cryptocurrency mining is the process of building a blockchain. It is the process in which transactions between users are verified and added to the blockchain public ledger.

The mining process also helps in introducing new coins to the existing ones that are circulating supply. Mining is the term used for the process of validating and recording new transactions on a blockchain, as well as hashing them to prevent shenanigans from sliding under the radar.

Now let’s see how this mining of cryptocurrency is actually done.

A blockchain “block” is a chunk of data containing some relevant data to be added to the database. (For example, all the bitcoin transactions that occurred within the last 10 minutes.) and the hash and ID of the block before it in the chain.

To add a new block to the blockchain, a computational puzzle must be solved to compress the block's data into a 256-bit hash. Mining is the act of solving this puzzle, or finding the hash — a task that is not so easy. The 1st miner to successfully hash the block, making it safe to share across the internet, is awarded Bitcoin for their work. The winner shares their results with all the other miners, who verify the encryption is safe and the work is done. This is called “proof of work.” Once verified by the other miners, the winner securely adds the new block to the existing chain, and all the other nodes update their copies.

Have you heard about mining pools?

Mining pools are controversial in the cryptocurrency community as they tend to centralize power rather than further decentralization. Mining pools allow miners to combine (or pool) their hashing power and split the earnings. Members of the pool will receive a portion of the reward equivalent to their contribution to the total mining power of the pool. According to too me if anyone seriously wishes to be a miner, he/ she should choose the best mining pool. Some of the top mining pools are Slush pool, ViaBTC, AntPool, etc.

Now, some of you may have a doubt that whether all cryptocurrencies have to be mined or there are some exceptional cases too? Well… Cryptocurrencies like Bitcoin are mineable and new coins can only be generated through a mining process. However, there are also non-mineable cryptocurrencies with great potential out there, such as IOTA, Ripple, Cardano, and numerous others which are only bought rather than mined.

Non-mineable cryptocurrencies can be highly valuable due to their limited potential to increase in size. This happens because of the constant supply. If we were to compare Bitcoin with IOTA, for example, IOTA’s overall price may increase because the supply is limited. The price of Bitcoin stagnates or devalues because a new BTC has to be introduced into the market. Non-mineable cryptocurrencies are not designed to replace fiat money. They’re digital assets issued usually during an ICO (initial coin offering). The more promising the ICO and its goals, the better chances for a non-mineable cryptocurrency to increase in value upon completion.

Cryptocurrency mining is painstaking, costly, and only sporadically rewarding. Nonetheless, mining has a magnetic appeal for many investors interested in cryptocurrency because of the fact that miners are rewarded for their work with crypto tokens.

Do you know Bitcoin is the most popular cryptocurrency its mining is also very famous? Bitcoin mining is the process by which new bitcoins are entered into circulation, but it is also a critical component of the maintenance and development of the blockchain ledger. It is performed using very sophisticated computers that solve extremely complex computational math problems.

Miners are getting paid for their work as auditors. They are doing the work of verifying the legitimacy of Bitcoin transactions. This convention is meant to keep Bitcoin users honest and was conceived by bitcoin’s founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the “double-spending problem.”

Some of you may also have a doubt that is his cryptocurrency mining real? Well…. We can say it is legal, but determining whether crypto mining is legal or illegal primarily depends on your geographic location and whether you mine crypto through legal means. However, where you start to tread into the territory of illegal activities is when you use illicit means to mine cryptocurrencies. For example, some cyber criminals use JavaScript in browsers or install malware on unsuspecting users’ devices to “hijack” their devices’ processing power. This type of cyber-attack is known as crypto-jacking.

Crypto-jacking is the unauthorized use of someone else’s computer to mine cryptocurrency. Hackers do this by either getting the victim to click on a malicious link in an email that loads crypto mining code on the computer or by infecting a website or online ad with JavaScript code that auto-executes once loaded in the victim’s browser.

Conclusion

Cryptocurrency mining is a method to create bitcoins and it is said that anyone can do it. But according to me one should do good research and learn cryptocurrency mining from the experienced person and then only initiate to be a miner. Always keep in mind that one should be conscious and not be absent-minded while working with cryptocurrency.