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Wednesday, April 10, 2019

What is cryptocurrency minining?


Last time I wrote about ways of earning Bitcoins. I found that not everyone knows what it is and what it involves. Today I took a short step back as part of the explanation of the concept - “cryptocurrencies.” There will be some scientific language.

What are cryptocurrencies?

Before we find out what is the cryptocurrency digging, let’s find out what these cryptocurrencies are. Well, in the simplest terms, the cryptocurrency works like a virtual currency. The holder of such a virtual currency stores it on his computer, tablet or other mobile device in a special application called a wallet which only he can access. Each unit of cryptocurrencies has a unique code. It uses this code to prevent copying and re-spending of a cryptocurrency.

Trading in cryptocurrencies takes place electronically, without the participation of any banking system directly between users. This is so-called peer-to-peer technology. Cryptocurrencies are currencies free from the control of politicians, domestic and international financial institutions. It is subject only to a strong system of electronic, automated security. Examples of cryptocurrencies are, for example:
  • Bitcoin - cryptocurrency introduced in 209 by a group of people (or one person) with the pseudonym Satoshi Nakamoto. 
  • Ethereum - also called “Bitcoin 2.0” is an alternative to Bitcoin cryptocurrency. The Russian programmer Vitalik started Ethereum. 
  • Monero - an open-source cryptocurrency providing the user with a high level of privacy. They launched it in April 2014. The creator of this cryptocurrency remained anonymous.
Mining cryptocurrencies is to approve new blocks and attach them to an already existing chain. Block, this is the place where new transactions are saved and in which new coins are issued.

Digging cryptocurrency - what is it about? 

To dig a new block, you need to solve the cryptographic problem. This process involves finding a string of characters that satisfies the corresponding equation. Thanks to the fact that the protocol is in the so's form-called “open source”, it is possible to check what it solves a problem. The output data is the transactions of the previous block. A person or company that finds a solution, announces it on the network, and the others check its correctness. If it confirm the solution, it considers the new block to be dug, and the person receives a reward in the form of a specified number of cryptocurrencies. 

How to dig cryptocurrencies? 

The code to be solved to dig a cryptocurrency is very complicated. This process requires high computing power. It uses various devices for digging, starting from an ordinary computer, through graphics cards (GPU) to specialized ASIC tools. You can find on the Internet attempts to dig a block with only a card and a pen. However, if we want to take this seriously, let us provide you with the help. Let us remember that with some crypto-currency, the power needed to dig them is so large that a single person has little chance of success. Individual units are associated in so-called mines. Acting together, they use a common computing power so that the chance to solve the puzzle is much greater.

Ending

If you have reached the end of the article, already know to a greater or lesser extent what this currency is all about. I tried to explain it as the simplest language but it is difficult, because the topic is very hard to explain.