Remember back in school when we were told to solve a math problem, we were always quick to ask the question “how is this supposed to make us rich in the future”? Well the future is here and you may want to take back that question because you indeed need good knowledge of mathematics and analytics to find one of the world’s most powerful currencies today – cryptocurrency.
To acquire digital currency today, there are three ways to go about it: you can either buy it, exchange it for a good/service or mine it. Mining in recent times has gained so much popularity as many people are beginning to see the value of these cryptocurrencies. Regardless, the concept of crypto mining remains a very popular yet vague idea. So let’s dig in.
Just like in real life where Mining involves the extraction of valuable minerals from the earth, Cryptocurrency Mining is not so different as is also a hunt through crazy puzzles and mathematical problems for Cryptocurrency.
In the early 2000s when crypto mining started, there were very few miners and finding one block of Cryptocurrency took longer than it does today. Even so, block rewards back then were very high compared to now.
Today, miners have found a better way of reaching the goal (to find new blocks of Cryptocurrency) faster as they have started using very complex machinery to solve mathematical problems.
In 2012, the reward for each block of Cryptocurrency added to the bitcoin blockchain was 25 BTC but in 2020, block reward became 6.25 BTC. As such, it’s worth is proof that the challenge of mining is worth every hashpower.
When a new token of Cryptocurrency is found, two things happen:
First, a new Cryptocurrency (for example bitcoin) is created and this automatically creates a new block on the bitcoin ledger. Each new block is linked using a hash function to previous blocks thereby forming a chain of blocks (blockchain).
Secondly, the blockchain ledger is updated therefore proving that the bitcoin payment network is trustworthy and secure in verifying transaction information.
To find one unit of Cryptocurrency for example Bitcoin, apart from the tools which we will mention earlier, there are abstract features one must possess:
- A good knack for mathematics and analysis. This is because you have to solve very complex math problems that you cannot solve by hand except using a computer and the computers in this case, do a lot of work when trying to solve the problem.
- Must be technologically inclined i.e you must be good at computers and codes.
- Patience with yourself and tools as Mining is no small task.
Bitcoin Mining is simply creating new bitcoin by solving a challenging puzzle. This puzzle is one of such complex math problems mentioned earlier.
The reason for Mining as a way of creating bitcoin is to ensure security. This is decentralised digital money (i.e belonging to no particular organisation, but accessible to everyone) and, there have to be restrictions and specialised methods of regulating it. This regulation is done using a digital ledger. The ledger holds bitcoin transactions in clicks and continuous transactions with blocks as its receipt forms a chain on the ledger which is why cryptocurrencies are usually said to be a blockchain platform.
Why is Mining Popular?
Here are a few of the reasons why cryptocurrency mining is becoming an increasingly popular job today:
- It is possible to do it from anywhere in the world as long as you have access to electricity and technologies.
- It’s a sure way to acquire lots of Cryptocurrencies without having to buy them.
- The value of the currencies acquired, especially the popular ones such as bitcoin, is bound to grow in value.
What Are The Requirements For Mining?
Since it’s the 21st century, the speed of mining has increased and prospective miners who want to be successful at mining should have the following:
- Power: Taking the step to become a miner entails you being certain that power supply (low-cost power) would never be an issue.
- High-speed mining Computers (They are also called Rigs).
- Mining pool Membership: Since it is a decentralized system, certain pools aid in the mining process. So, solving a mathematical problem in a pool of like-minded individuals helps the target seem less distant.
- Mining Software: Miners must be up to date with the latest mining software so that they can keep up with the speed of mining.
Are There Cryptocurrency That Doesn’t Require Mining?
Yes, some cryptocurrencies are not mined. Ripple, stellar and NEO are good examples of cryptocurrencies that are not mined. These non-mined cryptocurrencies are operated with a “proof of stake model”.
This means that you keep buying such cryptocurrencies and the more you own, the higher your chances of becoming a shareholder of that blockchain.
In essence, crypto mining is what keeps all cryptocurrencies today famous and running. It is totally fine to buy and trade cryptocurrency but mining is another great way of making that crypto wealth.
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