Crypto-mining for everyone
Digital tokens such as Bitcoin or Ethereal cannot be printed like traditional currency, and the only method to create new cryptocurrencies is via the act of mining, however, the term 'mine' may be deceptive. Cryptocurrency mining is essentially a method through which network members are rewarded with cryptocurrency in exchange for confirming these transactions.
From a technical perspective, mining constitutes the process of establishing the validity of blockchain transactions. Miners are compensated for their effort, same to how Visa gets compensated for confirming credit card transactions. The distinction is that miners are random people located around the globe. When a group is adequately rewarded at scale, verification potentially becomes "trustless." This was Satoshi Nakamoto's brilliant invention, which propelled Bitcoin to worldwide prominence.
Miners are the individuals that devote enormous computing power (sometimes whole buildings dedicated to mining computers) to solving hashing problems to introduce new blocks to the blockchain. Members of any blockchain, whether Bitcoin or Ethereum, are required to pay a fee to miners in exchange for their services. Together with a hard-coded block reward, this charge makes mining a profitable enterprise. Becoming a miner has never been simpler in cryptocurrency's history, and anyone can get started in a matter of minutes.
Cryptocurrency Mining: Creating a Blockchain
A blockchain "block" is a swath of data that contains two pieces of information:
- - A few essential pieces of data must be added to the database.
- The hash and unique identifier of the block immediately before it in the chain.
By incorporating the previous block's hash, each subsequent block is "chained" to the previous one - all the way back to the start. Any change to a historical block will necessitate recompilation of all subsequent hashes. Recompiling each hash would take years, which would be instantly noticeable to everyone else on the network. Math-based security!
To insert a novel block into the blockchain, a computational challenge must be solved that compresses the data contained in the block into a 256-bit hash. Mining is the process of resolving this problem or discovering the hash - a difficult undertaking. The first miner to hash the block successfully, so making it safe to spread throughout the internet, gets rewarded with Bitcoin for their efforts. The winner distributes their findings to all other miners, who ensure the encryption is secure and the process is completed. This is said to be "work proof." Once the remaining miners validate the new block, the winner safely adds it to the current chain, and the other nodes refresh their replications.
Every several minutes, miners from across the globe gain agreement on the network's current "state." From recent transaction records to each wallet's balance, state data is consolidated into a size- and time-restricted "block." When the network agrees on all of the data in the most recent block, they "chain" it to the preceding block and get the network incentive for maintaining order.
