Cryptocurrency mining is the process of solving a mathematical problem (for example, a sum) using computer equipment.
When a computer (or a group of computers) correctly solves the problem set by the network, it is rewarded with an incentive. In the case of cryptographic money, the incentive is a number of units of the cryptocurrency being mined.
Basically, what these computers do is try out a series of possible solutions until the proposed solution matches the hash value of the block.
Mining cryptocurrencies, the simplest explanation:
Let’s say, for example, that the hash puzzle states that whoever first discovers the number from 0 to 10 wins the prize. Miners will keep trying numbers until one matches the puzzle.
During the process, they will keep checking whether the number is correct or not.
Whoever reaches the correct number first wins the prize, or in other words, takes the block reward.
The algorithms that determine the difficulty of the problem and other variables are today regarded as consensus systems, since all participants must agree on the rules.
Currently, the consensus system used by Bitcoin, Ethereum and many other cryptocurrencies is Proof-of-Work (PoW), although there are a large number of coins, such as Lisk or Stratis, that are purely Proof-of-Stake (PoS)
PoS is based on holding coins and the work is simpler, which avoids wasting work as happens with PoW and makes it more energy-efficient.
Different types of computer equipment can be used for Proof-of-Work mining.
Bitcoin requires ASICs, which are specialized machines with many processors that give them great mining power.
Ethereum is mined with mining RIGs, which are systems based on many graphics cards. Bytecoin is mined using only a processor.
There are other options, such as ‘mining’ cryptocurrencies through a browser, as is the case with Bitrad.io; by sharing content and receiving votes for that content, as is the case with Steemit; or by sharing part of our hard drive capacity, as is the case with Storj.
Likewise, mining allows us to keep track of how many coins are in circulation.
When a block is certified, the miner receives a reward and, therefore, new coins are introduced into the market. This means there are more and more coins over time, up to a maximum limit, thus providing control over the network.
If you want to keep learning about cryptocurrency mining, we recommend you visit the article on mining Bitcoins.
