What is Cryptocurrency Mining?

Lately, at Money Trade Coin, We’ve been talking about bitcoins, its uses and how it’s transforming the world. Today, we’re going to talk about something a whole lot more interesting - cryptocurrency mining.

You might have a lot of news on the internet about how people are gathering computer resources so that they can mine for bitcoins. Well, that process is essentially how bitcoins are minted (like how paper money is produced.) Let’s take a closer look at what it is and how it works.

What is mining and how does it work?

We know that the technology behind digital currency like bitcoins and litecoins is blockchain. This is a digital ledger that keeps track of all transactions on the ledger. In order to find the next block in the chain, mathematical algorithms are used. These algorithms require a lot of computational power and each block requires more computing than the last. This is where mining comes in.

Discovering the next block requires the users - you and everyone else on the block network - to work together to discover the next block. This gives the power of financing to the users - unlike the traditional economy, where it is centralized and where the government prints money and decides the value of a currency.

Many have caught onto this and have pooled their computational resources in order to contribute towards discovering the next block on the blockchain. However, currently, it requires specialized computer components in order to efficiently mine. It’s a minor investment which pays off well in time.

A Few Things to Keep in Mind

One positive of bitcoin mining (or any digital currency; the process is the same for all) is that is an entirely passive operation. Once you’ve got your system setup, all you need to do is wait as the hardware processes the algorithms for the next block. Depending on your hardware and the time for which the system runs, you can mine anywhere between a few cents and $10 worth of cryptocurrency every day.

If you want to make truly large profits, you’ll need specialized hardware. Fortunately, once you’ve purchased that hardware, you can quickly recover the investment you’ve made on the hardware.

This may all seem a little overwhelming at first, but there really isn’t much to it. It’s a matter of deciding what you want to get out of cryptocurrency mining - how far are you willing to go and how much are you willing to invest? You’ll get as much in return.

We’ll examine how exactly one can mine, and mine effectively, in an upcoming article. Until then, we recommend doing your research on various cryptocurrencies, mining hardware and the basics of mining. You’ll be in a more knowledgeable position to get started and you’ll have a better idea of which cryptocurrency to mine.

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