Basic understanding of Cryptocurrency Mining

Basic understanding

To understand what is cryptocurrency mining, you first need to get the basic terms of cryptocurrency mining. Mining is a process in which cryptocurrencies are created on decentralized networks by independent individuals or in large mining groups, a miner is known as a “node”.

There are two main purposes of mining:

• To create more coins.
• To confirm the validity of transactions using cryptocurrencies in circulation.

For example, Bitcoin (BTC), BTC transactions are grouped into blocks (blocks) and these blocks will be verified by miners, when miners confirm this transaction they will receive a “reward ”and this reward is in BTC.

What’s cryptocurrency mining?

Once you have a good understanding of the basics, let’s continue with the concept of mining. Cryptocurrency mining is a term describing the processing and confirmation of payments on the cryptocurrency network. This enables  transaction information to be verified and stored on the Blockchain system.

The mining process is operated by a computer application or hardware dedicated to mining, making the processing and confirmation of transactions faster and more efficient. Anyone can participate in mining by operating an application on the computer. In addition to traditional computers, some companies have designed hardware specifically for mining, which makes it faster and more efficient to process new transactions and create blocks. To be able to confirm transactions and link to the Blockchain chain, these devices must solve complex cryptographic math problems.

In the cryptocurrency network, miners compete with each other to win the block mining reward because only the first ranked miner receives a reward for solving a numeric problem given by the system. The reward miners receive is the amount of coins corresponding to the transaction fees they process. Miners also receive additional rewards for every cryptocurrency mined.

What is a mining machine?

A mining machine is a device that helps miners mine by solving the system’s algorithm and making cryptocurrencies more efficiently. There are two types of mining machine.

1. Expert mining machine

This type was designed only to mine bitcoins, not to mine other cryptocurrencies nor to do anything else. Some machines can be named as AntMiner S7, SP20 Jacson, Avalon 6, etc

These machines are fast, stable in speed, priced from $250 – $500. However, the downside is that it only supports bitcoin mining, so owner cannot use it for other purposes and it is very difficult to liquidate.

2. Bitcoin PC mining machine

This type of bitcoin mining machine is very popular and the number of miners choosing this is huge. It is fitted with one or more powerful VGA. Then people can install the mining software on this machine and run it 24/7 so that it can mine bitcoin and other cryptocurrencies.

Its disadvantages are high price, high power consumption, high temperature in operation, and its speed is not as fast as specialized machines. The advantage is that it is possible to mine many other cryptocurrencies (usually few people mine bitcoins because it is so hard that people focus on mining low-value but much easier-to-mine coins like NEE, ETH, ETC, XMR and so on), and it’s easy to liquidate.

The above is the article about cryptocurrency mining and the machine for mining. We hope it will bring you a lot of useful information. In general, for those who are new to this field, these technical-oriented concepts are quite confusing, and the work of mining through machines is not for newbies. To do it, you need to have computer knowledge and proper hardware. Of course, you can still become a miner if you spend time researching and learning.

Read More: Cloud Mining vs Hardware Mining.