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The continuous boom in Bitcoin has paved the way for the growth of many virtual currencies. These virtual currencies have the name “Altcoins”. The mining takes place through cryptocurrency mining software.
Like Bitcoin, digital currencies like Ethereum, Litecoin, and Peercoin also appeared. Decentralization is the concept behind Bitcoin i.e. no participation of central financial authority. The transaction happens only between peer to peer.
Bitcoin is the first digital currency to use peer to peer transactions. This technology allowed instant payment across the ecosystem. From initial to the last, the entire process runs only under the participating members. These peers and members are MINERS.
Mining Bitcoin Meaning– Understand the Concept
Traditional online payment systems used to apply heavy transactional fees. The concept of Bitcoin evolved to reduce the gross cost of those fees. These transactions are logged in and encrypted in the form of ‘blocks’.
These blocks contain the entire data of all transactions done through bitcoins between peers.
These blocks create a blockchain that is similar to a public ledger. A Miner gets compensation for breaking the complex mathematical problem from an earlier transaction.
The compensation remains in digital currency and also the first hash for the next block. Mining cryptocurrency is arms race that proffers rewards to early adopters.
MINER uses different kinds of high-performance processors to solve mathematical problems. Earlier, miners used general laptops and processors for mining. But, the emergence of altcoins created the demand for high-performance processors.
Ethereum is a decentralized platform without any influence of censorship, and downtime. Ethereum mining software does the mining of the coin.
The quantity of new bitcoin generated with every mining block named a block reward. After every four years, the rate at which these rewards released gets diminished.
Computation power- Computation Power- When cryptocurrency mining incepted, a simple laptop used for mining. Also, people engaged in mining were very few. Over the years, the manpower for mining has grown.
More and more people use mining as a second source of income. So, now high-quality and high-capacity processors required for computation. Hence, people are using the graphics processing unit (GPUs).
This led to the designing and development of ASIC for mining bitcoin and similar coins.
The first ASIC for mining cryptocurrency brought into action in 2013. Over the years there have been many upgrades to this hardware.
The older version of ASIC with GPU or CPU leads to a higher cost of energy consumption. This causes a reduction in profit margin. So, to generate regular and enough income through mining, keep upgrading your hardware.
For the storage of cryptocurrency, plenty of wallets is available online. These wallets are necessary for storing the currency. Cryptocurrency wallets are software used to store your public and private keys.
These keys remain interfaced with various blockchains. This allows users to send and receive cryptocurrency, and track their balance. Dissimilar to traditional ‘pocket’ wallets, these digital wallets are virtual.
These wallets don’t store currency in one location. All that exists are the records of permanent transactions done through cryptocurrency. When anyone trades digital currency, he/she gives ownership of the coins to the receiver.
That individual sends private and public keys to do the transaction. When the private and public key matches, the amount in the sender’s account decreases. The receiver gets the ownership of those coins. The private and the public keys remain stored in a variety of forms,
- Online
- Hardware
- Desktop
- Mobile
- Paper
Generally, for security reasons, these keys can be printed and kept in paper form as they cannot be hacked. You can choose from the best crypto wallet app like Coinbase wallet, Electrum- best for bitcoin, Mycelium-best for mobile and others.
Ideal Conditions for Mining
- Air-conditioned room has a continuous electrical supply
- A processing system having at least 2 Mbps internet speed
- Upgraded mining software
- Altcoins which should be mined
Wrap Up-
There has been a continuous increase in the number of people mining with Bitcoins. As a result, it becomes tough for a normal consumer to make a profit through bitcoin mining.
So altcoins like Litecoins, Dogecoins, and Feathercoins are the ones to invest in. These three are scrypt-based cryptocurrencies which are the best cost-benefit for beginners.
