Cryptocurrency’s popularity continues to boom. At this point, everyone and their mother have heard a thing or two about Bitcoin. However, the question “What is mining?” still causes some confusion.
Mining is a way to make money in the crypto sphere. In this article, we are going to discuss what it is, as well as methods to do it and steps to take if you wish to earn with cryptocurrency mining.
1. What is mining
2. Cryptocurrency mining and ways to do it
3. Is mining like a cryptocurrency accounting
4. How to start mining cryptocurrency
What is mining
Mining is how you get digital currency using special equipment. The goal of mining is to create new blocks within the blockchain to ensure the network's stable operation.
Unlike the issuance of fiat money, cryptocurrency mining is not controlled by the government. However, by burning (which essentially means destroying) cryptocurrencies, a certain number of coins can be removed from circulation. This method allows improving the network and increasing the value of the asset.
Cryptocurrency mining and ways to do it
There are three main ways to mine coins: solo mining, cloud mining and mining pools. However, cryptocurrency mining can be additionally classified based on the equipment that is used for it.
1. Mining with computer processors. That way, you can mine relatively unknown and cheap tokens. That said, even a powerful computer won’t generate a lot of money. This method is going to work for those who have access to several computers and free electricity.
2. Mining with graphic cards. This technique can be used to mine big cryptocurrencies and is ideal for those wishing to analyze the market and predict the growth of cryptocurrency.
3. Mining with ASIC. These are processors that have been specially designed for mining. They are easy to maintain and effective. However, as the network complexity is increasing with every passing day, they are quickly becoming less relevant.
4. Hidden mining. It is done by using a special virus that allows secretly mining cryptocurrency on the victim's device. These types of malware are almost impossible to detect and eliminate.
5. Mining with smartphones and laptops. This method is pretty self-explanatory. You simply use special apps to mine coins. That being said, the profit made will be minimal.
Is mining like a cryptocurrency accounting
To make money with cryptocurrency, you need to clearly understand what mining is and how cryptocurrency emerges.
Cryptocurrency is generated within the system:
Purchases and money transfers done with the use of the digital coins support the circulation of the cryptocurrency in the system.
Artificial intelligence is what helps create coins. A new Bitcoin emerges whenever a transaction is completed within the blockchain. And this is exactly what the miners do.
The cryptocurrency value depends on the miner’s equipment capacity. In essence, miners have to solve a mathematical puzzle in order to guess a hash which, in a nutshell, is a fixed-size output.
All blocks are interconnected and depend on the previous block’s hash. The miner's task is to find the key to a specific hash in order to solve the puzzle and close it. The miner who manages to do that first gets a reward.
So, in a sense, miners are just like crypto accountants. They keep a check on transaction registry, cryptocurrency transfers, and the absence of duplicates. The system rewards the miner for identifying any inconsistencies and removing them. This is how the miners make money. Miner jobs depend on the number of cryptocurrencies on the network.
How to start mining cryptocurrency
Below is a simple step-by-step guide you can use if you wish to start mining coins.
- Decide on the budget you are willing to allocate for this. If you are serious about mining and turning it into a source of income, you will have to spend money on it.
- Choose the right cryptocurrency. Bitcoin is obviously the most popular one, with lots of advantages: plenty of pools to choose from, a powerful network, a very high exchange rate, and a huge selection of equipment. Given Bitcoin’s overwhelming popularity, mining it will cost you a fortune. In 2019, to get Bitcoin, you would have to spend over $7,500, with the cost of one coin also approaching this figure. On the brighter note, mining still continues to attract new miners.
- Figure out what equipment you will be using. Carefully consider all pros and cons of each mining method. One of the most effective ways to mine is with ASIC.
- Choose the pool. The pool is a special server that is used to distribute tasks between miners.
So, what is mining, after all? Is it a sure way to earn or lose money? Essentially, it all depends on you. By factoring in all of the nuances, choosing a suitable mining option, determining your budget and capabilities, you can definitely make money with it.
Another way to earn money with cryptocurrency is by trading. For this, you will need a computer (laptop or smartphone) and an installed app of the broker's trading terminal. What is especially great about this method is that you won’t use as much electricity and your computer will not get worn out as quickly. Plus, your investments will pay off in the long run.
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What to know:
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