Introduction to Cryptocoin Mining
Bitcoin was introduced to the world in 2009 by Satoshi Nakamoto, a software engineer. The whole idea was to create a currency that was independent of central authority and transferable electronically. The process with which bitcoin works:
Apart from trading bitcoins, people also mine bitcoin. It is called mining because it is similar to natural resources, there is only a finite amount of bitcoins. There is only 21 million bitcoin. Bitcoin mining is the process of adding transaction records to bitcoin's public ledger or blockchain. It helps confirm transactions that have taken place to the rest of the transaction. When a block is mined, the miner gets to collect the voluntary transaction fees from the transactions.
Since the invention of bitcoin, the level of difficulty has gone up in terms of mining. However, there are other coins that miners could choose from. As of now, Litecoin, Zcash, and Feathercoin would be easier to mine for beginners.
Why Mining is Necessary for Cryptocurrency?
There are two parts to this but the main reason is to make it expensive for miscreants to add dishonest blocks. It requires the means of adding transactions into the ledger as well.
Adding Transactions to the Ledger
In cryptocurrency, the timestamp of other participants can't be trusted. Also, there is no master clock or centralized agent whatsoever. Transactions added to the ledger in blocks (block order) is the only equivalent time.
This is all about the guessing game called "proof of work", the guessting game is not mandatory. In addition of blocks but it makes it computationally expensive which in turn makes it expensive to add blocks. This makes it expensive to act as a defense against miscreants who form dishonest blocks.
The security of the mining network is based on its decentralization, it makes the decision making in the network consensual. All the disagreements are settled by a majority consensus.
How to start mining cryptocurrency?
For more info on mining, check out our slides from our last Cryptocurrency 101 Workshop! Mining vs. Cloud Mining
11/30/2017 01:51:32 pm
Great tips! Renting hashing power online is a great way to start mining cryptocurrencies without having to make the investment in mining equipment.
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