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what is mining?

what is mining?


Blockchain is the distributed ledger technology that underlies Cryptocurrency. It is a chain of blocks that contain information. You can record any data and track its movement forever. Furthermore, the movement of this data can be checked by every participant making it impossible to get corrupted. Maintaining and creating new units of the currency requires computing power. This process of tracking and verifying transactions is called mining. By mining, you will be rewarded tokens technically called ether which can be later used as a digital currency.

Cryptocurrency mining includes two functions, Firstly, adding transactions to the blockchain (securing and verifying) and secondly, releasing new currency. Individual blocks added by miners should contain a proof-of-work (POW).

Mining needs a computer and a special program, which helps miners compete with their peers in solving complicated mathematical problems. This would need huge computer resources. In regular intervals, miners would attempt to solve a block having the transaction data using cryptographic hash functions. Hash Value is a numeric value of fixed length that uniquely identifies data. Miners use their computer to zero on a hash value less than the target and whoever is the first to crack it would be considered as the one who mined the block and is eligible to get a rewarded. The reward for mining a block is now 12.5 bitcoin.

In early days, bitcoin miners solved these math problems with the processors and their computers. Soon miners discovered that graphics cards used for gaming were much better suited to this kind of working. Graphics cards are faster they use more electricity and generate a lot of heat.

The first commercial bitcoin mining products included chips that were reprogrammed for mining bitcoin. ASIC (application specific integrated circuit), chips are designed specifically for bitcoin mining. This technology made bitcoin ever much faster and while using less power.

As the popularity of bitcoin increases, more miners join the network making it more difficult for individuals to solve the math problems. But to overcome this miner developed a way to work together in pools. Pools of miners find a solution faster than their individual members and each miner is rewarded proportionate to the amount of work he or she provides.