Cryptocurrency news has been a hot topic lately. A lot of people heard cryptocurrencies in the second half of 2017 with the rise of Bitcoin. Beyond any doubt, these coins are valuable, but how are they produced in the first place? In our what is crypto mining post, we will cover some of the basics of cryptocurrency mining.
All cryptocurrencies work on something called blockchain. It is simply a shared ledger or document duplicated several times across a network of computers. In this regard, mining is a bookkeeping service that is done through the use of computer processing power (usually through your Central Processing Units (CPU) or Graphic Cards (GPU) . The consistency of the blockchain is ensured by repeated verification of transactions.
A block contains the hash of the previous block and uses SHA-256 algorithm. This links every block to the previous block, which gives the blockchain its name.
What is block reward?
The transactions that are collected from the network usually has a small fee attached that constitutes the part of the block reward. Also, there is a difficulty level assigned for each solution to the cryptographic hashing algorithm. This difficulty level might scale up or down over time, which eventually affects the block reward. For instance, the target is to generate a block solution in every 10 minutes for the Bitcoin. For Ethereum, on the other hand, block solutions should be generated in every 16 seconds. As you can see there is a huge difference between these two cryptocurrencies. This is one of the reasons for some people to favor Ethereum (or other coins) over Bitcoin.
Beyond any doubt, you do not need to know all these details to start mining. Eventually, all you need to start mining is a cryptocurrency mining software package. However, learning these details may increase your profits.