Cryptocurrency Mining: What You Need to Know
Bitcoin and other cryptocurrencies have become extremely popular investments in recent years, and it's easy to see why – they're secure, anonymous, and fast becoming an accepted form of payment around the world.
But how does cryptocurrency work, exactly?
And how can you begin investing in cryptocurrencies?
This guide will answer those questions and more so that you can start mining cryptocurrencies like Bitcoin right away!
What Is Bitcoin and How Does It Work?
Bitcoin is the most well-known cryptocurrency, created in 2009. Bitcoin is a digital asset and a payment system invented by an unknown person or group of people under the name Satoshi Nakamoto.
The currency itself isn’t actually called Bitcoin, but rather its two parts: bit and coin. When you buy Bitcoin as an investment, you don't get any coin until it is mined—which means you own a share of all bitcoins mined up until that point and then receive shares proportionally as more bitcoins are mined.
This provides incentive for mining Bitcoin because people like being rewarded with new bitcoins.
Who Miners Are
Mining is the process of adding a new block onto the blockchain and can be done by using high-powered, specialized computers known as mining rigs.
It's a difficult, time-consuming work with no guarantee of actually making money. For those who succeed in their endeavors, there are great rewards. In this guide we'll help you learn about some of the benefits and risks of cryptocurrency mining before deciding if it might be right for you.
We'll also show you how to find out which type of miner may suit your needs best.
Why Do They Mine?
Many people have asked themselves what is cryptocurrency mining. To start, cryptocurrency mining is simply a process in which new coins are introduced into circulation by solving complicated mathematical equations.
The answer as to why people mine Bitcoin, Ethereum, and other forms of currency has less to do with who mines the coins and more about who does the mining.
From an economist's point of view, mining can be seen as the method used to regulate the supply and demand of each coin.
It would be pointless for miners just to produce currency without any constraints on how much can be produced because then a currency would become valueless and useless if there was an infinite amount that could be created.
Where Do They Mine?
Mining cryptocurrency, whether for personal use or for a profit, is done via mining rigs that are powered by GPUs. So which currencies can you mine?
The coins typically mined are Bitcoin (BTC), Monero (XMR), Ethereum (ETH) and Zcash (ZEC). The important thing about mining rigs is the card(s) it will support.
To summarize the topic in a nutshell, GPUs provide faster hashing than CPU and ASIC miners.
That's why GPU mining is more popular among those who want to extract cryptocurrencies from the network without having to invest heavily into expensive hardware.
If you're interested in investing your time, resources, and energy into this industry while there's still time before competition becomes too tough, then consider getting yourself one of these powerful machines.
How Do They Mine?
- – or in other words, a type of answer to a problem that is difficult but can be verified as correct.
- Think of it like a math puzzle
- - if you answer correctly, then you're rewarded with bitcoins!
How Much Can I Earn From Mining?
Is mining crypto illegal?
Whether or not cryptocurrency mining is illegal depends on the country and how it is done.
Bitcoin miners usually mine with the help of illegal bots that surreptitiously insert themselves into computers and use those machines to mine Bitcoin or other currencies like Monero, Zcash, and Ether.
Cryptojacking is a form of malware that takes over someone's computer by installing itself in the background without permission, unnoticed by antivirus software until they start doing something like mining cryptocurrency.
Fortunately, there are websites that offer free antivirus software, which can come in handy if you're worried about your computer getting hacked while you're surfing the internet.
What do crypto miners actually do?
Mining, at its core, is the use of computational power to solve complex math problems in order to be awarded with coins.
One of the main objectives for mining cryptocurrencies is that it helps the block chain operate more quickly and securely by adding transactions as they happen, while creating new units of currency at the same time.
Mining a coin involves solving extremely difficult cryptographic puzzle problems; when you mine Bitcoin, for example, your computer tries to combine a random string of letters and numbers called a 'nonce' with all previous transactions on the blockchain (the ledger).
If this results in a hash or hash value that starts with a certain number of zeroes (e.g., 12 zeros), then your computer has mined Bitcoin successfully.
Can you get rich by crypto mining?
No one has even got close to that, says Kotler. They're spending millions of dollars on server farms and machines,
just for the possibility that their computer might mine
a block and win some bitcoin. If you want your chance at striking it rich with cryptocurrency mining, it's going to take more
than just a powerful desktop PC. Unless the whole world starts mining bitcoin, the best way for most people
to get in on the ground floor is to buy cryptocurrencies outright. Bitcoin has already risen from a value of $1 per coin to over $6,000 this year. However, investing in bitcoin isn't like buying stock; there are no guarantees how high the price will go. Some experts predict bitcoin will rise to as high as $20k by 2020 while others say they'll fall back
down below $1000 before year end.
How do I start mining cryptocurrency?
The first step in cryptocurrency mining is deciding which coin you want to mine. Then, the second step is downloading and configuring a reputable mining software package. Third, you must download the blockchain for your selected coin before
running it from the computer's hard drive.
As long as all of these steps are completed before starting mining,
there is no need for any manual changes or updates later on.
This process can be started with anywhere from 1MB worth of processing
power up to multi-processor rigs with hundreds of terabytes
worth of storage and thousands of units for processing power!