Cyrptocurrency is nothing but digital money and unlike traditional money it does not have to be printed. Today it is safer to transact in this form of money than using credit card, debit card or cash because of the security that it offers. It is also easy to send money across international borders without heavy transaction fees using a cyrptocurrency than a traditional fiat currency. However to use cyrptocurrency, it needs to be generated or mined.
Some Crucial Things You Must Know About Mining Cryptocurrencies
In order to understand how cyrptocurrency mining happens, it is vital to learn how digital money works. When dealing with cyrptocurrency two things happen one is adding transactions to a block chain and the other is releasing new currency into usage. Both these activities are carried out using a computer and a special program that helps to implement both them.
The process of creating new cyrptocurrency requires that a miner solve a block having transaction data through cryptographic hash functions. This results in a hash value, which is a number with a fixed length that identifies data. What miners do is zero in on a hash value that is below the target. Miners who succeed in doing this have mined an entire block and they can get rewarded. The reward for mining a block is 12.5 bitcoins.
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What is Bitcoin and how it is Mined?
Out of the many Cryptocurrencies out there in the market, an important one is bitcoin. Money is sent in the form of bitcoins across borders using the bitcoin network. This network is maintained by computer programmers who keep it going by keeping a record of every transaction that has occurred by putting them into a block. Every transaction that is put into the block is confirmed by the miner and then it is written into a general ledger.
This ledger has all the blocks that were created when transactions were recorded and it can be checked by anyone in the bitcoin network for any transaction that has happened at any time between two bitcoin addresses. Miners then create a hash using a complex mathematical formula. This has numbed identifies the block. Every block hash is based on the hash of the previous block, which gives a sort of seal to the block. Generating the hash value of a bitcoin block is called Bitcoin mining and it is not easy to produce an acceptable hash value as it should have a particular format.
Bitcoins were originally mined on computer CPUs, but later it was found that graphic cards had more hashing power so mining was shifted to it. Special software was used to crate hash value through them. However, it explained that Application Specific Integrated Circuits or ASIC are even more powerful than graphic cards. Now, bitcoins mining is done using only ASICs.
As technology is expanding its horizons and worldwide users are taking a step ahead to adopt digital wallets and currency, soon people across the globe will discard the physical currency and switch to the digital money for enhanced security and ease. Read more blogs on bitcoins and other digital currencies to know how you can plan your finances for future.