What Is Crypto Mining? How Cryptocurrency Mining Works

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rypto mining (or ?cryptomining,? in the event that you?d prefer) is a popular topic in online forums. You?ve probably seen videos and read articles about Bitcoin, Dash, Ethereum, and other forms of cryptocurrencies. And in those pieces of content, the topic of cryptocurrency mining often comes up. But all this may leave you wondering, ?what is Bitcoin mining?? or ?what's crypto mining??

The bottom line is, cryptocurrency mining is really a term that refers to the procedure of gathering cryptocurrency as a reward for work that you complete. (This is referred to as Bitcoin mining when discussing mining Bitcoins specifically.) But why do people crypto mine? For a few, they?re looking for another income source. For others, it?s about gaining greater financial freedom without governments or banks butting in. But regardless of the reason, cryptocurrencies are a growing area of interest for technophiles, investors, and cybercriminals alike.

n a far more technical sense, cryptocurrency mining is really a transactional process that involves the application of computers and cryptographic processes to solve complex functions and cryptocurrency record data to a blockchain. Actually, you can find entire networks of devices which are involved in cryptomining and that keep shared records via those blockchains.

It?s important to understand that the cryptocurrency market itself is an alternative to the traditional bank operating system that we use globally. So, to better know how crypto mining works, you first need to comprehend the difference between centralized and decentralized systems.

Traditional Banks Are Centralized Systems
In traditional banking, there?s a central authority that controls, maintains, and updates a centralized record (ledger). That means that every single transaction has to go through the central bank operating system, where it?s recorded and verified. Plus, it?s a restricted system ? just a few organizations (banks) are permitted to connect to the centralized bank operating system directly.

Cryptocurrencies Use Decentralized, Distributed Systems
With cryptocurrencies, there?s no central authority, nor is there a centralized ledger. That?s because cryptocurrencies operate in a decentralized system with a distributed ledger (more on this shortly) known as blockchain. Unlike the traditional bank operating system, anybody can be directly linked to and take part in the cryptocurrency ?system.? It is possible to receive and send payments without going through a central bank. That?s why it?s called decentralized digital currency.

But in addition to being decentralized, cryptocurrency can be a distributed system. This means the record (ledger) of all transactions is publicly available and stored on lots of different computers. This differs from the traditional banks we mentioned earlier, which are centralized systems.

But without a central bank, how are transactions verified before being put into the ledger? Instead of using a central banking system to verify transactions (for example, making certain the sender has enough money to make the payment), cryptocurrency uses cryptographic algorithms to verify transactions.

And that?s where bitcoin miners can be found in. Performing the cryptographic calculations for every transaction adds up to many computing work. Miners use their computers to execute the cryptographic work necessary to add new transactions to the ledger. As a thanks, they get yourself a little bit of cryptocurrency themselves.

How Cryptomining Works (And an In-Depth Look at Blockchain)
In a nutshell, crypto miners verify the legitimacy of transactions to be able to reap the rewards of their work by means of cryptocurrencies. To comprehend how most cryptocurrency mining works in a more technical sense, you first need to understand the technologies and processes behind it. This consists of understanding what blockchain is and how it operates.

The first thing to learn is that a couple of things are central to the concept of blockchain: public key encryption and math. While I?m definitely a fan of the first, I?ll admit that the latter isn?t my strong suit. However, public key cryptography (aka public key encryption or asymmetric encryption) and math go together in blockchains like burgers and beer.

Traditional cryptocurrencies such as Bitcoin use a decentralized ledger referred to as blockchain. A blockchain is a series of chained data blocks that contain key bits of data, including cryptographic hashes. These blocks, which are integral to a blockchain, are sets of data transactions that get put into the end of the ledger. Not only does this put in a layer of transparency, but it also serves as an ego inflator when people reach see their transactions being added (chained) to the blockchain. Though it doesn?t have their names listed onto it, it often still evokes a feeling of pride and excitement.