If you are interested in Blockchain and cryptocurrencies, you have undoubtedly heard of the famous cryptocurrency mining or mining. This subject is fascinating and is often accompanied by many questions. Also, we will produce a series of several articles to explain the basics of cryptocurrency mining to you. This first article introduces the subject, and we will see the definitions and how mining works. Then, we will deal with more specific issues (how to become a miner? Is it profitable?…).
The origins of mining
Let’s start with a short story paragraph. The term “cryptocurrency mining” first appeared in 2009, creating the first Bitcoin blockchain, and relates directly to gold miners. In search of wealth, the latter left pickax in hand, not knowing whether they would return with pockets full of precious metals. So, likewise, the bitcoin miner would set off, equipped with his computer for mathematical calculations, and when he found the correct result, our miner was rewarded with bitcoin.
Today, mining has evolved a lot, so much so that mining with your personal computer, even if technically possible, is no longer of economic interest. There are now specialized machines for this task: Asics or RIGs (you can get this machine from the company Just Mining, French leader on the subject). Other cryptocurrencies have taken up this concept of mining, such as Ethereum (ETH), Litecoin (LTC), Monero (XRM), … etc.
The concept of cryptocurrency mining is not very complicated to understand. Mining is an operation of validating a transaction on a blockchain network through a mathematical calculation. Mining technically nicknamed “Proof of work” (proof of work) makes it possible to secure the Blockchain.
The role of the minor
The miner is the person who carries out the mining activity. It provides a mining pool with its computing power. Thus, the pool plays the role of a conductor in solving math problems. We will devote an article to the mining pool in the coming days. At the end of the operation, for his contribution, the miner is rewarded, he receives payments in cryptocurrency.
When you carry out a transaction in the traditional banking system, your bank takes the money from your account, sends it to another bank, which deposits it in the beneficiary’s account. Thus, the bank plays the role of a trusted third party. In the Blockchain and mining economy, it is the miners who replace the trusted third party. There is no central body. This is because Blockchain is said to be decentralized and give financial freedom and fast money transaction.
Who are the minors
Companies, individuals, you, me,… anyone can technically be a cryptocurrency miner. But, of course, the current market environment makes it not necessarily attractive for everyone to be. We should understand that the system has been designed so that anyone on the planet can become a miner and contribute at their level to the security and development of the Blockchain.
How does cryptocurrency mining work?
Proof of work
There are different ways to secure a blockchain. The best known, used from the outset by the Bitcoin blockchain, is proof of work (PoW). This mechanism consists of solving a mathematical problem requiring computing power provided by computer hardware.
A history of mathematics
Mining is, above all, a matter of mathematics. Transaction validation is accomplished by solving a complex mathematical problem. To find the solution to the problem, the miner will try many possibilities until he finds the correct result. Therefore, the more computing power the miner has, the more likely he will find good work before other miners. This system naturally leads to competition and an increase in computing power over time. Thus, to adapt to the rise in this power, the protocol provides that the difficulty is adjusted to maintain a constant average time per block (10 min for Bitcoin and 15 seconds for Ethereum, for example).
An illustration to better understand
To illustrate how bitcoin mining works, we will take the example of Andreas M. Antonopoulos, a famous ambassador of bitcoin on Sudoku. The latter compared mining to a huge Sudoku contest in which each participant would start a new puzzle as soon as one of them had found the solution to the previous one. The difficulty of the grid would be adjusted so that the average resolution time is 10 minutes (validation time of a block on the Bitcoin blockchain). Therefore, the grid problem can be changed so that the calculation can be complicated to solve, but it will be straightforward to verify.
What are the cryptocurrencies that can be mined?
While cryptocurrency mining is the most widely used security method, it is not the only one. There are dozens of security mechanisms (we’ll get to that in other articles). Many cryptocurrencies can be mined today. To name only the best known: Ethereum (ETH) *, Zcash (ZEC), Litecoin (LTC), Monero (XRM), Grin (GRIN), …