Mining (Cryptocurrency) Definition
Mining as a term as several meanings or interpretations depending on the context it is used, but it is basically used in the mining industry and cryptocurrency network. When used in the context of cryptocurrency, mining refers to an act of creating a new cryptocurrency and circulating it for use. Mining is done using the cryptocurrency network, it also entails verifying the authenticity of crypto transactions so as to detect fraudulent ones.
In the mining industry, mining is a process of extracting core and valuable minerals such as ore, coal, silver, metals, and others from the earth.
A Little More on What is Mining of Cryptocurrency
In the crypto world, mining serves two broad purposes which are; the creation and circulation of new cryptocurrency towns and the verification of the authenticity of a crypto transaction. As used in the cryptocurrency network, various types of mining exists, the core ones are highlighted below.
Generation of new cryptocurrency tokens: This form of mining examines the emergence of new crypto coins and how they are released in the market. This is the most basic type of mining. A cryptocurrency miner can also specialize in how transactions in the cryptocurrency network are verified and tagged as authentic. This is a form of mining that requires special expertise on the part of the miner. Once a transaction of cryptocurrency is verified, then it can be added to the blockchain.
How is Mining Performed?
For mining to be done in the cryptocurrency network, it entails the use of mining hardware, specially designed to ad the generation of new crypto coins, circulation of the coins and verification of the authenticity of blockchain transactions. Computers and electronic chips are needed to aid the work of cryptocurrency miners who strive hard to solve complex problems emerging from crypto trade. There are some processes that aid mining in the cryptocurrency network, these are;
- The use of mathematical formulas to solve calculations relating to transaction data.
- The use of hash functions to solve complex problems relating to the authenticity of a transaction or a block.
Most of the processes are also determined by the nature of the configuration of the crypto network a miner is working with. The most popular hardware and electronic ships used for crypto mining are; Graphics Processing Unit (GPU), Application-Specific Integrated Circuit (ASIC), FPGA and CPU.