The popularity of Cryptocurrency is increasing day by day. As many of the big organizations are adopting Cryptocurrency or this decentralized digital currency, more people are starting to make their minds on putting their money in this industry.
And as a result of this, the demand for Cryptocurrency mining is also increasing. In case you are familiar with this industry you may know what Cryptocurrency mining is. But in case you have little knowledge here is the necessary information for you.
What Is Cryptocurrency Mining?
First we need to know the meaning of the work mining in the Crypto world. By solving complicated Cryptographic equations, the gaining of Cryptocurrencies through computers is called mining, here.
The whole process includes validation of data blocks along with adding transaction records to the ledger. Ledger is a form of public record, which is named Blockchain. Let’s make it a bit technical.
So, a transactional process, which involves Cryptographic processes and also the use of computers in order to solve complex functions is referred to as Cryptocurrency mining. Well, recording data to a specific Blockchain is also included in Cryptocurrency mining.
Who Mines Cryptocurrency?
Miners are the designated people who add new blocks to the Blockchain, by utilizing computer power for solving hashing puzzles. The computational Cryptographic equation that I was talking about earlier is the problem that needs to be solved by a miner for successful Crypto mining.
Mining Cryptocurrency often includes an entire network of dedicated mining computers. Anyone can become a miner, but you also need to keep in mind that mining is not at all for everyone.
China is the country where more than 70% of Crypto minings take place. The cheap electricity allows the miners to run their mining computers with extreme profits. The miners are rewarded with some amount of newly-mined Cryptocurrencies.
Is Crypto Mining Legal?
Most of us know that there is a debate for the legalities of Cryptocurrencies. And when it comes to Crypto mining, the question remains the same, “Is Crypto mining legal?” in a single word; the answer is yes, but there is much more than just a yes.
The determination of if Crypto mining is legal or not, relies on two key considerations. And they are,
- The geographical location of yours. And,
- Whether you are mining Cryptocurrencies through legal means or not.
When you use illicit means in order to mine Cryptocurrencies, you will start stepping forward into the territory of illegal activities. Using javascript in browsers or also installing malware into the devices of the users, some cybercriminals hijack the users’ processing powers.
This kind of cyber attack is called Cryptojacking. Around the globe, different governments see Cryptocurrency differently. Some countries also consider Cryptocurrency mining as taxable; on the other hand, some countries keep it in the category of non-taxable income.
How Does Crypto Mining Work?
In simple words, for reaping the rewards in the form of Cryptocurrency, the miners generally verify the legitimacy of transactions. In order to understand how almost every Cryptocurrency works, you first need to understand the processes and technologies behind it.
And the first thing that you need to know about what a Blockchain is, along with the working process. There are two things that recede at the center of the whole Blockchain concept, and they are math and public-key encryption.
In the Blockchain, public-key encryption, which is also popular as asymmetric encryption or key Cryptography, goes hand in hand with math. Bitcoin and other traditional Cryptocurrencies use a decentralized ledger. This is known as Bitcoin.
Consider a series of chained data blocks, which contain key pieces of data. This is a Blockchain that also includes Cryptographic hashes. All these blocks that are an integral part of a Blockchain are basically groups of data transactions.
These groups of data transactions get added to the very end of the ledger. This is the base of the transparency layer that Blockchain offers. This also works as an ego inflator at the time; people can see that their transactions are being added to the Blockchain.
Though their names are not listed there, up to certain means, they still feel excited and proud. So, this is the basic method of how Crypto mining works.
Crypto Mining Process
Though I have told you about the basic concept behind working for Crypto mining, there are several steps present. You need proper technical knowledge for understanding the details, but here I am offering a step-by-step guide.
- Verify the legitimacy of the transaction.
- To form a block, separate transactions are added to the list of other transactions.
- To an unconfirmed block, other types of data are added.
- Miners verify the hash of the block and confirm the legitimacy of the block.
- After the confirmation, the block is published on the Blockchain.
Final Talks
So, this is the almost whole concept of Cryptocurrency mining. The more popular name is Bitcoin mining. In case you want to become a miner, you need to get all the technical support knowledge to understand and perform all the processes.