Cryptocurrencies are “fashionable” and it is a trend that is changing more and more the way we see the global financial system, so it is good that we know some related terms that we can hear or read commonly but do not really understand what it is.
Under this premise, in the previous article entitled what is blockchain technology? We already explained this concept along with the distributed accounting that is quite common too, but if there is a term that is more common than those before and that we have not talked yet, is the bitcoin mining, which is always read on any page of cryptocurrencies. Then we will expand the information a little to understand more about what it is and how it works.
How does cryptocurrency mining work?
The first thing we should know is that bitcoin mining or cryptocurrency mining is the current way in which the process of deciphering complex computational calculations is called in order to obtain new bitcoins and add new blocks to the blockchain chain. The people who dedicate themselves to this activity are known as “miners” and get as a reward some cryptocurrencies of the same type that they mined, so it is important to clarify that mining is a task that can be done with any cryptocurrency based on blockchain technology.
It’s given the common name of bitcoin mining because bitcoin was the first cryptocurrency to exist, but as a result there have been many others that have their own chains in which there is a specific amount of transactions to be resolved or cryptocurrencies per undermine. In the case of bitcoin, the limit number is 21 million and this amount can’t be exceeded, is estimated to be deciphered for the year 2140.
It’s also good to clarify that the word mining is used because of the similarity of the activity with mineral mining: the miners enter a mine with heavy machinery that they use to remove the land and obtain sufficient mineral resources to cover the costs of exploration and also obtain a financial benefit. The same thing happens with cryptocurrencies, except that instead of removing earth, calculations are solved and powerful computers are used instead of heavy machinery.
What does this process consist of?
The process of mining works in the following way: exactly every 10 minutes a new mathematical problem is released, available to all miners who want to solve it, the one that obtains the correct result faster, will get a reward, but all the members of The network must validate that result and say it is correct.
The mathematical problems that the miners decipher are based on random calculations, which will allow the validation of the block. That is why it can be said that the main function of mining is to verify that nobody uses the same cryptocurrency twice (that is, that no one tries to sell or buy twice the same currency) and that the coins that are introduced are legal, that is, avoid the falsification of cryptocurrencies.
Mining cooperatives: an interesting option for miners
Mining cooperatives, also known as mining pools, are associations of miners who put their computational resources in common with another group of miners in order to increase the power of their data, which will allow them to solve computer operations faster and thus get rewards.
Solve a problem of these is very complex doing it individually and the probability of achieving a reward is almost zero, perhaps in the early days when there was not so much competition in this area, it was much simpler, but today requires very powerful competing with millions of teams equal or more powerful still, so the use of a mining cooperative is a way to increase the chances of obtaining rewards.
What are the rewards that the miners get?
Within the bitcoin policies there is something clearly established and are the rewards for the miners. Currently for each block validated 12.5 BTC is obtained as a reward, this is in addition to the commissions that are added for each transaction. This fixed value of the reward is something that is set to change every 210,000 transactions and this is known as halving.
The next halving is stipulated to reduce by half the reward for each block validated, that is, instead of receiving 12.5BTC, miners who manage to obtain a valid block will have a reward of 6.25BTC. This is not something that happens in a random way, in fact, the next halving that will reduce to 6.25BTC the reward already has a date and time: on May 23, 2020 at 06:29:48.
What do you think about this topic? Have you had any experience in cryptocurrency mining?
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