Find the best broker for your trading or investing needs A cryptocurrency enthusiast willing to reap profits through the standard mining process either goes solo using his/her own mining devices, or joins a mining pool where his/her mining resources are clubbed with those of other pool miners to improve the mining output with enhanced processing. This article discusses how mining pools work.
The world’s oldest currency, physical gold, is dug out of the earth through the process of gold mining. It discovers hidden gold that is not yet available.
Successful mining allows the individual digger or the mining company to own the gold. Cryptocurrency mining works similarly, as virtual coins can be discovered digitally using computer programs. The bitcoin system has set a limit of total 21 million bitcoins.
All these bitcoins are lying within the blockchain system. Most are already dug out or “mined,” and owned by different participants, while the rest are in the process of being mined and will eventually become available. (See more: Only 20 Percent Of Total Bitcoins Remain To Be Mined.) Cryptocurrency mining involves two functions – releasing new cryptocurrency into the system (similar to gold discovery), and verifying and adding transactions to the blockchain public ledger.
It is performed using an internet-connected computer which is often equipped with special mining hardware devices and software programs to control and manage the mining process. The cryptocurrency discovery process is configured in such a way that if more miners are working, the difficulty level goes up, while a decline in the number of miners eases the difficulty level. Read more from investopedia.com…
thumbnail courtesy of investopedia.com