What is Cryptocurrency Mining?

Bitcoin is the first decentralized cryptocurrency on the market.  Invented by Satoshi Nakamoto in 2009, it was intended to work as a mode of exchange for goods and services with convenience and security in mind. When it was listed for trading, Bitcoin started with an initial price of $0.06. Guess what the price is now? Over $5,600 –  that’s over 93 times its initial value! Given the exponential growth since its inception, I am not surprised why more and more establishments are adapting to incorporate cryptocurrencies as a form of payment.

There are various ways to earn cryptocurrency, one of which is through mining. Mining is a record-keeping service done through the use of computer processing power. Using Bitcoin as an example, miners keep the “blockchain” consistent, complete, and unalterable.  This is done by repeatedly verifying and collecting newly broadcast transactions into a new group of transactions called a block. Each block contains a cryptographic hash of the previous block, using the SHA-256 hashing algorithm, which links it to the previous block, thus giving the blockchain its name.

Now that we understand what mining is… let’s look at two of the most popular forms of mining: Personal and Cloud Mining.

Personal mining is done by building or utilizing your existing personal computer and its CPU/GPU processing power to mine cryptocurrencies. I have personally built a couple of mining rigs and it was a a pain to setup and maintain at the very beginning; not to mention the additional noise and heat from the system that I had to live with. But in return, I had the joy of learning and being creative with my solutions. The potential return can be rewarding, but mining is not for everyone. It requires commitment, patience and technical expertise.

Luckily for people who would like to get into cryptocurrency mining, there is a much easier alternative called Cloud Mining. The main advantage of Cloud Mining is instead of spending thousands of dollars to buy the mining equipment, and spending countless hours setting up/troubleshooting, users can simply purchase processing power and receive a similar return without having to worry about the technical ins and outs. You also don’t have to spend very much to get started; I have seen service plans as low as $29.99 for a timed contract for a corresponding amount of processing power.

With that said, we are still in the early days of cryptocurrency. It will be interesting to see what the future has in store for this sector in the tech industry.

 

References: https://en.wikipedia.org/wiki/Bitcoin

Image: https://www.coindesk.com

Jeff


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