{"id":8072,"date":"2020-02-07T00:29:17","date_gmt":"2020-02-06T22:29:17","guid":{"rendered":"https:\/\/forklog.media\/?p=8072"},"modified":"2020-02-07T15:26:26","modified_gmt":"2020-02-07T13:26:26","slug":"how-to-mine-cryptocurrency-beginners-guide","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/how-to-mine-cryptocurrency-beginners-guide\/","title":{"rendered":"How to Mine Cryptocurrency: Beginner\u2019s Guide"},"content":{"rendered":"

If you thought about starting to mine cryptocurrency but know only a little about it, you have come to the right place. In this feature, forklog.media will explain the basic terms of mining, show how it works, and help you understand whether the juice is worth the squeeze.<\/span><\/p>\n

<\/p>\n

What is Mining<\/span><\/h2>\n

Mining is the process of recording cryptocurrency transactions onto a blockchain. People involved in mining are called miners. And so are the devices that perform mining itself.<\/span><\/p>\n

Miners check transactions and record them in a block. Those blocks connected to each other form a blockchain, hence the name. When most miners copy the most recent block, the transaction becomes effective.<\/span><\/p>\n

For this, miners get a reward. Its amount depends on the complexity of mining and the price of the cryptocurrency they are mining. Usually, this is how new crypto-coins are minted.<\/span><\/p>\n

Additionally, miners store a full copy of the blockchain. This way, if someone hacks one of the copies, it will not affect the system.<\/span><\/p>\n

Types of Mining<\/span><\/h2>\n

There are different kinds of mining out there. They differ in algorithms of consensus, which are basically the rules of recording blocks onto a blockchain.<\/span>\"How<\/a><\/span><\/p>\n

In PoC, we summed up the market cap of 12 PoC-based cryptocurrencies and divided the sum by the entire crypto-market cap. We used Cryptoslate.com as the source for market cap data for cryptocurrencies based on other algorithms.<\/span><\/i><\/span><\/p>\n

Mining on Proof-of-Work<\/span><\/h2>\n

The miner checks transactions and signs the block. The signature here is a hash sum of the block\u2019s header. The header includes the number of transactions, the previous block\u2019s signature, and a random number. The signature must be lower than the network\u2019s condition.<\/span><\/p>\n

\"How<\/a><\/p>\n

How Bitcoin\u2019s algorithm compares a signature to a condition<\/span><\/i><\/span><\/p>\n

In Bitcoin, miners search for a signature for around 10 minutes regardless of the mining speed. For comparison, it may take a living human being around 17 minutes to calculate a single hash sum on a piece of paper.\u00a0<\/span><\/p>\n

<\/p>\n

A cryptographic round by Ken Shirriff. Source: <\/span><\/i>Righto.com<\/span><\/i><\/a>.<\/span><\/i><\/span><\/p>\n

Still, if you want to mine Bitcoin, you need to calculate trillions of hashes per second. It requires very powerful equipment, so mining BTC at home is no longer viable unless you are a member of a mining pool.<\/span><\/p>\n

A hash sum or a hash is the information processed under a hashing algorithm. The result obviously depends on the initial data. If you change the original information, the hash will change as well.<\/span><\/p>\n

\"How<\/a><\/p>\n

How the change of the original information impacts the hash sum<\/span><\/i><\/span><\/p>\n

Here\u2019s an example of PoW mining:<\/span><\/p>\n

You have one job: press a button on a box with a screen. When you press it, the screen displays a random number from 0 to 100. You get the reward if the number is less than 10.<\/span><\/i><\/p>\n

Thousands of other people have similar boxes. The faster you press the button, the higher are your chances to win.<\/span><\/i><\/p>\n

In general, you and other people find the \u201cwinning number\u201d roughly once every 10 minutes. In order to earn more, they \u201cpress the buttons\u201d two times as fast and get the \u201cwinning number\u201d once every 5 minutes.<\/span><\/i><\/p>\n

And then the employer narrows the winning corridor: only numbers under 5 are winning. Therefore, miners do more work for the same reward. In Bitcoin, this is called halving.<\/span><\/i><\/p>\n

In 2019 alone, Bitcoin miners have spent 58 terawatts of power, which is the same as the average power consumption of the entire nation of Switzerland. This huge consumption caused cryptocurrency developers to offer another consensus algorithm: Proof-of-Stake which consumes just 1% of PoW expenditure.<\/span><\/p>\n

Mining on Proof-of-Stake<\/span><\/h2>\n

Here, users freeze cryptocurrency in their wallets to create a stake. The more coins there are in the wallet, the higher is the chance to mine the next block. It\u2019s like buying lottery tickets without an expiration date. The prize drawing occurs every 10 minutes. The more tickets you have, the more often you will be winning.<\/span><\/p>\n

Delegated-Proof-of-Stake is different from the regular one. There, users delegate the right to mine blocks to other miners in exchange for a partial reward for the mining.<\/span><\/p>\n

There are downsides to this model, though:<\/span><\/p>\n