Categories
Blog-en

Why is mining important?

INDEX

  1. Crypto Asset Mining Context
  2. Mining, security, and governance in the crypto world
  3. Bitcoin mining and how it works
  4. The infrastructure needed to mine

1. Context of crypto-asset mining

The infrastructures in charge of sustaining and protecting cryptocurrencies are called “blockchains”. These are open, decentralized, and accessible systems that allow users to own assets without giving their custody to a bank.

The existence of these infrastructures is due to mining. An activity through which the validity of money transfers made with crypto assets is verified, which are then added to historical records that function as “accounting books” of independent “peer-to-peer” networks of companies, governments, and individuals.

2. Mining, security, and governance in the crypto world

Mining is important, in a nutshell, because it allows us to distinguish true information from that generated by malicious agents, through mathematical verification of it, to prevent the falsification of assets and their double-spending. This activity is carried out by the “miners”; people in charge of putting into operation hardware and software necessary to secure the network.

Mining constitutes a fundamental mechanism for the governance of the systems on which cryptocurrencies run since it generates a public and open dynamic for verifying information. Through it, it becomes possible to reach a “consensus”; that is, collectively confirm the existing data in the blockchains without endowing any entity with a higher hierarchy.

seguridad de la mineria

To reach this consensus, the miners cooperate and compete with each other, motivated by their profit motive, since they expect to receive monetary rewards at the end of the process. They invest their computing resources in favor of blockchain security, with the ultimate purpose of mining a valid block.

These types of dynamics reduce the risk of collusion because they motivate those who dedicate themselves to mining to prefer to carry out an honest behavior since this will not affect the value of the assets they receive and the reliability of those systems that they consider will be strengthened. profitable to mine.

3. Mining and how Bitcoin works

The first implementation of mining systems in a cryptocurrency was completed with the launch of Bitcoin in early 2009; a currency whose most important conceptual aspects can be found in the whitepaper “Bitcoin: a peer-to-peer electronic cash system”, published by Satoshi Nakamoto in November 2008.

This document establishes that “proof of work” mining (that is, the one that requires providing a “proof of work”) is based on the mathematical validation of the information received from other agents of the “peer-to-peer network. “, Which is processed by sending new blocks of information approximately every 10 minutes.

For this verification, a “retroactive” scheme is used which contrasts, by means of “cryptographic hashes” embedded in the headers of said blocks, the reference to an immediate ancestor; In this way, the creation of a new block requires pointing towards a previous valid block, accepting its existence and implicitly confirming its consent, thus endowing the transactions with an increasing security scheme based on the number of confirmations that the block receives in which your data is included.

4. Infrastructure needed to mine

infraestructura para la mineria

Although the verification of the validity of the blocks and transactions is a simple and accessible process for most of the network participants. The construction of new blocks that add information to the transaction record of a blockchain (mining) requires intensive computer work, which demands, in most cases, a large number of resources.

To conclude, it is important to bear in mind that initially, mining was an activity carried out by miners “alone” using their home computers, but at present, this industry has become professionalized, so it usually requires a large number of resources and hardware. specialized networks connected to mining pools, through which many miners cooperate with their computing power to solve one block at a time, distributing the profits among the participants of the operation when they are successful in producing a valid block.

Categories
Blog-en

What cryptocurrencies are and how do they work?

INDEX

  1. What are cryptocurrencies?
  2. History of cryptocurrencies
  3. What is the Blockchain?
  4. How do cryptocurrencies work?
  5. Crypto mining and miners
  6. What happens when I use a cryptocurrency?

You would have to live disconnected from the world not to have heard, or read, at least once about cryptocurrencies. Either because the information would have given you a positive or negative impression, you will know at least that they are currencies that were born in the digital world, that they are not a paper currency like the money that you are used to handling and that, in addition, their price can be very high.

1. What are cryptocurrencies?

A cryptocurrency is a computer algorithm created with the function of representing a unit to carry out exchanges. If you wanted to visualize it, it would be something like a set of letters and numbers, a sequence of data, very similar to seeing a programming code on the screen.

Cryptocurrencies are digital currencies. They do not have a physical form, but they do have commercial value, thanks to the fact that they are used and accepted as a means of payment in transactions.

2. History of cryptocurrencies

que son las criptomonedas

The existence of cryptocurrencies has its theoretical background in cryptography, a technical branch of knowledge, which stems from the ancient need to create hidden messages through codes. Which was strengthened immensely with the development of informatics.

In the eighties, and thanks to the arrival of the internet, which opened a new scenario of technological interaction and a virtual space for communication, crypto enthusiasts began to raise the possibility that people could make transactions through the network. For this, the existence of a digital currency was necessary, which could be moved in the same medium, which would later give the added value of operating globally.

Additionally, they considered that it should be encrypted so that it was secure and that it was not subject to the control of banking entities, that is, it should be decentralized. This also implied that no government was going to rule over it, it was something like raising “free money” that, thanks to technology, could operate for the benefit of the people.

But it is only in 2009 that the first cryptocurrency was born, Bitcoin, because the creation and development of the software that allows the existence of these currencies, the Blockchain, required a very broad theoretical compilation.

Another curious fact is that just in 2010, a year later, Bitcoin was used for the first time to make a payment related to the physical world; the purchase of two Papa John’s pizzas in the United States. That is, until that date its existence and use were limited to small groups that used the cryptocurrency for private trials, so it still had no commercial value.

3. What is the Blockchain?

que son las criptomonedas y el blockchain

The chain of blocks or “Blockchain” is the fundamental element for the existence of cryptocurrencies. As their name indicates, they are a sequence of blocks, where each one contains the information of the operations carried out, but additionally, it also indicates which is the previous block and links to the next one. That is, it works as a kind of accounting book, within which each block represents a sheet with information, linked to the previous one and indicating which one should follow.

The great advantage is that the information stored there is that it cannot be modified because as there are thousands of nodes (computer terminals) that receive a copy of the Blockchain, as soon as any data is modified an alert will be generated because this network works By consensus, this means that most copies should have the same information, so when a change is detected the network reports it as an error. Additionally, to commit fraud, it would be ridiculously complicated, if not impossible, to convince most of the nodes (51%) to also change their copy. This gigantic peer-to-peer network spans the length and breadth of the planet.

4. How do cryptocurrencies work?

For the operation of cryptocurrencies we must again mention the Blockchain, remember that its way of operating is public and with this, it is guaranteed that the transactions are traceable and transparent. Then every time a transaction is made with a cryptocurrency, for example, a payment, the information of the transaction is sent on the network (the data of the crypto address of the issuer, receiver, and amount of coins to be sent) is confirmed and through A process called mining, which is carried out by cryptocurrency miners, adds the information within a new block of the chain. This happens in a matter of seconds.

5. Crypto mining and miners

que son las criptomonedas y su mineria

Miners are people who have powerful computer equipment with which they check that the information contained in the blocks of crypto is true. Said use of resources generates a reward in cryptocurrencies, but more importantly, this public audit action makes it impossible to modify the information contained in the Blockchain. As the data is transmitted over the network and constantly verified, an alteration would be easily identifiable. Additionally, thanks to the miners, new cryptocurrencies are generated, so the more transactions are made with a currency, the more profitable it is to mine.

It is important to mention that miners know how crypto works and believe in the system, which is why it would also be difficult to “bribe” them to change the information. In short, mining keeps the system safe.

6. What happens when I use a cryptocurrency?

For the end-user, sending, receiving, buying, selling, or exchanging cryptocurrencies is a process similar to paying with a local currency through a virtual account. However, the difference is that it requires specific applications that have greater security measures, in addition, there are also specialized platforms in exchanges such as Exchanges and P2P trading platforms.

In any case, the mining process to confirm the transaction happens in a short time and without the cryptocurrency user having to make any additional effort or operation.

Categories
Blog-en

How to choose the most suitable cryptocurrency for mining?

Among so many crypto alternatives, which one to select to mine,  having in mind the risks and capitalization values ​​in the market?

Since the popular and leader until now, Bitcoin, many other virtual currencies have been born.

Part of this great digital range is made up of Monero, Ether, Dash, Litecoin, DeepOnion, Dogecoin, Zcash, Ravencoin, Grin, etc. The list goes on and therefore doubts may arise in this regard, as many are profitable to mine.

And since this profitability will be maintained for the next few years, you must prepare yourself to know everything about mining and its types. In addition, we will show you what aspects to take into account to select the best cryptocurrency.

Cryptocurrency mining and its functions

First of all, what is mining? Simple, a set of processes to validate the transactions of a cryptocurrency within the Blockchain.

As you already know, the way to mine will depend on the system used by the blockchain or algorithm of each cryptocurrency. You should know how each asset works since they all have their characteristics.

Mining cryptocurrencies is a profitable activity that leads to a more secure and stable network. How to choose the most suitable cryptocurrency to mine? CLICK TO TWEET

Crypto mining serves two essential functions. We explain

Confirm or verify transactions in the ledger or blockchain to guarantee their validity. Each verification contributes to the stability, transparency, and security of the network.

Issue or extract new cryptocurrencies, a product of the work of mining.

Learn about the most important features of Minar

Mining cryptocurrencies is a very lucrative activity that is worth knowing. Since it has several very interesting features:

  • There are two consensus systems according to the type of virtual currency, the PoW or Proof of Work. The second is called PoS or Proof of Stake.
  • The miners or nodes scattered around the world validate the transactions and organize the blocks through complex mathematical processes.
  • Mining requires powerful, specialized, high-performance hardware for mining cryptocurrencies.
Minería y equipos especiales
  • Miners are remunerated for validating transactions, encouraging their work, developing a more reliable and secure environment.
  • This activity generates a great demand for electricity, which is why some countries have restricted or prohibited mining.

Types of Cryptocurrency Mining

There are many ways to obtain cryptocurrencies, but mining offers 4 types to evaluate according to your needs and objectives. Let’s see.

1. Mining with CPU

This kind of mining was used and very popular from the beginning of the activity. It works through the processor of your computer and software to extract cryptocurrencies.

This system is convenient, although not very fast or sustainable over time. Due to the excessive use of a simple CPU, it is necessary to let it cool down and, in addition to this, there is high electricity consumption.

It is also characterized by yielding lower income. This method is still used for mining, but it has a low return on investment.

2. Mining with ASIC

The way to mine is most used by those who love technology and speed who want cryptocurrency mining.

These are special equipment with a high-power platform, which has a “Specific Applications Integrated Circuit” (ASIC).

There is some suspicion among members of the mining community who demand the prohibition of this machinery. The reason is that those with slower methods don’t have much of a chance against this fast system.

3. GPU mining

The GPU stands for “Graphics Processing Unit” or Graphics Processing Unit, which offers high performance for mining. They have a graphics card, processor, motherboard, and cooling system. This equipment represents a high investment.

Mining with GPU consists of special high-performance equipment, generating high electrical demand. CLICK TO TWEET

They can cost up to more than $ 3,000; they generate great profitability, but also a high energy cost.

4. Cloud mining

Cloud Mining is a friendly process in which you avoid the purchase of expensive mining equipment and excessive electricity consumption. It’s about having a company do the work for you.

An expert ally that, equipped with a platform and through a commercial relationship, provides the operation service. In addition to maximizing your production, there are reliable and profitable options.

How to choose the right cryptocurrency to mine?

Now that you know the ways to mine, you must evaluate what type of cryptocurrency is the most suitable for you.

Criptomonedas y minería

The most important thing is its profitability since your efforts should not be in vain. Choose wisely, but be guided by these factors to take the right path.

Cryptocurrency price

In the crypto world, there is great volatility in every asset. Therefore, it is important to understand that the cost of mining a cryptocurrency may be higher than the current market price.

Legality

An indispensable rule is that the cryptocurrency to choose to mine is completely legal in your country. In some regions, mining has restrictions and can create a problem.

Consider the electrical aspect, since the cheaper the energy, the greater the profit.

Costs

In addition to taking into account the price of electricity, it is essential to analyze the cost of special equipment for mining cryptocurrencies.

If you decide on a GPU system, you already know that you will have to shell out thousands of dollars in hardware. If you opt for a cloud platform, the expense would be much lower and very efficient.

Conclusions

Cryptocurrency mining is an activity that, in addition to generating profits, entails an objective analysis. You must be clear about your goals to make the right decision as to which method to use.

To exchange your cryptocurrencies it is important to have a platform with state-of-the-art technology. At CCoins we have the functionalities you need to exchange your crypto assets.

With the P2P market you find multiple offers to buy and sell; With Flip CCoins you have the option to exchange from crypto to crypto, to stable currencies and USD in a single click, and with gift cards, you can exchange products and services in your favorite stores.

Make your transactions person to person, without intermediaries, and in a reliable, safe environment and with multiple tools. We are ready for you, choose your way to grow, and we do the rest.