Mining for cryptocurrency buzz has been all over the internet lately even though it’s not a new thing and has been around for more than a decade.
We should mention that it’s not mining in a conventional sense as all the labor is done by a high-end tech and in a sense, it is blockchain gambling, where more computing power provides more often rewards.
In this article, we will cover what’s mining is and how one can profit from it and to do so, we need to elaborate on how does cryptocurrency and blockchain work a bit.
Cryptocurrency and Blockchain
Cryptocurrency is a secure digital currency based on cryptography, that is used as a token of exchange.
Cryptocurrency oozed its way to a stock market and the value of, for instance, one Bitcoin at the time of writing is $55,953. Some countries and cities are excepted cryptocurrencies as payment means.
There’re hundreds of different cryptocurrencies what’s common for all of them is blockchain despite different approaches for encryption.
On the basic level blockchain is a ledger- a digital one that stores information about transactions and this information is absolutely uncompromising due to the use of hashing. Hashing is a one-way cryptographic process that maps data of any size to solid-size output.
When it comes to the transactions the information is added to multiple individual ledgers. To ensure authenticity the transactions are signed and receivers collect the transaction and constructing ledgers.
Here a bit of computing involved where ledgers looking for correct values are found in the hash. After this block is closed and recorded in all of the blockchain.
Then the old block is added to the new ledger repeating the whole process, therefore, constructing the chain.
How does the mining work?
The reward in the form of cryptocurrency comes from the finding correct value in hash functions, authorizing transactions by it, and make the blockchain function.
It involves using computing power, the more of it- the better. With powerful cryptocurrency mining rigs, miners can earn an excessive amount of cryptocurrency.
Speaking of profitability, back in 2009 mining was extremely profitable with requirements for computing means being less. Taking Bitcoin as an example, according to the protocol mining reward cuts in half approximately every four years.
But remember that despite lower reward in BTC the price itself high rocketed. And now for mining one Bitcoin, you can get a reward of more than $300,000 as of 2021.
If you want to start mining be ready to spend thousands of dollars on PC with high-end GPUs, other computing parts and take energy costs into consideration as well- it’s not free, you should invest to earn.
You will need a bitcoin wallet as well, various software, and joining the mining pool won’t hurt as well to get the best out of what you have.
In conclusion
You should remember that mostly cryptocurrency is an asset and moreover a digital one. So it’s important to know where to sell it for fiat currency to get the highest profit.
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