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Wrapping your head around cryptocurrencies and the way they are produced can be challenging at times despite the fact that the entire process is pretty simple and explainable through real-world examples. Trying to understand the process is like your grandpa trying to figure out how WhatsApp works – pretty easy for you but not for him. With some simple examples, you can easily figure out how cryptocurrencies work and what the mining process is like. When you need more information, you can always visit xtrgate.org blog. Let’s explain the mining process of cryptocurrencies.
The Mining Process of Cryptocurrencies
The term “mining” is pretty self-explanatory. And yes, just like dedicated miners who bring out gold from gold mines, you have dedicated miners to produce new units of cryptocurrencies. Cryptocurrencies are cryptographically secured. To produce a new unit of any cryptocurrency, you need to solve cryptographic riddles/puzzles/problems. To do that, you need a lot of computation power i.e. lots of RAM, graphics card power, CPU strength etc.
Miners produce a new unit of cryptocurrency every time they solve a cryptographic puzzle successfully. But why do they have to do it? Well, because cryptocurrencies are digital and there is no central government or bank to regulate their production. When someone makes a cryptocurrency transaction, it is the role of the miners to “authenticate” that transaction. You can say that a miner is putting a unique code on each transaction like the bank puts a specific serial number on every currency note.
However, the math problems are not easy and that’s why many miners are working to find the answer. The one that succeeds gets to “stamp” that transaction and store it in the public ledger (another name for the blockchain, which is the technology powering cryptocurrencies). Every time a miner is successful, a new unit of cryptocurrency is produced, and that belongs to the miner as a reward of his/her ‘work.’
Once a transaction is verified and stamped by the miner, it gets stored on the blockchain whose copy is then saved on every node. The node is every computer connected to that cryptocurrency’s network – more like every person who owns even a single coin of that cryptocurrency. Since a copy of the public ledger is saved on every node, there is no way for one person to tamper with it. Last but not least, every new unit produced of a cryptocurrency required a more difficult problem to be solved by the miner than the one before.
Final Thoughts
You can always follow a lot of online resources to know more about cryptocurrencies. More importantly, you should look for ways to make some money from them like you do with trading other financial assets. If you wish to trade cryptocurrencies and make money from them without owning them, you should try online broker. You can start with this Neuer Capital blog crypto trading platform full review.Keep in touch with the latest news from the market and around the world to be updated with the ever-fluctuating prices of cryptocurrencies.
