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Crypto mining is the process of digging for new cryptocurrency in the online ether. Not all cryptocurrencies can be mined. The most well-known currency to mine is Bitcoin, although currencies like Dash and Ethereum can also be created with this process.
There’s only a finite amount of Bitcoin available. This means that when it comes to mining on the Bitcoin network, it’s not possible to mine for a single Bictoin. Instead, you mine a block – and each one takes more computer power to unearth than the last.
If you want to mine Bitcoin, you need a super-high-powered computer that can solve complex computational equations in a short amount of time – but the chances of your computer actually solving one of these is about 1 in 13 trillion.
There are two purposes for mining:
Yes. When you mine Bitcoin, one of the motivations of miners is to be rewarded in Bitcoin. They’re basically paid for verifying transactions on the blockchain. How do they verify, you ask?
Imagine two people try to pay for something with a £10 note – but one of them is fake and the other is real. Someone inspecting both tenners would recognise that one of them is fake from the fact that the serial number is duplicated. This is the basis of the crypto miner’s role. They inspect transactions to make sure that they’re legitimate.
If you buy crypto on an exchange platform like Coinbase, the rate that you get per coin is more likely to vary depending on the seller. Otherwise, trading crypto is a simple buy-sell transaction.
Comparatively, when you mine crypto, the process is a little different.
On a blockchain (an online ledger that records all crypto transactions for each specific currency), transactions are governed democratically. But what does this mean in practice? It means that you can’t transact without each transaction being verified by multiple parties on the network. These multiple parties are the miners.
As a miner, you’ll spend your time verifying transactions – and in return, you’re rewarded with small sums of cryptocurrency.
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