The world of cryptocurrencies offers many interesting ideas not only because it could soon become part of our daily life but also and above all because cryptocurrencies can represent today as today a valid outlet and outlet for those who have money to invest or who in general they look for a way to earn. In this article, I will explain in detailed ways how to mine cryptocurrency, from the basics to the advanced stage.
Trying to understand what it is and what this expression means, which has now entered the vocabulary of many people who carry out this activity on the net, a phenomenon that has experienced great expansion in the past.
In practice, as an introduction we can say that mining is used in cryptocurrencies because there is no other way to issue money. So the system and the meaning is already quite clear.
That is, in a system that does not include the central bank that is able to print and materially produce money, we rely on new and more ingenious systems to issue money, so here is that since bitcoins and the world of virtual currencies in general exist , there is also the mining activity, this is changing over time and therefore we start from trying to make some history of this activity.
Mining cryptocurrency: the meaning
So what happens? In practice, the bitcoin network stores transactions within data structures that are called “blocks”, these blocks are able to keep track of transactions and testify them.
To make sure that a block can be added to the block chain (this is the huge public database containing all the transactions that have ever been made in bitcoin) and therefore to become an official part of the bitcoin world, it is necessary that a computer “Close” by finding a particular code.
This is the seemingly very simple system behind bitcoins. The code can only be guessed right by dint of numerous attempts.
Doing this allows you to crystallize the block preventing any type of future modification, so it is clear that this is the system that allows bitcoins to exist and to be safe and widely used, they are in fact as reliable as a normal currency.
Whoever finds the code we were talking about is rewarded with a certain amount of bitcoins, in the past for example 25 bitcoins were given for having closed a block and in addition they were rewarded with all the transaction fees entered by him in a block, this was the main incentive to donate machine time to the bitcoin cause.
In short, to mine you need computers with access at all hours throughout the year to try to earn as many bitcoins as possible.
The name derives in practice from the parallelism that exists between bitcoin and gold in which it is easy to read the similarity between the gold nugget seekers and the code researcher, only that instead of digging into the rock in this case we dig within the network.
Furthermore, the comparison is really effective given that today bitcoins are considered a bit like gold with the difference that while investing in the latter it is no longer convenient to invest in bitcoin it is becoming more and more so, all this because of the fact that they are both safe haven assets with the difference that gold prices, however, rise much more slowly than is currently the case for bitcoins.
Mining: what it is and how it works
Mining is a system used to create new digital money through the use of special calculation software, developed by the so-called PC mining.
Specifically, the main online transactions are stored in data structures also known as blocks and processed by these special software to fix them and complete the transmission procedure on the network channel.
Once a specific unique code has been identified, the block is executed and the coin issue process is completed.
Its name derives from a sort of parallelism between Bitcoin and Gold, in fact, there is a data extraction process that is completed as soon as the right code is identified to issue new digital currency.
This process works on a fairly high amount of CPU computing power and requires a specific processor known as a GPU to run them, which is why there are also alternative systems in this regard such as the mining pool.
It is a group of users from different parts of the world to combine the computing powers of multiple computers to start the mining process and distribute the value of the mined block as a reward among the participants.
The history of mining
From the first moment the idea of creating virtual currency and in particular the bitcoin network came, a problem immediately arose. How could the new currency be issued?
This was a nice dilemma because until that moment only the world banks arrogated to themselves the right to create money, but now with the network it was perceived that things could change radically.
All monetary systems issue money with central banks, but the decentralization of bitcoins required an equally decentralized method of generating money, in short, it is easy to imagine how it was a real revolution in the field of issuing money.
Finally, a solution was found and consisted in creating a method that would allow bitcoin to be given as a reward to the network components that provide processing power, which among other things was necessary to fortify and structure the network itself, all according to a random system studied in order to return bitcoins in a manner proportional to the computational power provided.
So here comes back what we said before about computers that were left on all day all year round, especially in the past to date, mining bitcoin has become very difficult and the system has changed in fact after we try to explain how the system is now organized and what you need to do to earn.
In the beginning, there was only one way to earn bitcoins, that is, you had to use the original client by enabling the “coin generation” function, thus allowing the system to use all the free time of its CPU to create and close the blocks.
So, since bitcoin was still in its infancy and there were very few people who lent themselves to this system, the one who left the computer on 24 hours a day could expect to generate even thousands of bitcoins.
But the main problem is the fact that at the time bitcoins had almost zero value and therefore it was not that convenient to mine more than anything else it was like participating in the system almost for charity, however more and more people began to do it even if not it had no value or usefulness and it was a kind of non-repayable donation for the good of the project.
Thanks to this system, however, the new bitcoin model became able to self-regulate, modifying the difficulty of the work necessary to close a block so that an average of 6 new blocks are generated every hour throughout the network.
The time of the convenience of bitcoin mining
As time went by, more and more people eventually became passionate about bitcoins and wanting to mine them, and so the number of people who started doing so got bigger and bigger, they were constantly adding new power to the network.
This obviously led to a significant increase in difficulty and decreased the average daily earnings for every single machine from thousands of bitcoins per day to a few cents and also led the miners to join in what has been defined as guilds or mining pools. whose purpose has always been to ensure a greater inflow of money than to mine alone.
In the end, the positive aspect of the increase in difficulty was the fact of being able to guarantee the birth of a certain demand and a market, in this way bitcoin took on a tangible value and good liquidity.
So how can you understand the time of the convenience of mining has come to an end because now a disproportionate number of machines are dedicated to mining and this has minimized the profit margins of this activity which in fact is not even cheaper than as it once was.
In the end, today only very powerful ad hoc machines are active that are left on all day every day in order to mine and therefore have access to earnings but these are machines that also cost tens of thousands of dollars so it is unthinkable to be able to afford them and in any case, it is not such a convenient system.
Bitcoin mining has become more and more specialized and has gone from using CPU to GPU to FPGA or logical devices that can be programmed.
For some time there have also been ASICs or microprocessors that have been custom-built for a certain task.
Nowadays, therefore, mining is a process that in order to be profitable requires enormous skills, a great deal of investment and supercomputers.
Fortunately, there are alternatives for exploiting the bitcoin system and it is an investment in this business directly online by exploiting the fact that bitcoins are constantly increasing in the price factor.
In short, instead of mining cryptocurrencies, wouldn’t it be better to try to invest in it?
It is a much less tiring process that requires much less attention and above all an average computer. Now we explain how it works.
Mining cryptocurrencies: convenience
As we have seen, the mining process is quite complex and requires great skills as a PC assembler, specific knowledge of hardware and knowledge in the software field is also welcome.
Mining bitcoin is now a very hard undertaking, but it is far from impossible to mine other cryptocurrencies on the market, especially the newer ones; but even in this case it is not possible to start easily, real studies and a large collection of information are needed.
Today, fortunately, much leaner solutions are available online and are suitable for the needs of modern investors who are not interested in wasting time.
In fact, it would take a long time to make money with mining because the process is really tedious and complex. Trading on the other hand is a completely different story and now you can understand why.
The new emerging sector among cryptocurrencies is that of cryptocurrency trading both through the purchase and sale of virtual currency and through the purchase of cryptocurrency on exchanges.
Thanks to the investment systems that exist at the moment with virtual currencies you can earn much faster and even starting from very small investment capitals, because as the industry insiders know now the advantages of trading go beyond all expectations. thanks to the many market fluctuations that occur every day on virtual currencies.
Swings mean price movements that if favorable lead to unprecedented gains.
The system works very intuitively and is quickly explained. In practice today there are online brokers who are intermediaries who manage operations by sending purchase and sale orders from their customers directly to the markets, markets where cryptocurrencies are now accepted and traded because they are completely linked and accepted by now, especially the bitcoin.
The trading platforms of the best brokers for online trading today are fully equipped to allow you to trade not only on bitcoin and other virtual currencies but on many other alternatives.