Cryptocurrency — it’s the talk of the decade. 13 percent of Americans traded cryptocurrency just last year.
The 21st century has seen the internet transform our lives. Crypto makes use of the internet to transform the way we look at business, the economy, and currency itself.
There are a lot of terms that get thrown around when one talks about cryptocurrency, however. One of these terms is cryptocurrency mining.
We understand why this term is confusing. Cryptocurrency is supposed to be a completely digital currency — what does mining have to do with anything?
If you’ve found yourself asking this question, you’ve come to the right place. This article will walk you through everything you need to know about crypto mining, so you can get one step deeper into the world of cryptocurrency investment.
Blockchain is another one of those words you hear thrown around with cryptocurrency. But though you hear these terms talked about it often, only 1 in 10 people know how cryptocurrency functions. Blockchain is key to all things cryptocurrency — so what is it exactly?
At the end of the day, blockchain is simply a way of using the internet to verify the authenticity of certain steps in a process. With blockchain, every single step of a transaction is given a serial number entered as a “block” into an internet “chain” that makes sure everything is running authentically.
This is extremely important to cryptocurrency. There are no physical tokens in cryptocurrency, so the only way to make sure people are counterfeiting is to check the authenticity of every cryptocurrency interaction.
Key to understanding blockchain is this: blockchain can work without cryptocurrency, but cryptocurrency cannot work without blockchain.
So how exactly does that cryptocurrency verification work? Cryptocurrency mining!
What is Cryptocurrency Mining?
When each step of a process is entered into a blockchain, it’s given a complex cryptograph, that’s pre-assigned to be one of a kind. Anonymous people solve the cryptograph (with the help of very advanced computers) to check the authenticity of the interaction.
Since no two cryptograph numbers are alike, solving for one — and getting the answer right — means you’ve verified that part of the process.
In cryptocurrency, it’s very easy to motivate people to solve these complex problems. When someone solves one of these, they’re paid in that cryptocurrency.
At the end of the day, in a literal sense, it has nothing to do with mining at all. Cryptocurrency mining is a metaphor. You’re helping bring cryptocurrency into the world, and getting to “take-home” some cryptocurrency in exchange — do you see how it sort of connects to the process of mining a resource?
Understand the World of Crypto
If you jump online into the middle of a conversation about cryptocurrency, you’ll encounter a lot of strange terms that people like to throw around. One of these terms is “cryptocurrency mining”. While people like talking about crypto, not everyone knows what these terms mean.
Understanding the basics of how blockchain and cryptocurrency mining means you have a leg up on others when it comes to the world of investing.
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