12/05/2018 Financial & Legal Services
Know all about cryptocurrency mining and how you can be a part of it to earn considerable amount of profits.
Cryptocurrency is the high profit investment that everyone has set their eyes upon. The name itself signifies that it is associated with something that is present in the form of a code or has to be uncovered through a coded mechanism. This description is actually quite apt for this ‘digital currency’ and just as a high value commodity like gold is mined, cryptocurrency is also mined.
Mining is the process through which this cryptocurrency is generated. The earliest example of cryptocurrency is Bitcoin which is frequently mined but the code gets complex as the process gets involved. This code is essentially a mathematical equation that needs to be solved. As easy as it may sound, it is actually not! The number that cracks the code to release cryptocoins can be a combination of any numbers and it all starts with random guessing. Hash function is applied to these random numbers and the data in the block, and if the result comes in the desired range, then the code gets cracked and it releases cryptocurrency.
However, there are many nuances of cryptocurrency mining which are discussed as under:
Process of Mining
The process of mining involves arriving at a 64-digit hexadecimal number (a hash) which is in the same range as the target hash. This is the primary objective and for the same, nodes or computers in the blockchain are eligible to crack these codes. The mining happens within the network where miners have to essentially verify cryptocurrency transactions since each one becomes recorded in the blockchain and contributes in creating the code. The process is time consuming and you need the right equipment and willingness to put in man hours to crack the code. Once the miner reaches at the right code to the numeric problem, he announces it within the network. This is considered as ‘proof of work’, the reward of which are cryptocoins.
Requirements for mining cryptocoins
If you believe the process of mining can be easily done if you are a software expert, then you are misinformed. There are certain prerequisites needed before you can start the process of mining. We are not referring to the knowledge about the concept here, because it is assumed that only the well informed will venture into the process of mining. There is clutter in the mining space where Bitcoin is concerned, however, you can go in for other cryptocoin options like Litecoins, Induscoin, Feathercoins, to name a few.
1. An account in an online currency exchange: This is needed so that you can trade or exchange your cryptocoins after mining for real time cash or use them for trading. Going in for a reliable online currency exchange is very important at this time since there are many fraudulent exchanges also trying to swindle miners and investors.
2. A coin wallet: This is like a private database where you can store your earnings. Cryptocoin providers like Indus Coin proved encrypted coin wallets ensuring that your digital currency is safe from hackers and Trojan attacks.
3. A mining software package: Software packages like AMD are needed to be able to begin the process of mining. These are usually made of cgminer and stratum.
4. A hardware setup: There is a specific hardware requirement for mining and you need to put in some amount of investment for it. Power consumption is also a parameter to determine success rate in mining.
5. A desktop or a custom built computer: For staying connected in the miners’ network, it is best if you have a custom built computer or a dedicated device for the process of mining.
6. ATI Graphics Processing Unit (GPU): This is a specialized processing device called the mining ASIC chip. This is essential for providing accounting services and mining work. This can be purchased online and compatibility differs depending on the GPU and ASIC chip.
Once you have these necessary equipments, you can begin with the process. Since there is always a rush to crack the code, you may need to arrange for specific cooling mechanisms to keep your machines running for a longer duration.