In the past few years, we have seen headlines, teenagers making money by blockchain mining. Have you ever wondered how even mere youngsters are excelling in blockchain mining?
And few of them are even more successful than our senior generation blockchain miners. Are they applying any shortcuts, or are they really that proficient in making money? Is trading and investing all they do in blockchain mining or something else.
What is the actual task of a blockchain miner? Well, we have tried to solve a few answers for you. In this article we will read about blockchain mining and its types.
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Now, blockchain in cryptocurrency is a recorded observation. It ensures the safety of transactions. It is a record of transactions that is distributed and duplicated across the network of systems.
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As it is a sequenced chain, and information is stored in databases called block, it is termed a blockchain. Blockchain not only reduces the risk but also validates the transactions.
Blockchain also helps to reduce several extra transactional charges. Now let us relate the four terms together, cryptocurrency, blockchain, blockchain mining, and its advantages.
Though trusted for several cryptocurrencies, blockchain mining is generally used for Bitcoin (the leading digital currency), and is hence often referred to as bitcoin mining too. Blockchain mining is a peer-to-peer (P2P) process.
The mining is generally done by blockchain miners. It ensures the validity and security of bitcoin transactions. A bitcoin miner can be any person who adds bitcoin traction records for a global scale. Blockchain miners are responsible for the security of ledgers blocks. In common man’s words, the process of adding transactions in cryptocurrency ledger is termed as Blockchain mining.
Anyone across the world can apply for Blockchain mining. The only eligibility is that they must know how to work on a special software. The software helps them to connect other computers globally.
Through the term, Blockchain mining sounds complex and versatile. But the whole process of blockchain mining is quite simple. Once you become a blockchain miner, you can connect your computer to the network and start mining bitcoins.
This function is called a ‘node’ of blockchain mining. Several nodes further connect one another and hold information and transactions in blocks. As explained earlier, the whole chained process is known as Blockchain mining.
If it is particularly for bitcoins, it is called bitcoin mining. The process runs the entire day and holds almost a million bitcoin transactions.
This question might have arisen in your mind, why is Blockchain mining, a trendy topic? Or what makes blockchain mining so unique.
One of the most unique attributes of blockchain mining is that ever since its launch in 2009, the system has never been hacked. Amazing, isn't it?
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Blockchain mining is a specific and specialized program. It is more or less, a type of database with several modifications. This complex process can’t be executed in personal desktops or laptops.
A strong software and database are required to run it successfully. Though, the mining process varies from network to network. It depends on nodes and chains of computer networks. But broadly, mining is classified in three main categories:
Types of blockchain mining
As the name suggests, this type of mining is generally carried out by an individual. An individual can register himself as a miner.
The process of individual mining is quite simple, it starts with a transaction, and as soon as a transaction occurs, a mathematical equation is sent to all individual miners of the blockchain.
The one who solves it first is rewarded. After that, the rest of miners validate the decrypted solution. If verified, it is added to the blockchain.
What happens in a car-pool, when a group of people go to the same destination? Pool mining is similar to the car-pool system. Here a group of miners work together to verify a transaction.
The type is preferable for complex data structures. The group of miners together act as a team. The reward earned is distributed equally among all the members.
Cloud mining is a hassle-free type of mining. It eradicates the need for systems and software. There are certain shortcomings of cloud mining. There are restrictions in software upgrades and thus in the verification process too.
Though cloud mining guarantees rewards, they demand an operational charge. After deducting the operational charge, the value of reward reduces.
In particular, bitcoin miners are awarded in terms of bitcoins. Blockchain miners don’t have a specific authority granting them payments. They basically earn from intermediate transactions. After deducting electricity charges and pool charges, a full-time blockchain miner can earn up to $54,000 per annum.
This news article will help you to further understand the concept, blockchain mining as a full-time job.
For executing a profitable bitcoin mining, trust the following guidelines:
A secure bitcoin wallet: Obtain a secure encrypted wallet and deposit your bitcoin there. Enable two-factor authentication and restrict its access.
Choose minimal cloud mining package: Choose a cloud mining package that has low operational charges.
Choose reliant pool members: While pool mining, choose a reliable team member, costing negotiable operational charges.
Withdraw back safely: After mining withdraw your money back to your wallet to ensure security.
Advantages of blockchain mining
Secured Network: As mentioned earlier, the blockchain mining system has never been hacked. This shows how stable and secure it is. Pool mining and cloud mining increase the network security more than individual mining. Miners work together in blockchain, this increases the safety of a blockchain network.
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Validated Transactions: With no control from a central authority cryptocurrency could be a fraud. Blockchain mining is an authentication factor of the network. The transactions are validated by an experienced miner.
Confirmed and verified results: Whatever data is in the blockchain is totally verified. The miners other than the rewarded one, verify his input. Once the transaction is approved by all, it becomes a part of the blockchain.
Few people consider blockchain mining as a shortcut to make money. But honestly, there are no shortcuts to success. Blockchain mining requires mental ability and understanding of algorithms too. But yes, there are a few tricks and types as discussed above. If you are looking to be a blockchain miner, Analytics steps wish you luck!
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