Cryptocurrency mining, such as that of Bitcoin, is a process in which miners use computers to solve complex mathematical problems and validate transactions on the blockchain. The reward for this work is new cryptocurrency (like Bitcoin) and transaction fees.
The mining process, in detail:
1. Adding transactions to blocks:
Cryptocurrency transactions are grouped into blocks.
2. The cryptographic problem:
Miners compete to solve a complex cryptographic problem (a hash) that is included in each block.
3. Validation and rewards:
The first miner to solve the problem transmits it to the network, and if it is valid, the new block is added to the blockchain and the miner receives a reward.
4. Increased difficulty:
As more miners join, the difficulty of the cryptographic problems increases, requiring more computational power to find a solution.
To better understand mining:
Proof of Work (PoW):
The most common method of mining, where miners compete to solve mathematical problems.
Individual miners vs. Mining pools:
Individual miners usually use their own hardware and software, while mining pools combine the computational power of many miners to increase the chances of finding solutions.
Impact on security:
Mining helps protect the blockchain from attacks by ensuring that transactions are valid and that the blockchain cannot be manipulated.
