The world of cryptocurrencies is quite a mystery looking from the outsider’s perspective. From Crypto coins and transactions to blockchains, there are a lot of new words and terms to get familiar with. All that can be confusing sometimes, especially for the ones that are new to the game. In this article, we want to give you some insight on how to start bitcoin mining. But first, let’s tackle some of the terms.
The word Crypto is derived from the Greek word kruptos, meaning hidden. The term was picked quite accurately, as Cryptos do have certain mystical characteristics. In order to know about them, you need to have at least some knowledge of the world of technology. Cryptos are basically digital/virtual money that can be traded, saved, and invested. All transactions and relations within the crypto market are registered in something called a blockchain.
You can imagine the blockchain as an accountant’s book of data on all transactions ever made via one of the cryptos. Each currency has its own blockchain. Now imagine you simply can’t scratch or erase any of the entries in your book. That’s how blockchains work – no data can be changed nor erased – everything stays in the base.
What is also important to state regarding blockchains is that they are completely decentralized. To explain further, let’s give a simple example. Your bank is the opposite of a blockchain when it comes to data collecting and saving. The bank has the “power” to know all your transactions and keep the info on them in a safe space.
Blockchain, on the other hand, has decentralized this power and split it among a bunch of regular people, and volunteers, which are called nodes. So now, these nodes have the info on transactions that happen in the crypto market. Every time a transaction is made, every list of data in every node’s computer refreshes, and everyone gets the info.
If you want to refresh your knowledge on the basic crypto terminology, check this article by Time’s partner NextAdvisor.
What is mining and how to mine crypto
Now when we are up-to-date with basic terms, we want to introduce a new one. It’s called mining, as it requires certain “digging” for the cryptos. People who do the “digging” are called miners. They are responsible for making transactions happen.
How does mining bitcoin work
Let’s imagine you are a miner. Someone wants to send 100$ to a friend, and they initiate the payment request. What happens next is that every miner in the business gets the info that someone wants to make a transaction. As miners have access to the data, the first step is to check if the person has enough funds to complete the transaction. If they do, now it’s game on for the miners. The goal for you, as the miner is to find a number and “write” the transaction by adding it as another block in the chain. This number is like a part of the chain and it needs to fit like a puzzle in order for the transaction to be successful.
It’s not an easy task to find the number. It can’t be calculated, so you have to have the skills and time to find it. You and other miners are looking for the number by letting your computers generate random numbers and find the one that fits. This process usually lasts for around 10 minutes.
The first miner to get the right number validates the transaction. The miner now sends the right number to other miners so they can update their blockchain info. The one who solved the puzzle gets a reward in bitcoins. That’s why more and more people are interested in this part of the crypto game. But not without risks. Digging for coins uses massive amounts of power, so miners’ electricity bills can sky-rocket.
Prize coins come from two sources – the person who initiated the transaction pays a transaction fee which goes to the miner, and in the sole process of mining, new bitcoins emerge. This is the only way to generate more bitcoin, plus without the miners blockchain simply wouldn’t work. So now you can understand why this job is important and attractive to people in the business.
How to start bitcoin mining
The answer to how to start bitcoin mining can seem simple after reading the text above. There are tons and tons of articles like this that talk about mining. Without any desire to burst your bubble, it isn’t simple at all. Yes, anyone can be a miner, but what does that mean?
That means you’re gonna have to invest on multiple levels. The first and most important thing is a computer. You need a high-performance machine, designed almost exclusively for crypto mining (so-called crypto mining farm), and these machines aren’t cheap. Add the expenses for the electricity, and the small possibility of you being the one to “crack the code”, you may now ask yourself does this pay off at all. It surely does, or people wouldn’t do it anymore.
What most miners now do is conjoin forces. That’s right – miners join in so-called miner pools. Their computers work together to find the famous number. The more people in the pool, the bigger chance of generating the needed number. If a pool gets the number, the reward gets split between the members of the pool. So technically, the prize you get may be smaller, but there’s a bigger chance you’ll get it.
To wrap this up
We hope this article enlightened you in some way if you are thinking about joining the crypto miners. You have all the important information to make a strategy. Now you know about the opportunity to join forces with other miners to multiply the odds of getting the right number and winning the prize. We can just add that the miners are way more than money makers, they ensure the whole system works, so they are a huge and important part of the blockchain industry. Good luck and happy mining!