Usually, we understand mining as unearthing Gold and other valuable tangible materials. But now mining word is being used for cryptocurrencies such BitCoin and Ether as well. A cryptocurrency is a digital currency without any central authority. Unlike fiat currency, the BitCoin and alike are not created by government or any other regulatory body. This aspect was one of the reasons BitCoin and other cryptocurrencies became widely used. Every person wanted to have a BitCoin or fragments of it due to its increasing price and value in exchange for fiat currency. But this hype also attracted scammers and money laundering activities which forced many countries such as USA, Canada, China, etc. to ban the exchange of cryptocurrencies for fiat currency. But many countries are accepting cryptocurrencies in exchange for other valuables and still owning just a part of BitCoin is welcoming by many industry leaders in the economy.
Bitcoin is backed by the emerging technology known as blockchain. The blockchain is an open source, decentralized ledger which offers unique features which were not offered collectively by any other technology. These features are immutability of information, peer-to-peer network, Anonymity of participants and no regulatory authority to control the flow. The participants with joint efforts assist the automatic workflow of the blockchain.
When one of the participants adds a piece of information in a block, the data is calculated through a hash function to looks like a random combination of alphabets and number reaching up to 64 digits. This hash function is responsible for immutability of that data. Now any participants cannot add information to chain casually. All or more than 51% of participants need to check and lock the hash function for its accuracy and strength. This process is known technically as “Proof of work.” Whoever verifies and seals the block first among participants earn a BitCoin or a cryptocurrency. This process is known as mining the cryptocurrency.
Over the last decade, mining a BitCoin had become a difficult task. Before the worldwide popularity when BitCoin had a value of 20,000 BitCoin for a dollar; A desktop computer was enough to mine and perform hash functions. But another silent feature of BitCoin based blockchain is everytime a block is added, the computing power for next block of information increases itself. The hardware requirements to mine a BitCoin has increased and now only blockchain development company or Cryptocurrency mining company can afford the equipment required.
Moreover, blockchain technology is an open source and developing technology that’s how other cryptocurrencies also emerged. Few of the popular ones right now which offers excellent value in the market are LiteCoin, Ether, Ripple, etc. BitCoin is considered the Gold of cryptocurrency market, Ether and LiteCoin are considered Silver.
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