How mining earning works
What is Mining?
Instead of having one central authority that secures and controls the money supply (like most governments do for their national currencies), cryptocurrencies spreads this work across a network of “miners”. Miners assemble all new transactions appearing on the cryptocurrencies network into large bundles called blocks, which collectively constitute an authoritative record of all transactions ever made, the blockchain.
The way cryptocurrency makes sure there is only one blockchain is by making blocks really hard to produce. So instead of just being able to make blocks at will, miners have to produce acryptographic hash of the block that meets certain criteria, and the only way to find one is to try computing many of them until you get lucky and find one that works. This process is referred to as hashing. The miner that successfully creates a block is rewarded with 50 freshly minted litecoins.
Every few days, the difficulty of the criteria for the hash is adjusted based on how frequently blocks are appearing, so more competition between miners equals more work needed to find a block. This network difficulty, so called because it is the same for all miners, can be quantified by a number; right now, it is 41,264.
For most users of cryptocurrencies it is not necessary to understand how the mining process in itself works, but it is fundamentally important to understand that there is a mining process to create the virtual currency. Unlike currencies as we know them today where governments and banks can simply choose to print unlimited amounts (Not saying they do so, just a point), cryptocurrencies has to be mined by users using a mining program that solves sophisticated algorithms in order to release blocks of coins that can go into circulation.
This is part that makes the cryptocurrencies unique, as there is nobody who can simply press a button and get unlimited coins. Everybody can compete equally while mining coins, by buying the same equipment as one another. The different cryptocurrencies uses different types of algorithms in order for the blocks to be released, but in general it is not something that you should be using your computer to do as it takes specific equipment to mine and it will provide you with a huge electricity bill compared to the profits you will be able to make from it. It is also worth noting that the more coins that has been mined from a cryptocurrency, the more difficult it gets to release new blocks and thus get new coins. The algorithms has been made this way, to ensure that all the coins would not be mined instantly and leave room for the currency to stabilize and not be over populated from the beginning, thus not having any significant value for anyone besides the miners.
Cryptocurrencies have a limited amount of coins that can be mined and once they have all been mined, there will be no more of them being created as it is virtually impossible. This means that when all 21 million Bitcoins has been mined, they will be the only coins in circulation forever and no further Bitcoins will be added to the system. Same goes for all other cryptocurrencies, which is why many people see them as a good alternative to the currencies we have today that is based on nothing but goodwill between countries in order to ensure the value of the currency doesn’t fluctuate.
There are two simple steps in the mining process for cryptocurrencies, which we will be describing below as user-friendly as possible. Please bear in mind that we do need to use some technical terms in order to correctly describe how it works.
Please be aware that it is currently quite difficult to mine coins for a profit, as equipment, electricity and so on will cost you more than to simply buy a Bitcoin or similar.
The Most Popular Cryptocurrencies:
- 1. Bitcoin: It is the most popular Cryptocurrency over the world but it is the hardest one to mine due to the introduction of new hardwares optimised to mine 1000 times faster than our computers. We advise you to avoid mining this Cryptocurrency if you have not the appropriate hardware.
- 2. Litecoin: This Cryptocurrency is very popular and can be mined by high end computers to get the maximum profit, we advise you to mine this Cryptocurrency if you have a computer with a brand new ATI or Nvidia display card as theses cards are more powerful than our CPU , I3, I5 and I7 CPUs offer an average earning if you want to try.
- 3. Dogecoin: This Cryptocurrency is less popular than the 2 first ones but it is easier to mine it with even a CPU , but if you have an ATI or Nvidia display card the result will be very good.
What is needed to Start mining?
1. A powerful computer. (External GPU recommended)
2. A wallet from one Cryptocurrency that you want to mine.
3. A mining Pool
What are mining Pools?
Basically you can start mining without mining pool but the earning will be hazardous due to low chances to find a wining block in the complex algorithm, this is why mining Pools exist, they consist on gathering thousands of miners to work with one hand to participate in the mining effort and find blocks easily then share the profit to community of miners, the earning is more stable, some mining pools offer their own mining software and you have just to signup with them , mining Pools manage the withdrawals of earning and send them to you to your cryptocurrency or other methods of payouts depending to which pool you have signed up.
What Software to Use?
If you have decided to do some CPU mining (just for the fun of it, since as we’ve seen above you are not going to make any profit), you should download Pooler’s cpuminer. GPU mining is considerably harder to set up, but if you really want to give it a try we suggest using either sgminer or BFGminer for ATI cards, and cudaMiner for Nvidia cards. You can use our configuration wizard to generate a starter script for your miner. Some Mining pools deliver their own softwares.