The most common way to obtain virtual currency, such as Bitcoin, is to open an account on an exchange and purchase it there.
However, did you know that there is a way to obtain virtual currency without purchasing it？
Through mining, you can receive bitcoins, a virtual currency, as a reward.
So, in this article, I will explain what mining is in detail.
I will also explain the blockchain mechanism, hash function, and Nance value used in the process.
Please read through to the end.
What is mining？
So, first of all, what is mining？
In a nutshell, mining is the process of approving transaction records.
So what is it, and how is it done?
Let’s take a closer look at the details.
First, virtual currencies use a technology called “blockchain.
All transaction records are recorded in the blockchain.
In a blockchain, each transaction is treated as a single block, which is connected like a chain.
A new block is created about every 10 minutes, and transaction records can be connected to the chain by approving them.
This approval process is called mining.
Mining is specifically the process of entering various values into a hash function.
So, how do you approve a transaction record?
In order to do so, we first need to know what a block is.
A block consists of “transaction data”, “hash value of the previous block”, and “nance value”.
These three are then input into a hash function to calculate a new hash value.
The hash function is a function that outputs a random value for the input value.
The value output in this case is called the hash value.
“Transaction data”, “hash value of the previous block”, and “Nance value” are put into the hash function, and the calculated hash value If the calculated hash value satisfies the “conditions,” the mining is successful and the transaction record is approved.
If the hash value meets the “conditions,” the mining is successful and the transaction record is approved, and you get bitcoins as a reward.
It is very difficult to meet this condition, and multiple calculations are required in order to meet the condition.
In order to do so, you have to change the Nance value in various ways and input it into the hash function multiple times to find a hash value that satisfies the condition.
The condition is “a fixed number of leading zeros”.
“How many zeros are lined up is randomly determined, for example, it may be 18.
For example, the number of digits lined up in a row may vary randomly, but it can be as many as 18.
In other words, we have to calculate a completely random value multiple times to get a value with 18 zeros lined up from the beginning.
This requires an enormous amount of calculation.
Thus, the hash value is calculated over and over again, and when a value that satisfies the conditions is found, the transaction record can be approved.
And you get bitcoins as a reward for doing that huge amount of calculation.
There are three methods of mining
There are three main methods of mining.
Here is an explanation of the characteristics of each.
Solo mining
This is a method in which an individual prepares a computer and mines alone.
In solo mining, you mine alone, so naturally you get all the rewards by yourself.
On the other hand, it requires knowledge of computers, and competition is very fierce because many people have joined the mining industry.
Since people from all over the world are running multiple computers and participating in mining, it has become very difficult for individuals to participate in it and get rewarded.
Pool mining
In contrast to solo mining, where one person mines alone, pool mining is where multiple people work together to mine.
If the mining is successful, the administrator of the group receives a reward, which is then distributed to the participants.
Since the participants work together to mine, the reward that you receive is lower than what you would receive in solo mining, but the success rate is higher.
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Cloud mining
Cloud mining is a method of earning rewards by investing in “mining companies (=miner companies).
It’s like investing in a company and getting dividends.
You don’t need to prepare any equipment like in solo mining or pool mining to get the rewards of mining.
With the increasing competition in mining, cloud mining is the most realistic way for individuals to get started.
If you are interested in this service, please check it out.
The following mining method is easy and highly recommended.
Summary
This is all about mining.
To understand mining, it is essential to understand the contents of the blockchain used in virtual currencies.
The fact that a block consists of “transaction data,” “hash value of the previous block,” and “Nance value” is very important to understand mining.
Mining is the process of inputting these values into a hash function and calculating them until the conditions are met.
What do you think?
I hope this article has helped you understand mining a little bit better.
Thank you for reading to the end.
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