Mining cryptocurrency – what is it and how to start?

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One of the varieties of earnings on cryptocurrency is mining – mining amount of cryptocoins. Many have heard about what a cryptocurrency is born, thanks to some complex calculations that are not less complex equipment that eats a lot of electricity. In this article we will talk about what exactly is calculate device, and how cryptocurrency network from the inside. You know, for what pay miners and what they need in infrastructure kryptonite.

The device of the cryptocurrency network

In order to understand what is bitcoin mining and should understand how the cryptocurrency network is arranged inside. A decentralized system of secure transfers, not having a controller and some external supports infrastructure itself fully adjust. That is, the set of algorithms ensures that the system was not compromised and its functioning is not interrupted because of any failures. In addition, the algorithms control the security of transactions and the issue (issuance) of the additional amount of cryptocoins.

The operation of the cryptocurrency network based on Blockchain technology (block chain), and based on duplicating blocks of information, each block has its hash sum, i.e. the unique identifier.

This ID is signed by information contained in the block, and if someone tries to make changes in this block, the system will not accept them as identifiers will not match.

When transaction a new block that continues the chain with the story further movement of the coins, and each new block is a confirmation of validity (i.e. “legitimacy”).

Why we need miners

Mining is the process of decriptive and calculate the digital signature of each block, that is, the calculation cryptogenic.

The decentralized nature of the cryptocurrency network involves, among other things, the lack of servers, which would serve the system while running programs and storing data. The blockchain exists simultaneously on the computers of millions of users that carry out a new transaction, thus creating new units. However, verification of many transactions need huge power, able to quickly process large volumes of data.

Cryptosystem we need to all processes not just work perfectly but also did not give a failure, and wasn’t forced.

Here enter into the work of the miners, who, launching their installations and providing their facilities for the calculations, are like employees of the system, ensuring the work of each stage.

Regardless of how much one circuit block areas, the system skips only those transactions over which the working miners.

That is, their presence within the system provides confirmation of transactions, network security in terms of forgery of blocks, security in terms of external attacks, as well as miners provide the most important is the decentralization of the entire network. The more users you attract the cryptocurrency, the greater the degree of security inherent in the very process of production and storage savings amount of cryptocoins.

Features of “work and pay”. The emission amount of cryptocoins

After the miner completed its work, it receives a reward amount of cryptocoins – the computer has performed the action, and the owner received payment.

When closing a block the light appears a new coin, which is credited to the miner’s purse. Thus, by mining is not only transaction processing, but also the addition of a new amount of cryptocoins.

However, this does not mean that after hashing each block, a miner will immediately receive payment. The system gives you your coins only for finding the “correct” hashes – specific to conditions, relatively speaking, here are the rules of statistics:

The more work done, the more closed “beautiful” blocks, therefore, received more coins.

In mining cryptocurrency, the computer will have to process a huge number of data sets in order to obtain from them a few coins. The same thing happens in the extraction of physical gold – you need to dig a lot of empty rocks, then again the same wash, and then get a small piece of the precious metal.

Regulation of amount of amount of cryptocoins

When creating Bocana was founded algorithms that adjust the number of appearance of new amount of cryptocoins. This is to ensure the stability of cryptocurrencies, and for other purposes, lies in the plane of the economy (this will be discussed in a separate article). We are now much more important to figure out how this happens technically.

Each unit has a certain complexity of its computation which grows as you increase the number of coins in the network.

The higher this parameter is, the longer it will happen by the time the processing array of the computer that is mining automatically becomes less profitable. In the network Bitcoin difficulty changes every 2016 blocks. That is, it was exactly as many arrays with the same complexity, then there is exactly the same but with a different.

Remuneration for the creation and calculation of the block changes every four years.

When Bitcoin was only created and launched, then one indoor unit paid 50 bitcoins. After 4 years the fee is reduced by half, after 4 years half again, and so it will continue until, until the last coin mined in advance of the planned amount. It also systematically reduces the attractiveness of mining.

Story: how did you start mining

Back in 2009, when bitcoin mining and almost no one knew anything, the data blocks were so simple, the calculations could be “calculate with a pencil on a piece of paper with a calculator”. The first miners mined bitcoins on conventional processors of their computers – CPU. It lasted long enough, two and a half years there was no change, and then bitcoin was worth only a few cents, think about the huge earnings on cryptocurrency at the time was just ridiculous.

Starting in 2011, the miners came up with a new way of mining cryptocurrency that was based on the fact to use as the core graphics processor – the GPU.

The fact that the inside of cards, especially very powerful, so to say top, a multitude of individual processors, each of which can itself process the blocks in the blockchain.

That is, the division of the mining process on multiple threads, whereby is achieved the acceleration of this process. However, increased computational complexity, required more and more hardware capacity in order to obtain some profit.

The era of specialized devices: the first farm

After this, some miners are smart enough to collect the computers, capable to work with multiple graphics cards at once. Further – more, going to whole racks of video cards that worked synchronously on a single processor, that is like a normal computer, but with many GPU cores.

Combining these racks, the miners received entire farm is another concept in mining.

That is, in itself, the farm – lots of computer equipment for mining.

To change the hashing on the GPU (although it is used now), came to an FPGA modules. They, like the graphics card, could work mnogopotochnoy, but was treated with more data. But after a year of use on the markets came the “asik” (ASIC). This integrated software modules that can work with only one task (calculations for the cryptocurrency network), but they perform much faster than the previous generation of gadgets. Remained still, someone mines a graphics card, and someone uses “Ashiki”.

The end of an era mass solo-mining

At a time when mine solo on your own computer became unprofitable, the computational complexity is increased so that the chances in the foreseeable future to find “beautiful” hash is reduced to zero. The miners, who had no money to purchase special equipment, began to band together in “pools” connected to the server, which distributes tasks for each computer.

There are special services, which included single computers into a powerful network capable of handling a lot of data.

After receiving rewards, such services of the money want it as a fee for services, and the rest is distributed among members of the network, according to the capacity offered by each of them.

You can do without buying equipment? Cloud mining

Let’s imagine that you have no money to purchase equipment on the same video card or “Asik”. Yes, and to put such piles of computer hardware nowhere.

What to do? You can use cloud mining – just rent the equipment working time someone.

For example, there is a data center where a certain time computing equipment is idle, and it is as if you are renting, rather, renting its power in any amount, even 1 Euro, at least 10,000 tenge, at least 100 rubles.

The devices themselves are somewhere in data centres remotely you mining with them using the cryptocurrency. Maintenance and electricity deals trained staff, and the tenant sees the results of work of the equipment on the monitor.

But do not think that if you use such a service without the necessary knowledge, then you seriously rich. At least to recapture the money, you need to correctly calculate risks, because the exchange rate of the cryptocurrency is constantly changing, and profits are falling every few months (increased computational complexity). It may happen that you just will not be able to earn at least as much as invested. That is why you should think about the strategy of mining advance, and to examine the economic aspects of cryptosphere.

Program for mining

For cryptocurrency mining in addition to the equipment it is necessary to have programs that actually carry out the calculations using computer resources.

There are programs for mining on graphics cards PC in Asilah special software components that are usually installed at the factory, however it can be changed. There are also viral miners – such programmes are launched and work without the knowledge of the PC owner, bringing the income for the distributors of the software. In the case of mining in a pool or cloud hashing program are provided appropriate services.

Among the most popular programs for mining include the following:

  • CGMiner;
  • GUImine;
  • Nheqminer;
  • MinerGate;
  • Bitcoin Core;
  • Awesome Miner.

You can learn more about programs for mining here.

Conclusion: What will happen to mining?

In conclusion, I would like to give a few tips for those who decided to engage in mining, but previously did nothing of the sort. Remember that deception is everywhere, and if you decide to go to cloud resources, you may well run the risk of running into scams and lose money.

So you should only trust resources with good rating and the reviews that are already operating successfully within prodolzhitelnost time.

Perhaps the best option would be to save money and buy yourself a cheap ASIC, for example on AliExpress, for home use. It will not be powerful, but personally yours and nobody else’s, working with the asik, you will constantly be practiced in the mining and to gain experience. It is not excluded that then you will buy more serious instrument, the income will grow and you will have more experienced in this field. The main thing – not to hurry, to study the materials, read news related to cryptosphere. And if you learn to predict the course of bitcoin, and the mining that you will be bringing in two or even three times more income.

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