WHAT IS MINING?





Currently in the fiduciary system of traditional currencies, such as the Euro, Dollar, governments simply print more money when they need it. But as for crypto-coins, money can not be printed - it is discovered. Thousands of computers around the world "mining" coins competing with each other over the internet, such mining becomes more difficult because the system itself increases the complexity of your algorithm.


Each currency has its own mining system, but all connected to blockchain this happens through a software developed specifically to mine that currency usually through super computers. The main concern of miners today has been with the energy costs that become very large because of the use of this equipment.

The mining of the criptomoedas are not infinite but have a limit number of emission this number has already been predetermined in the very creation of the currency, for example Bitcoin can issue up to 21 million of coins when issuing this quantity of currencies, then the mining of that currency is over.

The miner not only helps in the creation of the crypto-currency but also in the verification of the entire network of transactions, but this is subject to another moment.

Today we have three types of mining ie three different systems to mine crypto coins each coin chooses its technology which type to use:



PoW (Proof of Work)


The most well-known form of mining is PoW, used in Bitcoin. The process involves taking the Encrypted Hash Function (in the case of Bitcoin the SHA-256 algorithm is used) from the last block of Blockchain, adding new transactions and resolving a new encrypted function. Resolving the function would be the job, hence the name PoW, Work Proof.

It is easy to check if the result of the function is correct, but very difficult, almost impossible to solve, so you have to kick until you get it right. Thus, the computational force of the CPU (Central Processing Unit) was initially used for the attempts, and later the GPU (Graphic Processing Unit) was used. Nowadays more sophisticated equipment called ASIC (Application-specific Integrated Circuit) developed specifically for this purpose is used.


Whoever resolves the role will be the creator of the next block and will receive a reward beyond the fees included in the transactions processed in it. Once a block is settled and accepted by the decentralized network, the next block starts running.

The PoW is heavily criticized because of the high power consumption. But due to the difficulty of this process, it is undoubtedly the most secure Blockchain.


Examples of coins that use the PoW are: BTC, LTC, ETC, ETH * (ETH is planned to switch from PoW to PoS)


PoS (Proof of Stake)


The PoS mining form uses a random lottery to decide who will be the creator of the next block. In this model the creative potential must already have assets in the specific currency and those who have more coins are more likely to be the creator / raffle. It is necessary to allocate a quantity of coins to this process and if you try to compromise or change the block you will lose your coins. This in theory guarantees the integrity of the participants.

In the PoS this process is called a forged block and not mined as in the case of PoW.

There are different currencies that use this consensus algorithm and various forms of PoS as well. In some, the new currencies are proportionally proportional to the existing currencies, in others all currencies have been pre-created so each new block does not give a reward, the creator only receives transaction fees processed in that block.

Compared to PoW, the PoS is much more efficient in terms of energy consumption, since it does not require computational force to solve the algorithm.

Examples of coins that use PoS are: NXT, BLK, PIVX.




PoC (Proof of Capacity)


Finally there is the form of mining PoC, much less known and used, in this case space is used in the HD of the miner as proof of capacity. It's similar to PoS because it's a draw, but in that case the more space in the HD available the greater chance of being the creator of the next block. Since it uses very little energy, it is considered the greenest option among the 3.

An example of a currency that uses PoC is ATMCASH, BURST.



In order to be able to mine, it is enough to have the mining software generally available on the coin site itself, and run on an appropriate machine, this system is not paid the miner's investment is in his own equipment, the better the more he can mine.

Today with the global energy crises, mining has been moving towards systems with low energy expenditure and as the system offered by the capacity test.

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