How to mine cryptocurrencies

It is likely that you have considered for this 2018 to start a Bitcoin business once and for all. So, you may also be interested in learning about the process of mining cryptocurrencies.

The cryptocurrency mining is related to the chain of blocks and the mining system that it uses, depending on the currency that is desired to be mined. Thus, it is possible to find the Prook of Work system  or Proof of Work, and the system of Proof of Participation or Proof of Stake.

These mining systems, among others, have hardware and equipment for exploitation that allow other users to join the mining network.

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The Proof of Work system

In the case of this Proof of Work system, the miners use processors, either specialized or commercial, with the purpose of finding a solution to the hash riddles, which are no more than mathematical dilemmas that allow knowing the degree of difficulty of the process of mined, this will also affect the kind of chip that should be used.

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For example, for Bitcoin mining, computer processors (CPU) were usually used at the beginning, then programmable processors (FPGA) were used and when they were no longer enough, video card (GPU) chips were used in series as they are currently used to mine Ethereum . However, with the increase in the level of difficulty of the Bitcoin network,  all these types of mining have now fallen into disuse because they are insufficient, so that only specialized mining hardware (ASIC) is now used.

When it comes to mining with GPU, FPGA, and even with CPU, the miners needed to configure the chips in the computers to be able to have some computing power, according to the processing power required by the network to which the currency belongs. they are undermining, however with the use of ASIC miners, the computing power of the equipment is fully employed in Bitcoin mining .

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It is also necessary to have software to maintain the interaction through the network of the cryptocurrency that they mine and thus be able to get block jobs and send the solutions they find.

If the mining is with ASICs it is less complex, since these, the Integrated Application Specific Circuits, are integrated in electronic cards, which are connected to another card that has the necessary mining software.

It only takes the miner part of a power source, which can be 600 to 2000 watts, and have the software configured to join the cryptocurrency network that you want to mine and start working, in addition to that yes, with the correct measures for its operation as a space that is not enclosed and that allows the free circulation of air.

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Many of the currencies that are in the market employ the PoW system, which possess varied encryption algorithms. For example, just as  Bitcoin  uses  SHA 256 ,  Litecoin uses Scrypt , Ethereum uses Ethash , and so on for each type of currency.

The Proof of Stake system

The Proof of Stake mining system , or Participation Test, is another alternative to the PoW, since each cryptocurrency is assigned a value, which is related to the amount of coins that the miner may have, provided that elapsed a period of time without making use of the currency in question.

As long as the currency is not used, its value will increase. On the other hand, when used, its value will be restarted.

PeerCoin , is a type of cryptocurrency that uses this algorithm, and is based on a combination of PoW and PoS. There are also others that use this algorithm system, such as Novacoin , Nxt , Diamond , Qubits , among others.

The mining groups

Also known as  mining pools , is another of the alternatives used by miners to group their resources and share the computing power. In this case, the reward is distributed equally, considering the work they did to solve a block of operations.

This type of mining began as the mining activity became more complex at the time of getting a block, so they decided to pool resources in order to obtain blocks more quickly.

All these miners are grouped and pursue the same goal: to work on obtaining the same block. To do this, they use the cryptocurrency address of the miner who is the team manager.

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This manager fulfills the functions of publishing the blocks on which they will work, as well as is responsible for distributing the profits to each one of the participants, taking into consideration the work that each one of them carried out.

Manager’s earnings include a percentage, usually from 0 to 4%, and is known as a pool fee , or group fee. In 2010 the first mining group, Slushpool , joined , and until now it has become a regular way of doing mining.

This mining system is also used in the mining of many cryptocurrencies, such as Litecoin , Ethereum , Dash , or Bitcoin , among others.

This mining system offers the advantage of being able to undermine and reduce economic losses, so that lesser miners can be part of it and keep the software updated, while still being profitable.

Among its disadvantages is the fact that the miners have little capacity to exercise votes when the network undergoes changes and the network is centralized.

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