The gold rush refers to the period when miners “rushed” into places where gold was found. Miners competed against each other to secure themselves a better mining place. But how is this related to cryptocurrency? When you find a new cryptocurrency instead of buying it, this is called “mining” the new cryptocurrency. There are a handful of types of cryptocurrency, but the most famous ones are Bitcoins. However, the process of mining them is similar in general.
Cryptocurrency became a notable trend as few people got rich by buying them cheaply and selling them at greater prices. As these financial activities brought in a significant amount of money, many people sparked in their interests regarding cryptocurrencies. I will introduce the most iconic and most used cryptocurrency: the Bitcoin.
First, you should familiarize yourself with the nodes. Commonly referred to as “miners,” nodes refer to components of the network that are in charge of sending, receiving, creating, and storing data. If you are using the internet, your PC is a node. Even though some nodes are defective or hacked, other parts of cryptocurrency are operable. To find a faulty node, “proof-of-work” is introduced. As Bitcoin is a peer-to-peer* network, people can make, receive, verify, and transmit the transactions done with or by Bitcoin. Miners are paid with new Bitcoin when the block of the transaction is successfully verified, which is called the proof-of-work. However, it involves cryptographic decoding.
Miners need to do this action quickly so that they can have better hardware over other miners. They usually use one but a room full of GPUs** to mine cryptocurrency, which makes the process costly. However, this maximizes miners’ efficiency, and it allows them to share their profit.
To summarize, mining cryptocurrency has become extremely popular, and now, many people are “rushing” into the mining industry as they are known to bring a considerable amount of money. To mine them, some people consolidate by using GPU systems to increase their efficiency. They also actively search to find and use high-end hardware. Despite all this complexity, do you still consider yourself starting mining?
*: Peer-to-peer is a system where users are responsible for using appropriate software and hardware to make valid transactions
**: GPU (Graphics Processing Units) are computer parts mainly used for 3D animations, gaming, or mining. Expensive ones can go over $1000.
By: Juno Kim