CoinFlip Takes a Look at Crypto Miners
If you’ve taken your first steps towards understanding cryptocurrency, you’ve probably heard references to “mining” and “miners” thrown around quite a bit, and for good reason. The role of miners and mining is key to the overall success and stability of cryptocurrencies as a whole.
Here, we’ll take a closer look on who miners are, what they do, and why they’re so key to the world of crypto.
Who Are Miners?
To put it simply: anyone can be a miner, though there are certain requirements to fulfill before you can get started.
Let’s back up a bit. Cryptocurrency systems can be seen as a series of transactions that require confirmation before they are set. Miners do said confirmation – once a transaction is confirmed by a miner, it has become a part of the blockchain and is irreversible. This is fundamental to the function of cryptocurrency; thus, the overall viability of the system is contingent on the maintenance performed by the miners.
What Do They Do?
As mentioned above, miners are the people who ensure that cryptocurrency transactions are confirmed. But how do they do that, exactly? First, they have to find “a product of a cryptographic function that connects the new block with its predecessor,” which is called the proof-of-work. This is the basis of a cryptologic puzzle the miners compete to solve, and upon finding a solution, build blocks to add it to the blockchain.
In simpler terms, cryptocurrency is based on information, and miner’s “proof-of-work” is the proof that certain computational methods were completed.
But why is this so important? As stated earlier, prior to confirmation, a transaction is pending, which means it can be forged or reversed. Following confirmation, it can no longer be altered, and becomes a part of the blockchain. This lack of alteration is crucial because cryptocurrency is based on a decentralized system, which prevents any one person or institution from controlling the currency.
So…What’s in It for the Miners? As the old saying goes, you don’t get something for nothing. Obviously, worthwhile motivation is at the core of why the miners take care of the blockchain in the first place. Satoshi Nakamoto, the anonymous creator of the cryptocurrency Bitcoin, set the aforementioned rule that was later adopted by other forms of cryptocurrency that miners needed to work to find a solution in order to confirm a transaction, and in finding the solution, miners would be rewarded in Bitcoin. Thus, more generally: for each proof-of-work miners complete – that is, each transaction they confirm – the miners earn a vote and have the option of being paid in cryptocurrency. Now That I Understand Who Miners Are, Is It Worthwhile Becoming One? It could be! Whether or not you could actually receive enough cryptocurrency processing transactions as a miner to make it worth your time depends on what kind of hardware you have. Sophisticated miners often buy expensive processors and graphics cards for their custom-built computers to process as many transactions as possible and receive as much cryptocurrency as possible – though this has brought up the concern of electricity cost as a potential pitfall of mining for cryptocurrency. A good benchmark is if your computer can handle gaming, it’s worth considering becoming a miner. And even if you have no desire to become one of the miners, you can always buy cryptocurrency and invest in the blockchain that way.
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