What is mining

Many cryptocurrencies are produced through “mining”. For people receiving these newly issued coins is like obtaining newly unearthed precious metal, like gold or silver, so it is called mining.

Mining is the process of using computer hardware to calculate and authenticate each transaction and obtain rewards. People who earn cryptocurrency through mining are called miners. Mining is like letting the miners of the entire network compete with each other to calculate a mathematical problem on this page of the ledger. Whoever calculates the answer first is equivalent to digging this block, and can broadcast to all the miners (nodes) “I succeeded.” And get a certain amount of coins as a reward.

But the process of solving the problem is not simple, miners need to find a string of specific numbers- hash value (Hash)-. This problem-solving method can be roughly understood as the SHA-256 function operation of the version number, the hash value of the previous page, the transaction address, the update time, the current difficulty and a random number. SHA-256 function operation (Secure Hash Algorithm 256) can encrypt a string of any length to obtain a 64-bit hexadecimal number.

Miners need to keep trying repeatedly until the mathematical problem is solved. Once someone has solved the problem, that person will get the right to add this new page (block) to the existing ledger (blocks). The other miners will come to verify whether his answer was correct. If more than 6 people confirm this answer, basically the content of the book transaction in the block is valid, and then the next new accounting process can be started.

Although the mining process will not stop, it does not mean that the cryptocurrency can be issued and mined indefinitely. Taking bitcoin as an example, there is a difficulty in mining to control its issuance speed and quantity. At the very beginning, the system stipulated that the first miner to complete this problem (block) can get 50 bitcoins plus the transfer fee; after that, the reward will be halved every 210,000 blocks (approximately 4 years) ), until around 2140, bitcoin will reach the mining limit of approximately 21 million.