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NEW DELHI: Speaking in layman’s parlance, cryptocurrencies do not exist in any physical form.
There are no minted coins, currency notes, credit cards, or debit cards involved during crypto transactions. But they have value just like any other legal tender of any country and can be exchanged within groups or individuals. And now, you can also buy goods and services with it for certain purchases.
Just like loose change, it can be bought, sold or exchanged in bits and parts.
Where do they come from?
To put it simply, cryptocurrencies are mined through an arithmetic process using codes through mining with a virtual ‘mining rig’ that uses a combination of hardware and software designed by genius coders.
Cryptocurrency mining is painstaking, expensive and could also be very sporadically and minimally rewarding. But the new generation techies have nonetheless developed a penchant for crypto mining.
Mining can earn you cryptos, but the investment will be in terms of physical money for equipment, software and HR.
Crypto miners get coins out of their research, investment in terms of money and labour. They develop blocks of various exchanges and transactions that are added to the blockchain in terms of value. These are further exchangeable between individuals, groups and crypto exchanges.
The rewards of mining are paid to the miner or developer who uses a series of intellectual property traits to discover a solution to complex puzzle manoeuvres.
A graphics processing unit and an application-specific integrated circuit are the basic tools for starting up a coin mine. It is also known in common terminology as a ‘mining rig’.
The primary draw for many miners is the prospect of being rewarded with a cryptocoin.
However, miners are not always there to trade in crypto. The crypto coins or currency can be bought through paying value or by investing in fiat currency; you can trade it on an exchange like Zebpay and WazirX of India or other exchanges.
One can buy one type of crypto using another cryptocurrency or through local currency. One can exchange Bitcoin with Ethereum, Dogecoin or any other cryptocurrency.
How to mine a cryptocurrency
Bitcoin’s founder, Satoshi Nakamoto, whose identity is still unknown, is accredited for the ethical mining and creation of Bitcoin. Because of the platform created by Nakamoto, Bitcoin has been valued highly.
Generally, there is hardly anybody who has traded in Bitcoin and lost money, however, depending on the rise and fall in prices investors in Bitcoin did have their ups and downs.
Miners get paid for their auditing talents too. These auditors do the work of verifying the legitimacy of cryptocurrencies and their transactions.
Interestingly, with cryptocurrencies, there is no counterfeit. Neither is there a situation that we know as inflation in the case of legal tender.
Blocks are created out of 1 MB space, which verifies 1 MB worth of transactions which enables the miner to earn equivalent value to the cryptocurrency by marketing. OneMB of transactions can theoretically be equivalent to one transaction (though this is not at all common) or several thousand. It depends on how much data the transactions take up.
Apart from the crypto coins mined through the first block, which was created by Nakamoto, every single one of those bitcoins were created by miners. In the absence of miners, Bitcoin or any other cryptocurrency worth its salt will survive as a mere network that would still exist and be usable even if there were no miners.
Though it will take up the prices of the coins as there will be no mining activity and hence no new coins, pretty much like the minting of legal currency in economies the world over.
Just like the gold standard that the central banks of many countries follow, many crypto coins have a cap on production. Bitcoin leads the way with a cap of 21 million coins.
There are no minted coins, currency notes, credit cards, or debit cards involved during crypto transactions. But they have value just like any other legal tender of any country and can be exchanged within groups or individuals. And now, you can also buy goods and services with it for certain purchases.
Just like loose change, it can be bought, sold or exchanged in bits and parts.
Where do they come from?
To put it simply, cryptocurrencies are mined through an arithmetic process using codes through mining with a virtual ‘mining rig’ that uses a combination of hardware and software designed by genius coders.
Cryptocurrency mining is painstaking, expensive and could also be very sporadically and minimally rewarding. But the new generation techies have nonetheless developed a penchant for crypto mining.
Mining can earn you cryptos, but the investment will be in terms of physical money for equipment, software and HR.
Crypto miners get coins out of their research, investment in terms of money and labour. They develop blocks of various exchanges and transactions that are added to the blockchain in terms of value. These are further exchangeable between individuals, groups and crypto exchanges.
The rewards of mining are paid to the miner or developer who uses a series of intellectual property traits to discover a solution to complex puzzle manoeuvres.
A graphics processing unit and an application-specific integrated circuit are the basic tools for starting up a coin mine. It is also known in common terminology as a ‘mining rig’.
The primary draw for many miners is the prospect of being rewarded with a cryptocoin.
However, miners are not always there to trade in crypto. The crypto coins or currency can be bought through paying value or by investing in fiat currency; you can trade it on an exchange like Zebpay and WazirX of India or other exchanges.
One can buy one type of crypto using another cryptocurrency or through local currency. One can exchange Bitcoin with Ethereum, Dogecoin or any other cryptocurrency.
How to mine a cryptocurrency
Bitcoin’s founder, Satoshi Nakamoto, whose identity is still unknown, is accredited for the ethical mining and creation of Bitcoin. Because of the platform created by Nakamoto, Bitcoin has been valued highly.
Generally, there is hardly anybody who has traded in Bitcoin and lost money, however, depending on the rise and fall in prices investors in Bitcoin did have their ups and downs.
Miners get paid for their auditing talents too. These auditors do the work of verifying the legitimacy of cryptocurrencies and their transactions.
Interestingly, with cryptocurrencies, there is no counterfeit. Neither is there a situation that we know as inflation in the case of legal tender.
Blocks are created out of 1 MB space, which verifies 1 MB worth of transactions which enables the miner to earn equivalent value to the cryptocurrency by marketing. OneMB of transactions can theoretically be equivalent to one transaction (though this is not at all common) or several thousand. It depends on how much data the transactions take up.
Apart from the crypto coins mined through the first block, which was created by Nakamoto, every single one of those bitcoins were created by miners. In the absence of miners, Bitcoin or any other cryptocurrency worth its salt will survive as a mere network that would still exist and be usable even if there were no miners.
Though it will take up the prices of the coins as there will be no mining activity and hence no new coins, pretty much like the minting of legal currency in economies the world over.
Just like the gold standard that the central banks of many countries follow, many crypto coins have a cap on production. Bitcoin leads the way with a cap of 21 million coins.
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