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The universe of cryptocurrencies is already fully inserted in our environment. Investing and using digital currencies is no longer seen as something foreign to most people.
However, despite this “normalization” of terms, there are still many doubts for those who wish to enter this field. Here we will answer three of the most frequently asked questions regarding cryptocurrency mining.
What is cryptocurrency mining?
When we use the term “cryptocurrency mining” it can generate many doubts for those who are not in the know, contrary to what they think, mining does not mean finding, discovering or manufacturing cryptocurrencies, but the set of processes necessary to validate the cryptocurrencies.
Let’s use Bitcoin as an example, to mine the currency, it involves the process of validating and recording transactions on the blockchain. Each block is linked to the previous one by a code called “hash”, joining all the blocks we have a chain of blocks, or the blockchain.
Those responsible for setting up the blockchain are the miners. This work requires effort and computational cost to ensure the complexity of new transaction blocks in the registry, guaranteeing security and avoiding the inclusion of false blocks in the network, or even the modification of existing blocks.
Cryptocurrency mining is one of the main elements that allows cryptocurrencies to work in a decentralized way, in addition to being responsible for the process of verifying and recording transactions carried out by users, it is also responsible for updating the amount of coins in circulation.
In its own way, since the way to mine depends on the system used to validate transactions on the blockchain, or on the cryptocurrency algorithm.
Is cryptocurrency mining profitable?
It is common for people to think that cryptocurrency mining is something for large companies with high market power, since a high investment in computational power is required to mine cryptocurrencies.
But a profitable alternative are mining pools. Mining pools were created so that miners can organize themselves, sharing their mining power over a network. The idea is that together they have a better chance of solving the blockchain block, earning their reward.
Whenever a reward is earned, it must be divided among everyone in the pool, according to each miner’s processing capacity.
Another point to be considered is that currently there are many Altcoins on the market, many of them do not require so much cost to be mined.
Is it illegal to mine cryptocurrencies?
To answer this question, it is important to know that laws change and vary from country to country.
Cryptocurrencies work in a decentralized way, but they are not untouchable, many countries are already formulating ways to regulate their use.
In most countries cryptocurrency mining is not seen as a crime, however it is important to check the restrictions that may exist in your location.
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