How Does Cryptocurrency Mining Work?
Cryptocurrencies work on a technology named as Blockchain. Blockchain can be defined as a ledger system keeping the records of all the transactions done in a systematic manner. Blockchain, as the name suggests, consists of blocks linked in a chain. Once, a person attempts to make a transaction with another person on this virtual platform, miners come into existence. For this transaction to be valid and added in the blockchain via the introduction of a new block, many miners compete.
Miners have to solve some complex mathematical problem involving use of advanced computers and cryptographic methods depending upon the complexity of the puzzle. The first person who is successful in solving the problem is considered for the financial reward and termed as the miner as he/she is the one who mined the currency as a reward. This way the transaction is recorded in a block and the block is added to the chain, after getting the solution verified by the other miners (at least 50%). In general, a time slot of 10 minutes is allotted for this mining process in a single transaction.
The cryptocurrency mining has some basic and necessary hardware and software requirements. Regarding hardware, an advanced Graphics Card, efficient power supply and a minimum 3 slot motherboard is must. A good mining software and a coin wallet along with a high speed internet connection is what one needs in addition to the hardware.
Regarding the cryptocurrency awarded to the miners, it has an interesting pattern. In 2009, when the Bitcoins came, it was 50 BTC per block mined. For every 210,000 blocks mined, the reward would be reduced to half and would approach a zero value after 64 times as the net worth of bitcoins cannot exceed 21 million. So, it witnesses a decreasing order.