Introduction

What do miners do?

Mining is the key to completing autonomous transactions and making the cryptocurrency system decentralised. While banks traditionally played the role of verifier when transactions were being made, the combination of blockchain technology and miners have offered a new safe and secure alternative.

The role of a miner is to provide the hashes enabling blocks to be added to the blockchain. In a literal sense, this uses a miner’s computer power to solve the mathematical algorithm generated by the system, required to verify and complete cryptocurrency transfers.

Bitcoin provided the original template requiring miners to process transactions, bundling transactions together and verifying them before adding them to the blockchain.

In this system, only miners connected to the blockchain network through nodes can verify cryptocurrency transactions.

When they complete a mathematical algorithm, they become eligible to add a block to the blockchain. The validation of a transaction happens with the update of the ledger, or the completion of a block to be added to the blockchain. Then the entire network of nodes can see the updated blockchain and verify what they see.

Miners have an incentive to do this work because they get paid in cryptocurrency for every block they add to the chain.
Thousands of nodes are always competing to complete the algorithms, so it is rare for the same miner to continuously be successful in completing these complex problems first.
The hash algorithms are complex enough that a miner’s rate of success is determined mainly by the laws of probability.
But the more a miner’s computer is capable of, the more chance they have of finishing first and claiming a cryptocurrency payment.

The Bitcoin system continues to offer miners cryptocurrency incentives to perform these tasks despite there being only a finite amount of Bitcoin available for circulation.
New tender is released into the Bitcoin network periodically exclusively through payment to miners successfully completing blocks. So too was Bitcoin’s mining difficulty scale, which adjusts depending on the performance of the network of nodes.

Mining DifficultyMining DifficultyA periodic adjustment in a network's hashrate, in an attempt to ensure the network continues to solve new blocks at a consistent rate.

What is ‘mining difficulty’?

The more computing power available for mining, the more difficult the system generates its algorithms to be solved, and so too if there is less power available on the network, the algorithms get easier to solve.

Mining difficulty was specifically programmed by Bitcoin’s developers to adjust for an arms race of sorts, stopping a rising rate of new tender being introduced into the market and curbing inflation. Many other cryptocurrency algorithms choose to work in a similar way to Bitcoin’s original tender release and mining difficulty template.

Anyone with the computer hardware capable of performing these tasks can theoretically become a miner, since there is no authority within the decentralised network to recruit suitable applicants. However, before potential miners can contribute to blockchains, they first need to pass the network’s consensus model testing and prove their computer systems can solve complex mathematical problems.

There are other types of cryptocurrencies on the market with different functions relying on alternative methods of transaction verification. As cryptocurrency evolves, there are more alternative suggestions how transaction verification can be completed, and deviations away from traditional Bitcoin blockchain mining.

However, much of the cryptocurrency market still relies on the traditional mining system, or slight variations of it. 

Mining: Introduction

FAQ

What is mining?
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Mining is the key to completing autonomous transactions and making the cryptocurrency system decentralised. While banks traditionally played the role of verifier when transactions were being made, the combination of blockchain technology and miners have offered a new safe and secure alternative.

What do miners do?
arrow arrow

The role of a miner is to provide the hashes enabling blocks to be added to the blockchain. In a literal sense, this uses a miner’s computer power to solve the mathematical algorithm generated by the system, required to verify and complete cryptocurrency transfers.

Why are miners important?
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Bitcoin provided the original template requiring miners to process transactions, bundling transactions together and verifying them before adding them to the blockchain. In this system, only miners connected to the blockchain network through nodes can verify cryptocurrency transactions.

Is mining difficult?
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Thousands of nodes are always competing to complete the algorithms, so it is rare for the same miner to continuously be successful in completing these complex problems first. The hash algorithms are complex enough that a miner’s rate of success is determined mainly by the laws of probability. But the more a miner’s computer is capable of, the more chance they have of finishing first and claiming a cryptocurrency payment.

Can I become a miner?
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Anyone with the computer hardware capable of performing these tasks can theoretically become a miner, since there is no authority within the decentralised network to recruit suitable applicants. However, before potential miners can contribute to blockchains, they first need to pass the network’s consensus model testing and prove their computer systems can solve complex mathematical problems.

Next step: Method

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