To understand the principle of cryptocurrency mining, we first need to understand several key words closely associated with its mining.
These are the following names that comprehensively show how cryptocurrencies are actually mined.
This English term literally means "chain of blocks." Each individual block is composed of an ledger with a lifespan of ten minutes. The ledger contains:
movements or transactions between addresses,
nonce - a number added to the end of each block,
hash - consisting of data from the previous block converted into a special number (like converting text into Morse code).
Therefore, each block in the chain has its unique hash. And this is what cryptocurrency miners try to discover and decipher.
Miners aim to solve the previously mentioned hash of the blocks. To do so, they must try to combine the nonce given to the block. Either they succeed or not. Cryptocurrency mining is essentially a luck-based lottery from this perspective.
Once the miners successfully calculate the correct nonce, they also receive the correct hash of the entire block. As a reward, they receive a reward such as several Bitcoins.
The competition continues by focusing on the next block. This creates a chain of more blocks or data. Each block must be verified.
There is no regulatory authority in the world of cryptocurrencies, and all transactions are verified by other miners.
More miners naturally mean more mined cryptocurrencies. To make it more difficult, the creator of Bitcoin, Satoshi Nakamoto, incorporated an autoregulatory mechanism into his source code that gradually increases the mining difficulty.
As a result, the mining of Bitcoin is getting more and more difficult regularly.
Today, mining Bitcoin and other cryptocurrencies is practically unprofitable in domestic conditions. The costs associated with electricity and necessary technical equipment have made cryptocurrency mining less accessible.
List of the most popular cryptocurrencies
Here is a list of the most popular cryptocurrencies, ranked by market capitalization:
- Bitcoin (BTC)
- Ethereum (ETH)
- Binance Coin (BNB)
- Tether (USDT)
- Cardano (ADA)
- Polkadot (DOT)
- Dogecoin (DOGE)
- XRP (XRP)
- Solana (SOL)
- Uniswap (UNI)
Note: These cryptocurrencies may change over time and this list may change over time as well.