FAQ 16 – How to mine crypto?
Mining is based on the Proof of Work principle
The purpose of mining
Cryptocurrency mining consists in verifying the validity of a set of transactions on a blockchain. The purpose of this process is to generate cryptocurrencies and validate its transactions.
The principle of Proof of Work (PoW)
To secure the blockchain, cryptocurrencies use the “Proof of Work” technique.
Thus, the miner, who performs the mining activity, must solve mathematical problems, i.e. he must find the hash with the right combination. The miner is rewarded by receiving cryptocurrency payments for his contribution.
One can mine alone or in a group in a mining pool to combine our computing power and be more efficient.
However, other crypto-currencies use Proof of Stake to validate transactions.
Mining is not the only process to verify transactions…
Ripple, EOS or Ethereum cannot be mined using proof of work. These cryptocurrencies therefore rely on a different process.
…other crypto-currencies are based on the principle of (PoS)
Consisting of a network of validators, these validators must store coins to validate the blocks of the blockchain. Thus, the principle of PoS consists in putting a part of the tokens, i.e. one’s possessions, into play in order to validate a block.