Cryptocurrency mining is free money, but only if you are smart enough. You can earn by contributing to the software technology that runs the cryptographic blockchain!
Even your personal computer can earn a few bucks while you watch your favorite shows on Netflix. In this article, I will share various cryptocurrency mining rigs for you to earn passive income.
Mining is the lifeline of the crypto world. Validate ongoing transactions and put new coins into circulation. In simple terms, a miner solves some complex math problems to verify transactions.
It is the process by which a miner exchanges their computing power and electricity for the block reward. The block reward is the incentive for the miner to help support the blockchain technology behind cryptocurrencies.
In a nutshell, blockchain is the foundation of all crypto and the NFT universe. It is a digital distributed ledger that contains a tamper-proof record of every entry.
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Benefits of crypto mining
If you are a crypto-miner, then it can be a pretty good side job. With little analysis, you can generate passive income based on your computing power with nothing to do about it. Get-Set-Forget.
Next, it can be a vital part of the crypto movement as miners are the main contributors in making decentralized finance a reality.
Finally, you have veto power for any changes to network protocols.
Mined vs. Unmined Cryptocurrency
A consensus mechanism is a method of approving transactions in a decentralized system like a blockchain. It also helps keep the system safe from possible vulnerabilities, such as a 51% attack.
A 51% attack is a situation where a bad actor controls more than 51% of the blockchain. This majority empowers the fraudster to mold the protocols according to his will. A consensus mechanism keeps power decentralized. Such a degree of decentralization requires enormous computing power and work to pull off a 51% attack. In the end, a scammer is likely to lose more than he or she could possibly gain.
There are many consensus methods like proof of work, proof of stake, proof of capability, proof of activity.
Depending on the type of consensus mechanism, cryptocurrencies may require mining or otherwise.
Blockchains that use a proof-of-work consensus mechanism need mining.They use miners to approve the inputs (transactions). Whenever transactions go up for verification, miners start racing to solve a 64-digit hexadecimal number.
The first to find the solution transmits it to the entire network as proof of work. This victory awards the reward to the winner while others wait for the next challenge.This process is repeated each time for a block of transactions. A block is nothing more than a group of transactions that add up to 1 megabyte of data.
Bitcoin and Ethereum, the two largest cryptocurrencies, use proof of work along with many others. Therefore, they need mining to control double spending.
The only downside to proof of work is the energy consumed and the time each transaction takes, as all miners except the winner end up wasting their computing power for nothing.
Cryptocurrency not mined
All cryptocurrencies that do not use proof of work cannot be mined, such as Ripple, Cardano, etc.They use more energy conservative methods to validate transactions. Proof of stake is one such consensus protocol that is an alternative to proof of work.
Proof of stake eliminates the competition. Blocks are not mined. Instead, they are validated by stakeholders. Validators are chosen randomly. And they lose their participation (partial or total) depending on the degree of misconduct.
While proof-of-stake is eco-friendly, it comes with its own set of drawbacks, such that it promotes the accumulation of crypto instead of spending it.
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Who can mine cryptocurrencies?
In general, anyone with a compatible wallet, internet connection, and powerful hardware can start mining cryptocurrencies.
You can opt for solo mining or pool mining.
Soloing is just you solving the hash, whereas it’s more of a group effort in the pool. Similarly, it is also based on the type of hardware you have implemented, CPU, GPU or professional ASIC (Application Specific Integrated Circuit) miners.