Mining cryptocurrency can be a lucrative endeavor with enough computing power
Mining cryptocurrency is in the news a lot lately. People are finding their computers have been compromised by malware and are mining, or in some cases entire botnets are mining. But what does that mean?
This isnt mining in the traditional sense. There are no pick axes or canaries involved. Instead. its more about trying to win a blockchain lottery to earn the reward at the end.
What does that all mean? Lets hash it out.
To begin a discussion of mining cryptocurrency we need to start with what cryptocurrency is. Cryptocurrency is a digital form of currency with a cryptographic underpinning that is used as a secure medium of exchange. There are literally hundreds of different cryptocurrencies with varying real-world values. Many believe its the future of currency.
The most popular cryptocurrency is bitcoin, you may have heard of others like Etherium, too. While cryptocurrencies may differ in terms of the algorithms and encryption they use, they all share one similiarity: blockchain. And thats what we need to talk about next.
Blockchain is a digital ledger of transactions that is impossible to alter. It uses hashing and a concept similar to salting to continuously complete blocks of information that chain to form an immutable ledger.
Hashing is the act of mapping data of any length to a fixed-length output. When cryptography is involved its a one-way function. The most popular hashing algorithm is SHA-256, which outputs at a length of 256 bits. Every hash value is unique. Even the tiniest alteration to the data being hashed caused the entire value to change.
Hashing is considered one-way because of the amount of computing power it would take to reverse-hash it. For a 256-bit output, calculate 2 to the power of 256 (2 X 2 X 2 256 times). Your odds of finding the correct value are 1 in the product of that equation. Those are astronomical odds. It would take a supercomputer thousands of years to compute that.
Now lets fit it all together. With a cryptocurrency blockchain, as transactions occur they are broadcast and added to various private ledgers. Each one of these transactions is digitally signed for the sake of authenticity. On the other end, there are people or groups collecting these transactions and building ledgers. They are also computing to find a value that when hashed along with the ledger, produces a set number of 0s at the beginning of the hash value. Thats the portion thats similar to salting.
So lets say that for our example cryptocurrency, weve set the total to 10 0s. That means the first 10 spots of the 256-character hash value should all be 0s.
When the correct value is found, the block is closed, its broadcast officially and added to everyones blockchain, then the hash of the old block is put atop the new ledger and the process begins again. This is how blocks are created in the chain.
The act of computing the correct value to satisfy the hash function in blockchain is called mining. When it comes to cryptocurrency, a reward is provided to whoever solves for the correct value. That makes it lucrative to compute the correct value, though it takes quite a bit of power to accomplish that.
Oftentimes people pool their computing power together and split the reward if they solve for the correct value. In other cases, hackers have been known to co-opt others computers and use some of their computing power behind the scenes to mine cryptocurrency. There are entire botnets doing nothing but mining.
Really, solving for the correct value is like winning the lotto. There are countless people and botnets attempting to find the value and whoever finds it first gets the reward.
Of course, if you can accumulate enough computing power you could solve for the value enough of the time that you could accrue a substantial amount of cryptocurrency.
When someone says mining cryptocurrency what theyre referring to is the act of trying to compute a specific hash value by producing a set value that, when hashed along with the block ledger, produces a specific result. This requires considerable computing power, but considering the rewards its well worth it.
Heres what we covered in todays discussion:
- Cryptocurrency - CES 2020 - December 4th, 2019
- What is Cryptocurrency? A Simple Explanation - December 4th, 2019
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- What Is Cryptocurrency Mining? - Mycryptopedia - December 4th, 2019
- Best Places to Earn Interest on Your Cryptocurrency - Crypto Briefing - December 4th, 2019
- Cryptocurrency 101 in the South Bronx - The New Yorker - December 4th, 2019
- Bitcoin Corrects And What's Next - Seeking Alpha - December 4th, 2019
- Drugs hidden in childs toy lead police to massive $1M cryptocurrency stash - The Next Web - December 4th, 2019
- Chinas blockchain consortium adds cryptocurrency exchange Huobi to its alliance - FXStreet - December 4th, 2019
- Want to Pay for Your Stay with Cryptocurrency? Head to Vir Island - Total Croatia News - December 4th, 2019
- Thai SEC to Amend its Royal Decree on Cryptocurrency - The Tokenist - December 4th, 2019
- German Banks Will Be Allowed to Buy, Sell, and Store Cryptocurrency Starting New Years Day Crypto.IQ | Bitcoin and Investment News from Inside... - December 4th, 2019
- India vs. the people: The battle over cryptocurrency ownership continues - Forkast News - December 2nd, 2019
- Cryptocurrency This Week: Binance Launches Ethereum Futures, Hackers Steal $50 Mn From Korean Exchange And ... - Inc42 Media - December 2nd, 2019
- China Shuts Down 173 Cryptocurrency Exchanges and Token-Issuing Platforms - BeInCrypto - December 2nd, 2019
- More traditional investors are eyeing cryptocurrency to diversify their portfolios - Forkast News - December 2nd, 2019
- U.S. Authorities Arrest Virgil Griffith For Teaching Cryptocurrency And Blockchain - Forbes - November 30th, 2019
- What Hides Behind South Korean Cryptocurrency Regulation Policy? - The Diplomat - November 30th, 2019
- CipherTrace Q3 2019 Cryptocurrency AML Report: 2/3 of the Top 120 - AiThority - November 30th, 2019
- Cryptocurrency Crime Spikes This Year and SMBs are Paying the Price - Commercial Integrator - November 30th, 2019
- $150 Billion Cryptocurrency Boom Is Here Buy This ETF to Profit - Banyan Hill Publishing - November 30th, 2019
- Cryptocurrency crime surges, losses hit $4.4 billion by end-September: CipherTrace report - Reuters - November 28th, 2019
- More traditional investors are eyeing cryptocurrency to diversity their portfolios - Forkast News - November 28th, 2019
- Binance CEO: China has never been pro-Bitcoin or pro-cryptocurrency - AMBCrypto - November 28th, 2019
- Nearly $50 Million of Ether Swiped From South Korean Cryptocurrency Exchange - The Wall Street Journal - November 28th, 2019
- The Cryptocurrency Market Update: Bitcoin back on recovery track, Ripple and Ethereum follow the lead - FXStreet - November 28th, 2019
- What the Crypto Markets Are Saying About the Future of Bitcoin - Coindesk - November 28th, 2019
- Thailand: Cryptocurrency Law Will Change in 2020 to Stay Competitive - Cointelegraph - November 28th, 2019
- Navigating the Token Crypt: What Options Are Available For Investing Cryptocurrency? - Nasdaq - November 28th, 2019
- This Cryptocurrency Is Up 11310% in a Week. Legit Scam or Just Legit? - CCN.com - November 28th, 2019
- The Cryptocurrency Market Update: Bitcoin sits above $7,000 as the trading range is narrowing - FXStreet - November 28th, 2019
- Cryptocurrency policies must combat snake oil without stifling innovation - The Globe and Mail - November 28th, 2019
- Akon has started building Akon City in Senegal with focus on cryptocurrency and renewable energy - Evening Standard - November 28th, 2019
- Cryptocurrency steps closer to legalization in South Korea - CoinGeek - November 28th, 2019
- Dwight Schrute tells Bitcoin holders to give their worthless cryptocurrency to a non-profit - The Next Web - November 22nd, 2019
- VinDAX Is the Seventh Cryptocurrency Exchange Hacked This Year: What Should Investors Be Considering? - Lexology - November 22nd, 2019
- Bitfinex Announces Strategic Collaboration with ODEM to Expand Cryptocurrency and Blockchain Education - PRNewswire - November 22nd, 2019
- How a seven-week Wharton course brings the study of cryptocurrency to the classroom - The Daily Pennsylvanian - November 22nd, 2019
- The cryptocurrency market update: Bitcoin bears have an upper hand - FXStreet - November 22nd, 2019
- Sacramento Kings Lead The Way For Sports In Cryptocurrency Solutions - Front Office Sports - November 22nd, 2019
- This week in Cryptocurrency - Born2Invest - November 22nd, 2019
- South African cryptocurrency exchanges will be having their bank accounts shut down - FXStreet - November 22nd, 2019
- PayPal CEO Holds Bitcoin and Only Bitcoin - Cointelegraph - November 22nd, 2019
- Cryptocurrency exchange that went dark with $16M in user funds only has $45k, report - The Next Web - November 20th, 2019
- Cryptocurrency market update: $5 billion wiped off as Bitcoin bears take a breather - FXStreet - November 20th, 2019
- The cryptocurrency market update: Bitcoin bears hit the pause button - FXStreet - November 20th, 2019
- This cryptocurrencys price just pumped 7,000%, but why? - Decrypt - November 20th, 2019
- Swedish gold-for-cryptocurrency scammer finally extradited to US - The Next Web - November 20th, 2019
- Binance US Adds Nano (NANO) as Its 26th Cryptocurrency - SludgeFeed - November 20th, 2019
- Is the IRS HODLing Out on Us? IRS Issues Additional Cryptocurrency Guidance Addressing Hard Forks, Soft Forks, and Airdrops - JD Supra - November 20th, 2019
- Maksim Zaslavskiy of the cryptocurrency Recoin was sentenced to 18 months in prison for lying to investors - Crain's New York Business - November 20th, 2019
- Cryptocurrencies | Category | Fox Business - November 1st, 2019
- Best cryptocurrency to Invest 2019 - The Complete Guide - November 1st, 2019
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- Is This Cryptocurrency The Next Bitcoin? - forbes.com - April 28th, 2019
- Cryptocurrency Definition | Bankrate.com - April 26th, 2019
- Samsung is developing its own blockchain network, report claims - April 26th, 2019
- 2019s best cryptocurrency wallets | 70+ compared | finder.com - April 26th, 2019
- What is cryptocurrency? - Definition from WhatIs.com - April 25th, 2019
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- What is Cryptocurrency: Cryptocurrency Explained the Easy Way - April 13th, 2019
- How to trade cryptocurrency in the UK - finance.yahoo.com - April 8th, 2019
- Cryptocurrency Trading | TD Ameritrade - April 8th, 2019
- Cryptocurrency Prices, Charts, and Market Cap Data - UNHASHED - April 8th, 2019
- Blow To Bitcoin As World's Largest Cryptocurrency IPO Is Iced - April 2nd, 2019
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- Hundreds of Millions in Cryptocurrency Vanishes After ... - March 11th, 2019
- Fidelity's new cryptocurrency company is up and running ... - March 9th, 2019
- Cryptocurrency Exchange Says It Can't Access $190 Million ... - February 5th, 2019
- What's the Best Cryptocurrency to Invest in Today? - January 9th, 2019
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- Differences Between Cryptocurrency Coins and Tokens - January 9th, 2019
- Cryptocurrency Charts - January 8th, 2019