Mining and the Cryptocurrency

in StemSocial2 months ago (edited)

Introduction

The term Mining has been widely adopted in many fields to mean different things, however, before the advent introduction of cryptocurrency, the most common use of mining, generally known to people is natural resources mining from the field of Geology and it is an act of extracting naturally occurring mineral resources such as solid mineral (coal and ores), and liquid minerals (crude petroleum and gases).

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[Image source: Flickr]

In the field of computing, The first mentioning of Mining is in Data Mining, the term Data Mining has been used for more than a century ago, although, it gained public focus in the 1930s and since then, it has undergone a lot of transformation. Data Mining is a sub field of Machine Learning and Artificial Intelligence. Data Mining simply means the discovery of relevant knowledge or patterns from the pool of data in database without using conventional programming.

However, the conventional mentioning of Mining in computing was changed from the known Data Mining to Bitcoin mining in 2009 when bitcoin was first mined. Although not many people really know what it was all about then.

Subject of the matter

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[Image source: Flickr]

Mining in Cryptocurrency
Let me first clear the misconception about mining in cryptocurrency: It should be noted that not all cryptocurrency coins are mined, in fact, cryptocurrency can be divided into two based on mining: mine-able cryptocurrency, example of this include Bitcoin, Ethereum, Hive, Steem .e.t.c, and non mine-able cryptocurrency, example of this include OTA, Ripple and Cardano.

Mine-able Cryptocurrency
The only way to accumulate any mine-able cryptocurrency like bitcoin is to buy one else you should get yourself ready for the big task ahead of mining the coin. However, Mining cryptocurrency is not an easy task, as it requires a lot of processes like verification of the transaction before adding the newly created token into public ledger called blockchain.

Why Mining
Just like natural resources where raw materials derived from mining are used to build houses, automobiles, to construct roads and generate electricity among other good services to the community, likewise, cryptocurrency mining is the root of generating a new token which will be added to the blockchain.

The first coin to be mined is Bitcoin in 2009 by the mysterious and pseudonymous Satoshi Nakamoto, although, his real identity still remain a mystery till today.

Process of Mining Cryptocurrency

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[Image source: Flickr]

I am not convenient with the words usually used when it comes to explaining the process involve in mining a new coin, especially when considering non-mathematically inclined reader. Many times, people usually refer to the task of mining a coin as a process of solving difficult mathematical problems or puzzles in order to discover a new block which will then be added to the blockchain.

However, I prefer the expression stating that mining a new coin involves being the first miner to discover 64-digits hexadecimal number usually called 'a hash' in such a way that the discovered 64-digit hexadecimal number called (a hash) is less than or equal to the the main target 64-digits hexadecimal number.

A glance look into 64-Digit Hexadecimal Number
Having discuss mining around 64-Digit Hexadecimal Number, the question that will follow is what is this 64-Digit Hexadecimal Number, well, Hexadecimal Number as mentioned here is one of the common number bases often used when coding and using computer systems, it consists of digits ranges in between (0,1,2,3,4,5,6,7,8,9,a,b,c,d,e,f), some of the other bases include binary (0's & 1's), Octal (0,1,2,3,4,5,6,7) and decimal (0,1,2,3,4,5,6,7,8,9).

Consequently, 64-Digit Hexadecimal Number means 64 digits number with each digit ranges between (0,1,2,3,4,5,6,7,8,9,a,b,c,d,e,f).
example of such number is : 0000000000000000057fcc708cf01309203e9f967ac56e4df598ee

Using the genesis coin (Bitcoin) as a case study, the total number of bitcoin coins that can be mined has been fixed by its founder to be 21 million bitcoin, currently the total number of mined bitcoin is around 18,614,806 bitcoin as of today Sun 18th, 2021 and there are approximately less than 2,385,193 bitcoin left to be mined.

the proof-of-work algorithm of Bitcoin is consered as a standard algorithm used to mine mine-able cryptocurrency.

A successful mine usually rewarded with varieties number of Bitcoin, for instance in 2009 When bitcoin first launched, the reward for successful mining was 50 bitcoins. It changed to 25 bitcoins in 2012 and halved of 50 again in 2016 . i.e 12.5. This figure changed again in 2021 to halved of its former value in 2016, i.e 6.25 bitcoins as at 2021. By 2025 it will be 3.125, this means that for every 4 years, the reward for a successful mining changes to halve of its previous value, thus, this rewards decrease by 50% for every 4 years and this reduction rate has been assumed to reduce Bitcoin's inflation rate.

Non mine-able cryptocurrency
Like I said earlier, not all cryptocurrency coins are mine-able, some do not need to be mined. coins like OTA, Ripple and Cardano are typical example of non mine-able cryptocurrency, the algorithm in use is based on a PoS (proof-of-stake) type of algorithm which does not reward participants for solving difficult or complex crypto puzzles needed to validate every new transactions and build new blocks through mining.

Conclusion

Having discussed Mining and its application in various fields such as geology and computing, It should be noted that one thing that is common to all the mining, especially as it has been used in various fields is Discovery. Mining is used in Geology related field when their is a discovery of naturally occurring minerals resources, also the first mentioning of Mining in computing field was in Data Mining which is knowledge discovery. However, the conventional mentioning of Mining in computing was changed from the known Data Mining to Bitcoin mining in 2009 when bitcoin was first mined.

In this article We also have established the fact that not all cryptocurrency tokens are mine-able and the process of mine-able cryptocurrency were briefly discussed.

It should be noted that aside Hive being a mine-able cryptocurrency like steemit, it operates like steemit with both having their separate digital currency created every day by the network and distributed to the users who exchange digital currency for real money.

Thanks for reading through! your contribution will be appreciated.

References
1. How Does Bitcoin Mining Work?
2. Hive Blockchain Sees Q3 Crypto Mining Income Double to $13.7M
3. How the Cloud Mining/Hashing Works
4. Non-mineable cryptocurrencies & their plans for the future

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Great comparison between the "original meaning" and the one we use in the crypto world! I never thought of it like this

Thanks for such a remarkable comment.