Cryptocurrency mining

The highly important task of maintaining the blockchain, verifying transactions and adding blocks to the blockchain, rests in the hands of miners. Working not with pick-axes but with very powerful computers running specialised mining software, miners look at unverified blocks and the transactions on them and solve a mathematically difficult, cryptographic puzzle involving everything on the block.

This puzzle can take anywhere between a minute and ten minutes to solve. While the exact process by which miners verify these blocks is beyond the scope of this guide, once a miner verifies a block, it’s assumed for all intents and purposes to be valid and ready for attachment to the blockchain.

The miner then pulls the last block’s identifier from the blockchain and attaches it to the new block. He also gives the new block its own identifier. This process makes the new block an official part of the blockchain, and this new information is then propagated to everyone using that particular cryptocurrency.

As reimbursement for this work, the miner receives payment in the cryptocurrency just mined. Some cryptocurrencies choose to award a portion of the transaction fees on the block just mined while others, like bitcoin, generate new coins and those coins are then given to the miner.

2018 Trade Index, Inc.

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