Crypto Mining | Cryptocurrency Exchange

Crypto mining can be complicated to understand, but many of its fundamentals are rooted in concepts we all already know.

Let’s look at newspapers for example. It might seem surprising at first, but the creation and distribution of newspapers paints an accurate picture for how blockchain, and in turn, mining works.

Newspapers are published and distributed every day for everyone to see, similar to a blockchain. A blockchain is a public ledger, meaning that it’s a record of transactions that can be viewed by anyone. Once a newspaper has been published, it’s not possible to change already published articles without readers noticing. This is one of the other big advantages to blockchains — the blocks can’t be changed once added, making them immutable. The same way that editors of a newspaper put together each issue, miners collaborate in blockchains.

For you to know which newspaper you’re reading, it must have the correct front-page layout with a banneron the top. Many of us remember seeing physical newspapers growing up, but all of us have seen digital newspapers on websites that serve as sources of information. Each one of these sources is easily recognizable by the big banner at the top of the front page, like the New York Times or The Guardian.

The front page and the banner are how we know it’s the correct publication, and how we know to add it to the collection of previous issues. The blocks in a blockchain also need to fit certain criteria to be able to join. This is done through a hash.

What’s a hash? The heart of blockchains, and the reason we call Bitcoin a cryptocurrency, is a special math tool called the cryptographic hash function. When you input data, like the transactions listed in a new block, it outputs a mix of letters and numbers, called a hash. The layout of the front page of a newspaper is like the hash. However, it’s very unlikely for a block to get an acceptable hash right away. Just like figuring out the layout of the front page, it requires some work. So a few extra characters are added to the end of the list in the block. For a blockchain, these are called the nonce.

In newspapers, we can think of the different placements for article headlines on the front page as the nonce. Miners repeatedly try different versions of the nonce until they find an acceptable hash. Similarly, an editor has to try different layouts until they achieve an acceptable front page with the banner properly placed at the top. In this way, newspaper editors are like the miners of the blockchain network. Miners drive the growth of a blockchain by creating new blocks. You can also think of this as a game of Sudoku. Miners function as players in Sudoku as they try to complete a mathematical puzzle – or hashing – to solve it in a certain period of time. The game changes its difficulty level so that it can be solved in a given amount of time. That time constraint is considered the Bitcoin block time.

After a miner creates a block that has an acceptable hash, they send it out to the network for other miners to review and approve, reaching a consensus.  Similarly, after a newspaper editor produces an acceptable layout for the front page, with the banner at the top, they share it with the other editors for their review.

Once all the editors have approved the front page and come to an agreement, that issue of the newspaper is published. Similarly, once all the miners on a blockchain network approve the new block, with an acceptable string of zeros at the beginning of the hash, it is added to the blockchain.

Although there are many different aspects to crypto mining, this is just a simple beginner guide to get you started. Make sure to stay tuned for additional content on topics aimed to further advance your knowledge in the blockchain industry.

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