What is digital currency and how cryptocurrency mining work ?

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What is digital currency and how cryptocurrency mining work ?

What is digital currency and how cryptocurrency mining work ?

What is a digital currency ?

Cryptocurrency is a digital currency with no physical form or intrinsic value, but is an increasingly hot commodity as Bitcoin, its most well-known iteration, flirts with a record high and  Cryptocurrencies rely on blockchain technology. The blockchain is a public ledger of the currency’s transactions and Bitcoin, the self-proclaimed original decentralized digital currency, is hovering around US$8,000 as investors pour into alternative currencies.

Many other types of cryptocurrencies exist, including Monero and Litecoin. These digital currencies are decentralized, meaning there is no third-party authority like a bank that oversees activity, and transactions happen directly between two individuals. This offers some benefits, such as lower fees and global use.

Also Read: What is cryptocurrency, why do we use it and how does it work ?

Generally speaking, there are two ways to obtain cryptocurrencies:

How cryptocurrency mining work ?

A person can purchase units on an exchange, or they can participate in cryptocurrency mining. Miners secure cryptocurrency networks. They receive new issues of the currency for verifying transactions, which are then recorded on the blockchain. Miners run software that can require special hardware, like asic chips — designed for Bitcoin mining. Their computers solve complicated math problems in exchange for new issues of the currency.

What is cryptocurrency and how cryptocurrencies emerged as a side product of digital cash how does it work and why do we use it

A mathematical proof of work, created by trying billions of calculations per second, is required to confirm a Bitcoin transaction. The more puzzles a miner solves, the more cryptocurrency they earn — incentivizing miners to participate and strengthening the overall system.

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On Bitcoin’s network, the problems become more complex if they are being solved too quickly. As more miners joined the system and the problems grew very difficult, miners started to pool together to do this work and Once purchased or mined, cryptocurrency lives in the individual’s digital wallet and can be used to purchase items online or at local stores that accept the currency.

What is digital currency and how cryptocurrency mining work ?

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