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Main mining cryptocurrency questions

Cryptocurrency is a type of digital, virtual, surrogate, non-bank currency used as a means of payment (eg. Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin, Dogecoin, Anacoin, Pirate Chain). The name cryptocurrency indicates that this means of payment uses cryptography and is decentralized to control transactions and prevent double-spending, a common problem for digital currencies.

Proof-of-Work

Cryptocurrencies use proof-of-work protocols based on hashing algorithms. The most used are based on the SHA-256 algorithm, introduced by Bitcoin, and script, the most used, with at least 480 confirmed implementations. Other algorithms that are used for proof-of-work include CryptoNight, Blake, X11, and combinations.

Digital wallets

A digital wallet is generally the equivalent of a bank account: it allows you to receive cryptocurrencies, store them, and send them to other accounts. Wallets store the private password needed to access the bitcoin address. Each user installs a software application, which is a digital wallet file, on a computer or mobile phone, or a web page. Using this digital wallet, the user can send or receive cryptocurrencies from other users. Digital wallets can be dedicated, for a single cryptocurrency (examples: Bitcoin, Etherium, Ripple, Litecoin), or they can be multi-currency (Coinomi, CoinSpot, CoinVault, Cryptonator multi-cryptocurrency wallet, Exodus, Gatehub, Holy Transaction, Jaxx Wallet, UberPay Wallet.

Transactions

Cryptocurrency transactions are secured using encryption between virtual wallets. Each virtual wallet will receive a "private key" that results from the cryptography. This private key prevents the alteration, modification of the transaction by another person, which makes the transactions extremely secure. Transactions are made based on an alphanumeric address in the form of a string such as 1FfmbHfnpaZjKFvyi1okTjJJusN455paPH derived from the public portion of one or more pairs of cryptographic keys, generated free of charge. A cryptographic key is an algorithm that requires two individual keys, one secret, and one public, linked by the algorithm. To benefit from cryptocurrencies sent to an address, the user sends a digitally signed message with payment along with the associated private key.

Mining

The cryptocurrency can be bought, but also created. The process of creating money is called "mining". Network participants are known as miners. They check date transactions and share them in a public database called a blockchain. There are specialized nodes that validate transactions and blocks and connect them between transaction points. The mining operation is particularly complex and is very difficult to perform on your own, by a single user. Thus, groups of miners, called mining pools, developed. A group of miners combines their processing power to solve cryptocurrency-producing algorithms. Mining is a business for some, but it depends on the geographical region in which the mining unit is located. The yield and profit of such a business are mainly calculated according to the laws of the region and the cost of electricity.

Hardware

Cryptocurrency mining involves the use of the computing power of PC systems for the mining operation. Several dedicated systems for cryptocurrency mining are being developed. These devices are called ASIC (Application Specific Integrated Circuit) and are integrated circuits with permanently programmed chips and an application integrated into those chips. Two popular companies that offer ASIC mining installations are Avalon Asics and Butterfly Labs

Software

While the mining process itself is done by hardware, special software is needed to connect the miners to the blockchain and mining pool. The software can run on almost any operating system, such as Mac OS X, Windows, Linux. The program transmits information and results to the miner but also monitors general statistics such as temperature, hash rate, fan speed, the average speed of the miner, etc.

Hash Function

In the mathematical sense, hash functions (class of functions named in specialized papers and scatter functions or summary functions) are functions defined on a set with many elements (possibly infinite) with values ​​in a set with a fixed and smaller number of elements. Hash functions are not invertible. In computer science, hash functions are used to speed up searches in tables, as is the case in large databases or data comparisons. The value of a hash function is called a summary, hash value, hash code, hash sum, or just hash. They can also be used as checksums or error-correcting codes (although not to be confused with the two), or, in cryptography, as components in digital signature schemes. A hash function can bind two or more keys to the same hash value. In many applications, it is desirable to minimize the chance of such collisions, which means that the hash function must link the keys to the hash values ​​as evenly as possible. Also, depending on the application, other properties may be required. Although the idea was conceived in the 1950s, the optimal design of hash functions is still an active topic of research and discussion. Hash functions are also used as checksums or cryptographic hash functions, but should not be confused with check characters, fingerprints, randomization functions, error correction codes. Although these concepts overlap to some extent, each has its own uses and requirements and is designed and optimized differently.

Blockchain

A blockchain is a growing list of records (or data), called blocks, that are linked and secured using cryptography. As a data structure, a blockchain is a simple chained list, in which the links between elements are made by hash. Thus, each block usually contains a link to a previous block (a hash of the previous block), a timestamp, and transaction data. By design, blockchains are resistant to data modification. The blockchain is "a transparent and distributed registry that can record transactions between two parties efficiently, verifiably and permanently". To be used as a distributed registry, a blockchain is usually managed by a peer-to-peer collective network, adhering to a protocol for the validation of new blocks. Once recorded, the data in any data block cannot be changed retroactively without altering the following blocks, which requires the majority consent of the network participants. Blockchains are secure by design and are an example of a distributed computer system with a high tolerance of the Byzantine type (tolerance to attackers or uncooperative computers). The problem of decentralized consensus has therefore been solved with the help of blockchain technology. This makes blockchain technology suitable for recording events, medical records as well as recording other management activities such as identity management, transaction processing, source documentation, route tracking. food or voting systems. The first blockchain was conceptualized in 2008 by an anonymous person who identified himself as Satoshi Nakamoto. In 2009 it was implemented in the cryptocurrency bitcoin, where it serves as a public and decentralized register for all transactions. The invention of blockchain technology made bitcoin the first digital currency that solved the problem of double-spending without using a reliable central authority. or central servers. The design of Bitcoin has been a source of inspiration for many other applications.