Education about cryptocurrencies No. 3 📚
Today's topic is mining.
It should be mentioned right away that the word mining / digging in the world of cryptocurrencies has nothing to do with the method of digging gold, etc.
Proof of Work (PoW)
This mechanism consists in performing a series of calculations using software and hardware. The algorithm's task is to find such a value to finally achieve a hash that has a certain number of zeros at the beginning. The number of zeros is determined by the difficulty, which depends on the sum of the power of all participants. The amount of calculations before it hits the right set is unimaginably large. Devices called excavators are supposed to perform these calculations and how much a given device can do them depends on their computing power.
Giving the example of Bitcoin. It was once mined using a home computer because the computing power it offered was sufficient. Today, this is not possible and mines extract Bitcoin with helping a large amount of mining equipment, which translates into having a huge amount of computing power. Thanks to this, they can effectively extract Bitcoin.
The BitClub Network in which I operate is such a mine. If you are interested in mining then contact me, I will introduce you to this topic :)
Proof of Stake (PoS)
This is the second method of mining, which is based primarily on rewarding the user for the mere fact of having cryptocurrency in the portfolio, and not on real digging and using the full computing power of the processor and graphics card. Therefore, it can be concluded that the PoS method significantly reduces the load on the computer unit, which results in a much lower demand for electricity and, consequently, lower charges for electricity.