The term mining refers to the process through which cryptocurrency transactions are gathered, verified, and recorded into the blockchain. The process is essential for maintaining the integrity of the network and is responsible for introducing new coins into circulation.
Understanding the term
New coins for cryptocurrencies are generated through the process of mining which follows some predefined set of rules established by the underlying protocol. While the primary rules are defined by the protocol, the consensus algorithms dictate how these rules will be followed.
In the case of Bitcoin, the mining participants are called nodes and their job is to gather confirmed transactions from the memory pool and organize them into a block that they will try to validate. Once a block gets validated, it is added to the blockchain (after which miners start working on the next block). The valid hash acts as the miner’s proof of work and each confirmed block has a unique block hash that identifies it.
Mining refers to the process by which new coins are entered into circulation for a particular cryptocurrency. It is usually performed with the help of sophisticated hardware that solves complex computational math problems. The first computer to find the solution receives the next block in the blockchain and the process is repeated.