Bitcoin, Litecoin, Ethereum, dogecoin- it’s all over the news! Everyone around us seems to be going crazy over cryptocurrency, and somewhere we hear this term- Cryptocurrency Mining and puzzle over it.
Mining, in layman terms, refers to digging through the soil to find some precious metal like gold right? But if cryptocurrency is digital, what are we digging?
To understand this, let’s take a deeper dive into what cryptocurrency is and how it works.
It is essentially digital money bought and sold online. There are no bills or coins, and it’s not based on another asset like gold, and it doesn’t have to go through traditional financial institutions like banks. Instead, these currencies are traded in a completely decentralized system using blockchain technology to track transactions.
To see how this works let’s look at how you buy with cryptocurrency. Say, Alice wants to buy a bike from Dan using bitcoin. Alice begins the process by logging into her bitcoin wallet with her private key, which is a unique combination of letters or numbers.