Mining & Minting
BLOCKCHAIN BASICS
Mining and Minting are both terms that relate to the creation of real coins, mining the metals, and minting them into coins. In crypto, the terms also relate to the process of creating new coins, read on to find out exactly how.
Cryptocurrency mining is the process of adding transaction records to the blockchain. It is also the process of securing and verifying transactions in a cryptocurrency network.
Mining is done by computers solving complex mathematical problems to validate transactions, create new blocks and make them public. The miner who solves these complex mathematical puzzles first, wins and gets to add their block on top of the existing blockchain.
Mining is an important part of cryptocurrency because it validates transactions that take place on the network. Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a PoW to be considered valid.
PoW requires miners to find a number called a nonce, such that when the block content is hashed along with this nonce, the result is numerically smaller than the network's difficulty target. This proof guarantees work was done to generate the block and enables fast confirmations of the block.
Interestingly minting is also part of mining, for example when a new block is hashed for the first time in the bitcoin network, it triggers a minting of new coins, therefore minting here refers to new coins coming into existence, and with PoW this happens through mining.
On the other hand under the PoS mechanism coins are not minted through mining but rather through staking. Proof of Stake (PoS) doesn't have miners, it has validators who create new blocks as well as checking and confirming blocks that other validators have minted.
The main difference in the way cryptocurrency coins are generated is that one requires PoW which is done through mining and the other requires PoS which is done through staking. No matter which process a cryptocurrency uses the goal is to secure the blockchain while distributing new coins in a fair and decentralized manner. Turn over the page to learn about more future basics, Smart Contracts.
Last modified 10mo ago