Definition:
Mining is the process of verifying transactions by grouping them and adding them to the network’s permanent digital record, or blockchain. It is executed by individuals, called miners, who use their computing resources to perform the computations necessary to maintain and secure the credibility of the network. Mining is an incentivized process as miners are rewarded in the blockchain’s native currency for contributing to the processing power of the network.
Explanation:
The defining characteristic of cryptocurrencies is decentralization. That is, there is no central authority, like a bank, to confirm, verify, and control the flow of currency. Instead, these tasks are performed by a global network of computers that dedicate their resources to maintaining and securing the network. The individuals that own these computers are known as miners.
Miners verify transactions by solving complex mathematical problems. Solving these problems usually consumes significant computational power and energy, generally requiring specialized machines depending on the network. Mining is also a competitive process, with various miners on the network working towards solving the necessary computational puzzle. The first miner to solve the calculation in the shortest possible time wins the reward.
In addition to verifying transactions and securing the network, mining is also used to generate and release cryptocurrency coins or tokens into the circulating supply.
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