What is Mining?

The truth is “mining” is a misnomer. When gold is mined, nothing is achieved beyond the discovery of new gold. When a cryptocurrency such as bitcoin is mined, however, a valuable service is provided to the network: decentralized transaction recordation and validation.

Mining is the auditing process that secures a transaction into the blockchain.

Double Spending

Cryptocurrencies such as bitcoin rely on miners to record and validate transactions because of a particular problem inherent in any system of digital currency: double spending. Double spending is the digital version of counterfeiting.

To fix this, the inventor(s) of bitcoin designed a system of network interactions, a protocol, that checks each transaction against a public ledger called the blockchain. A bad actor can try and resend an already spent cryptocurrency, however once the funds have been spent the first time, the bad actor will not be able to resend them because of this mining, or audit, process.

How Does Mining Work?

Miners, or highly specialised computing hardware, connect to the network like telephone operators. Miners use their computers to listen for transaction requests across the entire network and assemble a list of valid transactions.

 

What is the blockchain?

Blockchain is the first successfully tested distributed ledger technology. The technology is a catalyst for the Age of Decentralisation, paving the way for business models that have not been possible before. It is providing us with new opportunities for human achievement.

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