Zero to Hero Digital Currency Extraction
Digital Currency Extraction: Mining digital currencies is one of the most widely used terms in the world of digital currency. The question is what does it mean to extract a digital currency?
How is it working? What knowledge or tools do we need to extract?
In this article, we intend to thoroughly examine the whole idea of digital currency extraction. Follow us:
Learn more: Digital Currency Training
What is digital currency extraction and how is it done?
“Digital currency extraction” or so-called “mining” is a set of processes performed by the CPU, graphics card, and ASIC in a network.
Perhaps the term extraction makes you imagine that you have to dig with a shovel or pickaxe. But this is not the case in the world of digital currency.
In fact, for mining, you have to solve complex mathematical equations using complex hardware to achieve digital currency.
It is interesting to know that the level of difficulty of the equations becomes more difficult with the increase of miners, the passage of time, and more sales of digital currency.
You can extract digital currency wherever you are by providing the appropriate mining and internet hardware.
How is the process of extracting digital currencies?
Mining requires a lot of electricity. If you are sure of your mining, you can pay all the electricity bills after obtaining the desired digital currency.
You should know that by mining, you do not own digital currency, in principle, you will get only a small piece of the extracted currency as a salary.
The way it works is that miners determine the validity of digital currency transactions by solving complex problems based on cryptography.
Steps of extracting digital currencies
In the following, we will teach you the mining process in 7 steps:
A user makes a transaction through his wallet and transfers the digital currency to another user.
This transaction spreads through the wallet in the network and waits for a miner to select it.
The transaction remains in the “Unconfirmed Transaction Pool” until the miner selects it.
This pool contains all transactions that have not been approved by any minor and are awaiting processing.
Miners select transactions from this pool and form it into a block. So a block contains a set of unconfirmed transactions. In addition, other information such as digital signature, timer, etc. is also available in the block.
According to the records in the blockchain, if a user has sufficient funds in his wallet, his transaction will consider valid and Miner will add it to his block.
Miners usually choose a transaction that has a high transaction cost, because then they get more rewards.
At this stage, mining begins with the extraction of digital currencies and creates a block of transactions by adding a user to their block. Miners need a digital signature to add this block to the blockchain
This signature is actually a complex mathematical equation and consists of a very complex problem. These equations are different and unique to each block, so each block is essentially a different mathematical problem.
As a result, each miner computes on a specific problem for their block, and these problems are so difficult to solve that they require both high computing power and a lot of power.
Electricity consumption is so high that many countries do not consider mining a valid business, and mining is illegal in these countries. Because they believe that consuming this amount of electricity will not be economical for the country.
If a miner can find the first correct signature for his block, this block and its signature will be published to other miners.
At this stage of digital currency extraction, the block issued to the other miners is waiting for their approval, and the other miners must match the output hash with the existing signature and confirm it. If the output hash approves, the block will be added to the blockchain network.
If a block is added to the blockchain network, any other block that is added after that is a confirmation stamp for that block.
In fact, the more confirmation transactions a miner has, that is, the deeper a block is, the harder it will be to hack.