Mining: how (some) cryptocurrencies work

In the next chapter in our series exploring the foundations of Bitcoin, we’re looking at mining.

How do miners mine?

Much like regular mining, a miner’s job is to unearth resources. The reward for extracting resources out of the ground is the cash value of the resource.

For blockchain miners however, things are a bit more complicated. A crypto-miner is rewarded by cracking a fiendishly difficult puzzle.

But first, a bit about how information is shared on the network.

Sharing Information

On cryptocurrency networks there are traditionally two types of nodes :

Regular Nodes ☋

A node is a computer that shares information with other nodes on the network. When someone makes a transaction on the network — one person sends another person some currency for example — the nearest node documents the transaction and sends it to others, so every node is on the same page.

Mining Nodes

These nodes take all the transactions passed around by the regular nodes and groups them together to form the blocks that make up the blockchain.

When you combine the two you have the fundamentals to a functioning cryptocurrency network!

(If any of these terms throw you, that’s totally fine. Our site, Aysha.io has a built in glossary for these technical terms)

The Puzzle

Mining computers are trying to guess a number. This is trickier than it sounds.

It doesn’t matter whether the information is a single letter, a word, a sentence, or an entire encyclopaedia, that number, called a digest number is always the same length.

But if you change just one bit of the information, the resulting number that comes out of the hash function will be completely different.

Information in hash function ➡One long number out.

Want to learn more?

This is just the tip of the crypto iceberg. LitePaper has a a whole host of easy-to-understand articles that make learning about cryptocurrencies, blockchain and DLT technology really bloody simple.

Click here to learn more.