What are the Benefits of Crypto Mining?

If you ever heard the word cryptocurrency, you also probably heard about mining. If you still don’t know what cryptocurrency mining is and if it’s even profitable, keep reading!

In order to understand crypto mining, we must first explain what a cryptocurrency really is. Unlike traditional currencies, a cryptocurrency is a digital asset that works in a decentralized way; it doesn’t need a bank or a third-party to operate. Someone can send someone else a cryptocurrency directly without any third-party involved.

The first cryptocurrency ever created was Bitcoin. Every single cryptocurrency has a blockchain, an immutable digital ledger. All transactions on a blockchain are recorded there forever, and no one can edit or delete them.

A blockchain works because it incentivizes people to confirm each transaction’s authenticity by rewarding them with its cryptocurrency. Cryptocurrencies are based on cryptography; miners basically need to solve extremely complicated mathematical problems to verify each transaction, and they get rewards for their work.

The process explained above is what known as the mining process; anyone with a computer can participate from anywhere in the world. It also allows cryptocurrencies to be so secure. An attacker would need to somehow own 51% or more miners in order to attack a blockchain network. Since miners are spread around the world, this task is hard to happen, but still possible especially to new projects.

Proof of Work ‘Mining’

Bitcoin was the first cryptocurrency to introduce the Proof of Work consensus algorithm where users have to solve complex mathematical problems in order to process transactions and secure the whole network.

Bitcoin was quite easy to mine at first; you could do it with your CPU. There was no need for special equipment, and the rewards were huge. However, Bitcoin’s mining difficulty has considerably increased as time goes by. Currently, users need specialized and expensive equipment to mine it.

Proof of Stake ‘Mining’

With the introduction of the Proof of Stake consensus algorithm, cryptocurrency mining faced a new era. In this case, users don’t have to solve computationally intensive puzzles. They are called validators in the PoS consensus and have to lock up some of their coins as a ‘stake.’ They get rewarded for their locked up coins, and typically, the more coins they stake, the more reward they get. There are hundreds of PoS-based cryptocurrencies that can be easily staked by just using a wallet.

PoS has many benefits over the traditional PoW, like lower cost and more energy efficiency. Additionally, because PoS encourages users to hold the coin, it stabilizes the price a bit more than traditional cryptocurrencies. Also, PoS is known as more decentralized than PoW. Therefore, it can prevent 51% that once happened to some other projects.

Today, you can find plenty of exchanges that support staking, including Binance exchange.

Proof of Formulation ‘Mining’

FLETA, as a blockchain platform for the creation and development of DApps, developed the PoF(Proof-of-Formation) consensus algorithm. In PoF, blocks are generated in a designated order rather than randomly. It also prevents unnecessary forks and enables faster block generation and dissemination.

What is special for the miners in the PoF system is that every miner can get a reward every day. There is no competition among miners, and they do not need expensive mining equipment. Users can easily create FLETA formulators, the mining nodes of FLTA, by using the official FLETA wallet and start mining. You need to lock up a minimum 200,000 FLETA to create a basic level formulator.

Moreover, there is also a staking system in FLETA ecosystem, which helps ones with relatively less FLETA can participate in FLETA mining ecosystem; you need at least 100 FLETA to be a Delegator of FLETA. An unstaking period for Formulator and Delegator is 15 days.

Conclusion

The mining reward miners get, cryptocurrency, is the reason they mine and secures the blockchain network. FLETA developed PoF consensus algorithm for improved network and benefits of miners. FLETA will always try hard for a better mining ecosystem for our participants.

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