If you are new to cryptocurrency or are interested in learning more about the technology behind the increasingly popular field, then this article is for you. Some of the terminology and concepts in the cryptocurrency world are very foreign to most people, and as a wise person once said, “you don’t really understand something if you can’t explain it to your grandmother.” So let us try to make sense of mining crypto currencies in the simplest terms, along with how a service like MinerGate can facilitate your goals from a simple hobby to larger investment-oriented results.
First, ask yourself why the world needs banks. Civilization needs a place where money can be stored safely, where transactions can be recorded by an honest and independent 3rd party, and a place where money can be invested or borrowed in loans or other credit. That has worked out pretty well for bankers, hasn’t it? Today, banks own professional sports arenas all over the world and control huge sectors of global finance from construction to the arts. There is a lot of profit in banking, and very little of that goes to you and me, the little guys. But imagine if we no longer needed banks. Imagine if all those grand profits no longer went to the 1% of top earners in the world, but instead was shared more evenly across the 99%. That’s the idea behind cryptocurrency: basically, we don’t need powerful banks holding all the money anymore now that blockchain technology is here.
Let us next work with some foreign sounding terms. Imagine that the “Blockchain” is basically an excel spreadsheet file on your computer with some data in it. Except that it isn’t just on your computer, it is on a million computers across the globe, and it isn’t just “some” data, it’s all the financial transactions on record for that particular currency—and encrypted so no trusted 3rd party is needed. If a hacker wanted to hack your computer and change the data in your file to reflect all of the money in your checking account going into their account, that would be pretty easy. But when that file is on a million computers, the hacker would have to hack a million computers all at once to do the same thing—and that it nearly impossible. It is certainly more impossible that it would be to hack a bank’s computer system!
So you have this account data that is shared across all these computers, but so what? Well, that is where “mining” comes into play. Mining is just a funny word used to describe participation in the financial record-keeping with a high-powered computer. When I decide to mine a particular currency, what I am actually doing is connecting my super-fast (often super-expensive) computer to the cryptocurrency network and allowing that network to use my computing power to run the transactions. There is a lot of technical jargon that happens here, and we will keep it simple. Computational challenges arise from the heavy burden of encrypting all the financial record-keeping. All you need to know is that “mining” is nothing more than applying your personal computing power to solving those computational challenges. Mining rewards are a financial incentive to users who provide the fastest, most powerful computers. The faster and more accurate the computer you provide, the greater your reward in crypto currency coins. MinerGate is a great way to do this, where users can join a mining “pool” that combines computational resources among a group of users who share the rewards together. Many currencies are reasonably profitable today when mined in a good pool like Minergate with even a modest computer CPU and GPU (examples include the Intel i5 or the AMD RX series). Why not download MinerGate and put that computer to work for you no matter how modest the return? You never know how much those coins will be worth in ten years, do you?
Remember when we said those super-fast computers are often super-expensive? Well, that is where cloud-mining services like MinerGate’s program come into play. The mining analogy really does fit well in this case. Imagine you are a prospector in California back in the 1800s during the Gold Rush days. You go out into the mountains with your mule and pick axe and find a spot. You start digging and get lucky. There’s a vein of gold right there. So you go back into the nearest town with your mule loaded down with ore, ready to cash in, buy more supplies, and head back out to dig up some more. What’s going to happen next? You think you’ll be going back out alone, or will about 200 other prospectors follow you out? How will you protect your claim when the minute you ride back into town those other prospectors are going to “claim jump” all over your ore so when you get back, it is all gone? The answer back then was mining contracts where claims were protected by businesses who had experienced miners, security, lawyers, smelters, and payroll so they could share into claims and provide valuable services while sharing profits.
That is much like what has happened in cryptocurrency with computing power. When people discovered that they could make money by participating in the mining system, a virtual arms race of computational power ensued to the point that now the machines go far beyond a desktop computer. MinerGate takes the pressure off users by procuring the expensive equipment and then leasing it under contract. This allows for excellent returns on investment over time without huge up-front costs that truly competitive mining hardware would require for coins like Bitcoin. MinerGate is also one of the most trusted names in cloud mining, as they make no wild claims of get-rich-quick or insane returns on investments. Instead, MinerGate’s cloud mining is an excellent way to profit from the rising market trend over time of cryptocurrencies like Bitcoin and Monero – plus Ethereum soon!
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