Miner’s glossary: 10 new blockchain terms
Are you interested in mining but afraid of being lost in unknown terms? Specially for you, we have prepared a glossary that will help you to come to grips with the process. Now, reading any mining article, you won’t have to google a lot, because you should just peek into our ‘Glossary of blockchain terms’.
The concept of mining
Let’s begin with the main thing. Today, mining means the process of applying computer hardware capabilities to create new blocks, units of the Bitcoin network. Miners receive cryptocurrency as a reward, thus mining is generally a process of obtaining cryptocurrencies. Currently, the most popular mining types are Bitcoin and several altcoins: Ethereum, Bitcoin Cash, and Ethereum Classic. You can see how beneficial mining of each coin is on the Whattomine website.
A matter of technique: exploring equipment
In the early days after the Bitcoin development (9 years ago), one could use a 2009 home computer for its mining. However, with the Bitcoin network being constantly upgraded, the process of creating new blocks becomes more and more difficult. Nowadays, mining requires giant capacity to be profitable. Therefore, one uses special farms instead of computers.
However, even a powerful farm needs lots of time to find a new block. To optimize the process, miners are united into pools. Read in this article: How pools work and which of them are considered to be the largest today.
- Mining farms are computers with a block of powerful processors designed (or assembled) specially for cryptocurrency mining.
- Mining pools are groups of miners united via the network (similar to the torrent tracker). They collectively solve a problem of finding new blocks in blockchain and divide obtained cryptocurrency among each other.
- Hash rate is a calculating capacity of mining hardware. It is measured in hashes per second. Hash is a cryptographic term meaning a cipher obtained out of the initial information. Cryptocurrencies require hash to complete the block.
- Altcoin is the name of all the cryptocurrencies, except for Bitcoin.
- ASIC (application-specific integrated circuit) is a specialized microchip for solving certain problems. In this context, it is special farms for mining Bitcoin, Bitcoin Cash and some other cryptocurrencies with similar protocols.
- Node is any computer connected to the Bitcoin network and based on the P2P protocol. The blockchain network consists of such nodes where the information is distributed. All of its participants possess equal rights.
- Proof-of-Work and Proof-of-Stake: these blockchain terms mean two best-known consensus algorithms. They offer different mechanisms for proving accomplished work. They are described in detail in the Forklog online publication.
Virtual currency storage
Every miner should store obtained cryptocurrencies, thus choosing a reliable cryptocurrency wallet is a significant stage of preparing for this business. All modern wallets have private and public keys, as well as public (open) Bitcoin address that miners use to send obtained coins.
- A public key identifies a receiver and a sender and can be given to other people. A private key is applied along with a public one to create non-forgeable signature to the message.
Well, now you know 10 new blockchain terms and will be able to read any article for a newcomer. Do you want to learn more about mining? Subscribe for the news of our website! We prepare the latest publications about blockchain and cryptocurrencies weekly.