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Updated cryptocurrency mining paragraph. (#21298)

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dillon
2018-11-09 08:29:35 -05:00
committed by Kristofer Koishigawa
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guide/english/blockchain/cryptocurrency/index.md
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@ -10,7 +10,7 @@ title: Cryptocurrency
Cryptocurrency is a subset of digital currency, which acts as a medium of exchange amongst two parties. It is known as crypto-currency because of the utilization of cryptography in securing its transactions. There are various cryptocurrencies including Litecoin, Dash, Ethereum, Ripple, and the currently most popular one Bitcoin.
> You can’t stop things like Bitcoin. It will be everywhere and the world will have to readjust. World governments will have to readjust
>
> – John McAfee
Cryptocurrency enables trustless and anonymous transactions since it does not involve any third party - there is no central bank. Instead, a blockchain keeps a ledger of transactions across a public network of computers. Blockchains are append-only, meaning nobody can change past transactions.
@ -22,7 +22,7 @@ Every cryptocurrency has three layers:
2. Network - The group of computers that maintain and update the decentralized ledger (aka miners)
3. Application - The software that allows users to make transactions (aka wallet)
If you want to earn cryptocurrency through mining, it can be done through solving mathematical proof-of-work problems that validate transactions. Blockchain uses the concept of irreversible cryptographic hash function which consists of guessing a random number (usually less than a certain value) to solve the problem for transaction validation. You will require machines with high processing power to be able to solve these problems. Computers with a high-end graphics card or an application specific integrated circuit (ASIC) designed especially for cryptocurrency mining are able to solve these puzzles most efficiently.
Many cryptocurrencies such as Bitcoin can be earned by validating transactions on the network. This process of validation is called "proof of work" and consists of mathematically guessing a random numbers (usually less than a certain determined value or "difficulty") to attempt to match the blockchain's irreversible cryptographic hash function. As more transactions are validated (and rewards for validation are collected) over time, the difficulty of finding the correct hash increases. An increase in the popularity of cryptocurrency mining over the past few years has outpaced the development of the average computational power of a household computer, so in order to mine effectively, one requires a computer (or computers) with especially powerful graphics cards (such as the Nivida GTX 1080) or specialized cryptocurrency mining equipment (such as the Fast-Hash One or CoinTerra TerraMiner IV). It should also be noted that, because of drawbacks of proof-of-work validation (such as energy inefficiency), some cryptocurrencies are exploring alternative algorithms such as "proof of burn".
Some people invest in cryptocurrency on exchanges such as Binance, Bitrex, or Coinbase. The market peeked in January of 2018.
@ -34,5 +34,3 @@ Cypherpunks, crypoanarchists, and libertarians paved the way for the right to pr
[Cryptocurrency](https://en.wikipedia.org/wiki/Cryptocurrency)
[Ultimate Guide to Cryptocurrency](https://blockgeeks.com/guides/what-is-cryptocurrency)
[Bitcoin](https://en.wikipedia.org/wiki/Bitcoin)