What is crypto mining and staking? What do miners do?

Started by AmarInfotech, Jul 24, 2022, 05:37 AM

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AmarInfotechTopic starter

The Proof-of-Work consensus algorithm is widely known and involves network users reaching agreement with public proof of their efforts. This is achieved through the process of mining, where Bitcoin and other cryptocurrencies are mined to create new transaction blocks and issue coins as a reward for the effort and electricity spent.

Transactions are automatically sent to pools and distributed among validators through smart contracts, with validators staking cryptocurrencies and their amount being called the "stake." In contrast to mining, staking does not require expensive equipment or large computing power, making it a simpler way for people to earn money.


I cannot view the safety and fairness scores. In PoS, the block that receives the most votes is deemed the winner, as opposed to the block with the highest number of assets expended on mining. In the event that node behavior is malicious, the penalty may result in losing the entire blocked share rather than just losing the reward for their work.
This penalty can be likened to the loss incurred if a whole mining farm configured to use the PoW algorithm were destroyed by fire.


In simple words, mining is the extraction of digital currency using certain equipment, to put it even more simply, these are attached blocks that store transaction data. And staking is a way to validate transactions and create blocks.
Blocks can only be attached if a certain cryptocurrency algorithm is decrypted. This is done by the miner, or rather his special device.

nikola Kras

I'll try to explain. For processing information, the owner of a computer resource receives a reward in the form of a commission assigned by the owner of virtual money, or a reward in the form of a part of the cryptocurrency issued during the mining process. It is on this that one of the main principles of the operation of payment systems is based, involving the use of bitcoins and some other virtual money. First of all, those transactions are processed and carried out, where the highest commission is set. Therefore, transactions with zero commission can be carried out for a very long time.


Mining is essential to ensure the functionality of blockchains that operate on the Proof of Work (PoW) algorithm, with bitcoin being the first cryptocurrency to use this algorithm. Miners receive a reward for supporting the network operation and transaction execution through computing power. In contrast, staking involves owners of a particular blockchain competing to own the most coins rather than computing power.

Staking is more environmentally friendly and energy-efficient since it does not require the purchase of equipment such as video cards or ASIC miners, and it is open to more members of the blockchain community. However, there are still risks involved, such as a potential change in the value of the coin being held. To start staking, there needs to be free funds available for purchasing coins and the ability to freeze them for an extended period in a deposit smart contract.
 The budget should be considered when selecting cryptocurrencies for staking.