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Come with us as we take a deeper look into cryptocurrency mining pools.
What is Cryptocurrency
Although many may think that cryptocurrency and fiat currencies are similar, they are not. The truth is that just like a fiat currency, cryptocurrency can be used to make payments; however, there are major differences between the two.
Firstly, cryptocurrency does not have a tangible note or coin. All payments and other things related to moving crypto are made digitally.
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Secondly, cryptocurrency is decentralized, meaning there is no central point of control. Banks and the governments control fiat currencies; however, this is not true for cryptocurrency.
What is a Cryptocurrency Mining Pool?
When we think of a mining pool, we usually think of a group of miners mining for minerals; however, this is far from the truth regarding cryptocurrency. A group of virtual miners works in a cryptocurrency mining pool. After combining computational resources, these virtual miners are meant to strengthen the probability of finding a block.
When thinking of a block, you need to think of a blockchain, essentially a ledger where all transactions are recorded. The block records a small portion, if not all recent transactions that have taken place that have not been approved as yet by the network. The minute the transaction is approved, it is then closed.
Another aspect of a mining pool is cloud mining. What’s important to remember is that cloud mining is similar to virtual mining, just without the hardware.
It’s also important to remember that cloud mining involves leasing or purchasing equipment from a third party. Just like any other lease agreement, the third party is then liable for the maintenance of the equipment.
The entire idea of cryptocurrency cloud mining is that the people involved use a remote data center to process cryptocurrency mining using a shared database.
Different Mining Pool Platforms
Thankfully you can join a mining pool platform and mine over 40 cryptocurrency pools. It’s important to note that you can mine cryptocurrencies such as Ethereum, Bitcoin, Litecoin, and many others. Below we take a look at a few top mining pool platforms available.
There are many other mining pools available. However, when choosing a mining pool, it’s always important that you choose one that works best for you. Always ensure that you conduct the necessary research to fully understand what you are getting yourself into.
How Does a Mining Pool Work?
With every team, there is a process of delegation, and the same is true for mining pools. The mining pool acts as a coordinator and is meant to assign work that comes in units to members of the mining pool.
There are three main functions of a mining pool: managing member hashes, distributing rewards, and recording the amount of work done by each member. The work given to each member of the mine is unique, meaning that no member receives the same work. This is done to ensure that there is no overlapping of work.
How Do Virtual Miners Get Paid?
A virtual miner is only paid after the work has been deemed successful. They are also paid according to their contribution to the work done.
Virtual miners are paid in cryptocurrency; however, it’s important to remember that there are different methods used to share the cryptocurrency. These methods include but are not limited to the proportion, pay-per-share, and pay-per-n-shares methods.
Cryptocurrency mining is more complex than it looks on the outside. It’s important to conduct all your research before venturing into a mining pool platform or pursuing a mining pool in general.
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