What is Ethereum?
Ethereum is a decentralized, open-source, public, blockchain-based computing platform and operating system that helps the functioning of smart contracts. Ethereum platform generates the blockchain through the use of the token called Ether. This token can be transferred between accounts which are used to compensate participant mining nodes for the performing computations. In order to do so, Ethereum produces a decentralized virtual machine known as the Ethereum Virtual Machine (EVM), that works at executing scripts using a network of public nodes.
To understand the functioning and development of Ethereum in simpler words, let’s have a brief look at how the internet works. Your private information including your passwords, personal information or financial data is stored on servers controlled by third-party services such as by cloud servers or storage apps by Google, Amazon, and Facebook. There are servers that work at storing all your data entered on these websites or media platforms and charge the companies to do so. However, with these strong connections of servers for all the information, there comes a substantial threat. These servers are unfortunately vulnerable to hackers or government who can easily manipulate their way into these servers and get a hold of your personal information.
Ethereum is one of the largest and fastest growing cryptocurrencies in the world, currently, after Bitcoin. The price of Ethereum jumped from $1 to the current rate of over $150, with an ATH of over $400 in just a year and a half.
The purpose of Ethereum is to deploy a new way to store all this information on a network created using blockchain configuration rather than relying on the third-party servers. This means that the network created using Ethereum will give the hold of information and all the data to the entity itself. Ethereum works at diminishing the hold of third-party servers and developing a blockchain-based decentralized system with an ideal notion of removing the dominance over internet third parties, while Bitcoin aims at replacing the payment methods and online banking.
According to what Ethereum is planning on achieving, if all goes well, the decentralized system will work at giving all the rights of information and storage to the creator itself rather than risking the vulnerable defense of server entities prone to hacking and attacks. This suggests that all the information that you enter on these platforms will be stored within the platform itself with the Ethereum blockchain. This means that only the user can make any necessary changes in the application or module without any effects occurring from the application ban resulting from the third-party servers.
What is Ethereum Mining?
Now that you know about Ethereum and the token, it is important to understand Ethereum mining and how it works. A general understanding of mining Ether is to generate tokens in a way which does not require the central issuer. This notion is true in the sense that the Ethereum tokens are generated from the mining process at the rate of 5 ether per each mined block. In a way, miners play a substantial role in making sure that Ethereum works in a way that is accomplishing its purpose of combining a network of decentralized blocks to diminish the dependency and threats of the third-party servers.
However, with Ether mining comes another major responsibility for Ethereum. The mining of its tokens focuses on making decentralized record-keeping a possibility in the near future. As a result, Ethereum mining focuses on blockchain building which introduces a new way of keeping and storing records on an entire network rather than an individual server which further helps the client to verify transactions as well as add to them to the public ledger. Ethereum is termed to be the ‘World Computer’ that strives to diminish the entire client-server model through mining. These servers and clouds are to be replaced with thousands of nodes from around the world thus explaining the term ‘world computer.’
Ethereum mining is a computationally complex work requiring maximum time along with processing power. A miner in this process is rewarded with tokens in exchange for providing solutions to challenging math issues using the blockchain technology, similarly like the Bitcoin mining. If you have ventured into Bitcoin or have participated in the Bitcoin mining, it is not entirely impossible to understand Ethereum mining as there are similar processing structures between the two. Marco Streng, CEO of Genesis Mining says, “We believe it is headed to the moon and we are building a rocket ship to make sure our customers do not miss out.” Just like every other major cryptocurrency in the world, it is hard to predict about the future of Ethereum, but it looks promising to Streng and other influencers.
How Ethereum Mining Works?
Ethereum is venturing out for different methods of deriving to a consensus about the transaction’s validity. However, mining holds the staging together. For this, miners use computers to guess answers to a puzzle or a math problem very quickly until one of them wins. This takes place for each block of transactions where miners provide answers to problems repeatedly and quickly. That means that the miners have to go through the unique header metadata of the block using a hash function, returning a jumbled string of letters looking random and changing the nonce value which in turn impacts the hash value result.
This hash that a miner finds should be similar to the current target which then results in awarding ether token to the miner and allows them to broadcast that block across the network for validating from other nodes and add this to their own ledger. If in case a person working on the problem finds the hash, the other person has to stop working on the block or the puzzle and move on with the same processing to the next block presented on the network.
Interestingly, this method of proving the hash and coming up with a unique solution faster than others has no way that a miner can cheat. This makes the puzzle solving technique to be known as ‘proof-of-work’ method because of its impossibility to cheat or fake their answers in this network. Once the miner comes up with the correct hash, it takes very little time for other nodes to verify this as correct as it is on the network itself. The approximate time for a miner to find the block is between 12 to 15 seconds on the platform. The network algorithms are set in a way that if miners are exceeding this time or solving the puzzles too quickly, the system will automatically adjust the difficulty of the problems in a way that the miners reached the approximate of 12 seconds to provide solutions.
The miners providing the correct hash for the particular blocks, earn rewards in the form of Ether tokens and can vary according to their computing power and luck. However, with the latest developments, it might not be very far that Ethereum mining won’t require miners for a very long time. The ‘proof-of-work’ method of mining Ethereum is soon transforming into ‘proof of stake’ method of mining. This means that the developers are creating a system where the current network will be secured by tokens of the owners, ditching the current system of determining the validity of transactions using the algorithms on the network.
How to Mine Ethereum?
You now have an inkling as to what is Ethereum and how mining works and if you are wondering on how to mine Ether yourself, here is some information to help you. But for mining any major public blockchains, you must start with powerful hardware and a system with strong processing and computing power.
It becomes a prerequisite to investing in powerful hardware for mining on bigger platforms such as Bitcoin and Ethereum in this day and age. Miners also need to make sure that they are using this special hardware computer only for full-time mining purposes. The best option here is to choose GPU mining hardware which the miners suggest guesses answers to puzzles quicker.
Once you have selected your hardware, the next step here is to install a mining software where the miners can start with installing a client in order to make a connection with the network. One can also install a command line named Geth, which runs an Ethereum node for any number of clients.
It is important and possible to test ether mining using a private network and experiment using decentralized applications (dApps). This, fortunately, doesn’t require powerful hardware, but a home computer can do the work for you, with the client installed.
Now that you have installed and tested the necessary application according to the previous steps, you need to decide if you are interested in mining Ether tokens itself. If you decide to go for it, now you will need to install a mining software dedicated to the ‘real’ mining. For this, you can download and install Ethminer once you are done with Geth. Once you are done installing it, you will officially secure a position on the Ethereum network.
Join ‘Mining Pool’
For mining ether tokens, it is important that you participate in one of the ‘mining pools’ as you are unlikely to mine on your own. The mining pool is where some of the miner’s ‘pool’ together and combine their computational powers in order to improve their chances of solving block puzzles and earn Ether as a reward. You can then split the profits proportionally based on what computing power each miner contributed.
For more information on how to mine Ethereum, you can visit the Ethereum website here: https://www.ethereum.org/