The cryptocurrency and blockchain marketplaces are some of the newest marketplaces to gain the attention of the mainstream consumer. This has been true for about a decade or so now, and the future of cryptocurrencies and blockchain technologies seems to be well established. That being said, many consumers are still a little unsure about what all is involved in cryptocurrency and blockchain technology, and if they should start investing now. It’s also important to note that there are a variety of ways in which one can get started with Bitcoin or blockchain technologies, depending on the comfort level one has with technology, investing, and finances.
Before getting into the ins and outs of Bitcoin mining and how it can be an advantageous strategy in 2022, it’s important to have at least a basic understanding of what Bitcoin, cryptocurrencies, and blockchain technology actually are.
What is Bitcoin and the Blockchain?
Bitcoin is a form of cryptocurrency. Another popular form of cryptocurrency on today’s market is Ethereum. However, while these are two of the newest and most common cryptocurrencies you’ll hear about, there are a wide variety of other cryptocurrencies entering the market each and every year as well.
Despite their modern buzz and their presentation as a new and exciting technology, the groundwork for blockchain technologies and cryptocurrencies was actually laid back in the 1980’s by David Chaum. Then, in the 1990’s, Chaum’s company DigiCash created the first ever cryptocurrency eCash. While eCash didn’t find much traction with the consumer, the impact in the world of technology and information was long-lasting.
With multiple other iterations occurring, a decade later one such iteration was released called B-Money. This is important to note because there were specific elements of B-Money that were then later mentioned and referenced in the White Paper that launched Bitcoin.
So what is a blockchain?
Blockchain technology is pretty simple. Essentially, a blockchain is just an immutable ledger. It logs the series of transactions as they occur, and it cannot be edited once a transaction is verified and added to the chain. The cryptocurrencies that live on top of Blockchain technologies, are simply little snippets of code that represent coins.
This is also important to note because it can help one understand the concept behind an NFT. NFTs are non-fungible-tokens. Similar to cryptocurrency tokens, these are little snippets of code, but instead of representing a coin; they typically represent a still image, an audio clip, or a piece of graphic design.
The difference between an NFT and a cryptocurrency is the interchangeability. NFTs represent unique pieces of content that can range in value, whereas cryptocurrency units share the same value. To make this simpler, think of cryptocurrencies like dollar-bills. One dollar bill is the exact same as any other dollar bill (less any sentimental value). On the flip side, think of NFTs like trading cards wherein a first-edition holographic limited release Pikachu is not worth the same as a 20th issue print, holographic Blastoise.
There is a lot to understand and learn about blockchain technology, and it’s highly recommended that you do even more research before jumping into any cryptocurrency investing.
The Process of Bitcoin Mining
Bitcoin mining is the process of validating transactions on the Bitcoin blockchain. The Bitcoin blockchain makes use of a proof-of-stake validation system. This is another element in the design and function of a blockchain ledger. In order to create a validated and authenticated addition to the blockchain, users all across the chain work together to solve equations that lead to the next block of transactions being added.
This typically happens through a network of computing devices that are all constantly running algorithms in order to solve for the next block on the chain. However, what this has led to in the past is an extremely high environmental toll, giving Bitcoin mining a poor reputation in the eyes of the environmentally concerned.
That being said, there are organizations in operation today working diligently to reduce the carbon footprint of Bitcoin mining through the production of carbon zero Bitcoin mining machines. If there is a way to significantly reduce the environmental impact of Bitcoin mining, it may very well pave a path forward into a world that is much more ready to embrace a full integration with cryptocurrency.
A few Last Words
Cryptocurrencies and blockchain technologies are constantly being advertised across just about every channel there is. From social media, to sports stadiums, to Discord groups. If you’re interested in getting started with cryptocurrency investing or Bitcoin mining, do your research, be diligent, and keep in mind that all forms of investing are akin to gambling. While many people have made a serious fortune through Bitcoin mining and crypto-investing, there are plenty more who have lost a significant amount.
Be careful, be responsible, and good luck!