By Ibrahim Alkurd, CEO of New Mine, a blockchain mining company and hardware, and a spouse at Lavaliere Capital, a virtual asset hedge fund
A blockchain is a decentralized database of transactions that everyone on the network can see. The network is made up of many computers that verify transactions and upload them to the blockchain ledger; this procedure is known as blockchain mining. Computers that extract the blockchain are rewarded with cryptocurrencies, a virtual form of currency designed to serve as a means of exchange.
I covered what makes blockchain revolutionary in an earlier Forbes article. In this article, I’ll give an in-depth look at the blockchain extraction procedure.
Test paints (PoW) against emission test (PoS)
Blockchains are divided into two categories, PoW and PoS. Bitcoin, the first cryptocurrency, operates with a PoW consensus mechanism. It’s a form of mathematics known as cryptography. Cryptography uses very complicated mathematical equations that can only be solved through computers. PoS, the other consensus mechanism, first followed through a blockchain mapping known as Peercoin. In PoS blockchains, no blockchain extraction is performed.
In this article, I will focus on PoW blockchains because they are the ones that require blockchain extraction. A variety of PC devices can be used to extract the blockchain, although it is sometimes divided into 3 categories: CPU, GPU, and ASIC. The type of PC device you can use is decided through the blockchain you need to operate.
Upc
CPU stands for central processing unit. It is thought to be the brain of a computer because it controls the operations of all parts. CPUs perform all kinds of knowledge processing operations; without one, a PC cannot function properly. In the early days of Bitcoin, you can simply mine it on your processor. As mining has become more competitive, that was no longer possible. However, there are still other blockchains that can be operated with a processor today, such as Loki and Nimiq.
(Full disclosure: my company owns Bitcoin, Ethereum, XRP and cryptocurrencies).
Gpu
GPU stands for graphics processing unit. GPUs are more resilient than CPUs for quick functions. GPUs are designed to be effective for performing large calculations. This feature makes them very suitable for the operation of certain blockchains, such as Ethereum. Although it is technically conceivable that Ethereum works with a processor, it is not recommended. GPUs are much more effective at extracting Ethereum and other cryptocurrencies like Ravencoin and Beam.
There are other GPU models. Websites like WhatToMine allow you to enter other GPU models and estimate which cryptocurrency will have the maximum success to exploit.
Asic
An ASIC is an application-specific built-in circuit. An ASIC is a chip that can only be used for one purpose. Previously, it was imaginable to extract bitcoin using a CPU/GPU. But that has replaced as it has become more competitive. Today, Bitcoin is extracted using ASIC chips. Litecoin is another popular exploited cryptocurrency that uses ASIC chips.
Most large-scale blockchain mines use ASIC machines. Because these machines are specially designed, they are more reliable in mining.
Conclusion
The blockchain mining landscape has been dramatically replaced in recent years. Today, there are thousands of blockchains that can work with a processor, GPU or ASIC. This can be a complex domain of browsing, especially for beginners. When considering blockchain mining for you or your business, do your due diligence and consult with experts in the box to avoid non-unusual traps.
Blockchain mining has a multibillion-dollar industry and is growing. More and more companies are entering the area and innovating in this exciting field.