6:00 AM
Paul B
Cryptocurrencies are the new kid on the block in the financial world. Some of you may have heard of the terms Bitcoin or Ethereum, and some of you may have seen news articles about the increasing price of Bitcoin and its subsequent crash.
Cryptocurrencies are basically a form of digital currency that are created using the blockchain technology and secured with encryption. Currently, the most prominent cryptocurrency is Bitcoin. It was the first digital currencies created and is undoubtedly the most widely accepted in the financial world.
A widely disruptive technological innovation, Bitcoin led to the creation of hundreds of cryptocurrency exchange sites, new ways to conduct business, new marketing strategies and much more. Saving us quite some time and providing great insight into this industry, Btxchange has published an interesting infographic you'll see below.
This article and infographic look at how bitcoins are actually generated.
It is done through a technique known as Bitcoin mining.
Whilst traditional money is simply printed and placed gradually into circulation, Bitcoin is mined using algorithms and dedicated mining computers.
Mining works on the premise that only a set number of bitcoins can ever be created (21 million to be precise). The mining process effectively creates and brings them into circulation. The actual process involves solving a puzzle and adding a hash number to the new block of data. This new data is then added to the public ledger, and the miner who solved the puzzle is granted 12.5 bitcoins as a reward.
The mining process involves a huge amount of processing power and electrical output, and some companies have even created mining farms composed of hundreds of dedicated servers. Mining means big business as the potential rewards can be great, but as the total number of bitcoins in circulation increases the difficulty in obtaining them actually grows.
The infographic below provides additional info about Bitcoin and mining.
