Cryptocurrency mining algorithms
Today, a lot of people are interested in blockchain and consider cryptocurrency mining as an opportunity to earn money or just an interesting investment. However, not everyone has an idea of how this works from a technical point of view and do not delve into the basics of mining. In this article, we will consider the most popular cryptographic algorithms and tell what it generally is. Below is a list where the most popular coins will be listed along with the algorithms they use.
What is an algorithm in mining
All cryptocurrencies use different hashing algorithms that are responsible for the operation of the blockchain. With their help, decryption takes place and thanks to them, the reliability of the data is guaranteed. Creating an algorithm is always the work of cryptography professionals. Owners of mining equipment, for example, video cards or special asic devices, receive rewards for maintaining the functioning of the network of a particular cryptocurrency. In general, mining is a complex algorithm for earning on a coin with electricity, which is spent in exchange for a crypt. Each hashing algorithm uses separate programs that are tailored specifically for it.
However, encryption alone is not enough to build a reliable blockchain. Due to the fact that any member of the network can add a record, this process should be checked somehow. For this, special evidence of consensus is used. These are the confirmations you expect when you submit a new transaction.
The most popular consensus is Proof-of-Work (PoW) and Proof-of-Stake (PoS). PoW is translated – this is proof of work. This approach assumes that to complete the action, you need to perform work that can be guaranteed to be done.
PoS is proof of ownership. It makes it possible to generate blocks only to those network nodes that have coins on their account. In this case, the number of coins increases the likelihood that generation will occur.
There are also other ways to achieve consensus that are less popular. All of them are aimed at certain projects and are often successfully used in niche solutions for which they were developed.
Basic encryption algorithms
First you need to figure out what general mining algorithms are. Here we will only mention the most common ones that are used to mine popular cryptocurrencies like bitcoin or ether. However, new, more modern algorithms that offer greater reliability, efficiency and manufacturability continue to appear on the market.
Newer algorithms are increasingly protected against ASICs. The thing is that the presence of such devices on the market allows a group of industrial miners to get most of the processing power of the network. This makes it less decentralized and violates one of the principles of cryptocurrencies.
Protection from these devices increases the number of potential miners, because almost any more or less modern video card can be used for mining. This makes the network more reliable and more stable.
- SHA-256 is an algorithm that is the basis for the well-known Bitcoin. The effectiveness of video cards in this algorithm has long fallen due to the appearance on the market of special devices called ASIC miners. Many new projects or forks of Bitcoin still take this algorithm as the basis.
- Scrypt is an algorithm that is used to work with lightcoin, one of the main alternatives to bitcoin. It was especially popular when ASICs did not exist under it. Now mining equipment for the Script is not uncommon and mining coins with this algorithm on video cards is pointless.
- X11 is another popular algorithm that uses the anonymous cryptocurrency Dash. He mined well on modern video cards, until in 2017 the release of ASICs for X11 began.
- Cryptonight is the basis of the anonymous Monero coin. It is especially noteworthy in that it is protected from ASICs and works only on processors and video cards.
- Dagger Hashimoto (Ethash) – an algorithm that uses the cryptocurrency Ether. It is also intended for video cards, since large amounts of video memory are required for operation. All modern types of cards are supported.
- Equihash – became especially popular with miners after increasing complexity in the Ethereum network. This technology is used in ZCash. There, it was launched in the cold start mode, which artificially overestimated the complexity in the early days, which significantly affected the course.
So, in this review we managed to figure out what encryption algorithms are, talk about their types and make a list of the most popular coins for mining. The cryptocurrency industry is still at the very beginning of its development. Every day new types of consensus-building on the blockchain appear, cryptocurrency algorithms change and improve. Such developments are always interesting to the audience and it is interesting to observe this market.