Cryptocurrency has been a hot topic for several years now and with the significant jump in the value of certain cryptocurrencies like Bitcoin and others, an increasing number of people took notice and started trading in Cryptocurrency. If you’re a newbie in the crypto market, there are a few things that you should learn before you begin investing and one such thing is the Cryptocurrency Mining Pool.
Cryptocurrency mining refers to the process in which transactions of different currencies are verified and added to the blockchain digital ledger. Every time a transaction is done, a cryptocurrency miner verifies the information and updates the ledger.
This process involves solving mathematical problems including a cryptographic hash function that relates to the block having transaction data while competing with other miners. The first miner to solve the problem and to update the ledger is rewarded a small amount of cryptocurrency.
What is a Cryptocurrency mining pool?
Cryptocurrency mining takes a lot of resources, which includes powerful computing and a significant amount of electricity and neither of these comes cheap. So, in order to make the process viable, a group of miners create a cryptocurrency mining pool.
The people in these pools share their processing power, hardware resources over a network to find a block and divide the profits according to the work done by each of them. Each member has to show valid proof of work to get a share.
Mining pools started when mining individually became very difficult, and it could take years for slow miners to generate a block. The solution came in the form of pooling resources so that miners can find a block and generate revenue consistently.
Most of the mining apps and services have their mining pools. These are the official mining pools and are default settings in the app. Using an official mining pool has advantages as it has other miners that can help in technicalities and other problems. Further, these mining pools receive updates from the company regularly.
Things to remember while selecting a pool
Several things have to be kept in mind while selecting a good mining pool such as:
It is advisable and necessary to check the cryptocurrency mining pool requirement that you wish to join. This includes whether the mining equipment is compatible with the pool. Sometimes there is even a limit on minimum internet speed and one needs to get it verified by the owner of the pool.
Different pools use a different mechanism for dividing work to miners. A good mechanism should divide the work equally and evenly between the miners depending on their skill level. The strong miners should get more complex tasks as compared to weak miners.
Pool Fee Structure
Some pool charges some fee, while some pools are free. A miner should look for a fee structure and all the additional charges before joining a pool. The pools free at starting can become chargeable later and can charge ridiculous fees.
What to do if you want to earn through mining pool?
Mining pool earnings depends entirely on how much cryptocurrency your computer can mine, so to make something out of pools, one needs to invest in a good quality mining rig.