Mining vs Mining

August 1st, 2022
Mining vs Mining

Cryptocurrency mining is different from gold mining, and cryptocurrency minting is different from real life coin minting; here we explain their differences:

Cryptocurrency mining:

Cryptocurrency mining is the process of recording and verifying transactions on a public digital record, known as a blockchain. To do that, miners solve complex mathematical problems and in return, there is a chance that they will be rewarded with cryptocurrencies. As a result of mining in the sense of proof of work, a new block is mined. The mining of new blocks allows the continuation of the blockchain. Therefore, mining serves two purposes: to create new coins and to keep track of all existing token transactions.

However, minting is also part of mining. So minting here refers to the appearance of new coins through proof of work.

Cryptocurrency Mining:

On the other hand, under the proof of stake mechanism, coins are not minted through mining, but rather through staking. Proof of stake has no miners, it has validators and it does not allow people to mine new blocks, instead it allows them to mint or forge new blocks. Minting is the process of validating information, creating a new block, and recording that information on the blockchain. So proof of stake is the minting process of how blocks are created and how data is added to a block.

The main difference in the way cryptocurrencies are minted is that one requires proof of work, which is done through mining, and the other through proof of stake, which It is done by gambling. The coins that are minted are the end, but the means to the end are what differentiate PoW (proof of work) and PoS (proof of stake) minting. However, both processes have the same goal, which is to secure the blockchain and distribute the newly minted tokens in a decentralized manner, only through different means.