Mining is the process of adding transaction records to Cryptocoin's public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Cryptocoin nodes use the block chain to distinguish legitimate Cryptocoin transactions from attempts to re-spend coins that have already been spent elsewhere. It is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work, or proof of stake, to be considered valid. This proof of work is verified by other Cryptocoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function.
The primary purpose of mining is to allow Cryptocoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Cryptocoins into the system: Miners are paid any transaction fees as well as a "subsidy" of newly created coins. This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.
Cryptocoin mining is so called because it resembles the mining of other commodities: it requires exertion and it slowly makes new currency available at a rate that resembles the rate at which commodities like gold are mined from the ground.
Mining of cryptocurrencies is usually done using sophisticated computer equipment that is very expensive to purchase, but there are three ways to mine cryptocurrencies at subsidized rate.
1. MINING CONTRACTS:
Mining contracts are like shares bought by an investor from a company on the promise of a return of profit for an extended period of time, these contract once bought begin to give returns as soon as it confirmed by the mining company, this kind of contract is called a third party contract, where the company plays a third party by mining the coins for her investors, but it comes with many risks, most mining companies have been known to be ponzi schemes and as soon they have ammassed enough money they abscond with their investors captial. Examples of companies that offer mining contracts are, Genesis mining, Hashflare, Eobot, etc.
2. CPU/ASCI MINING:
This is the safest and surest way to mine cryptocoins, here the miner puts his own computer to work, usually the coins mined are the ones that have little difficulty to solve, mostly scrypt coins. This method of mining is very slow due to the low hash rates the cpu can handle, the miner uses either his computers GPU, or the graphic cards, or even both, but maximum hash rates with this method never reaches the amount where the coins will be profitable to the miner in a short run.
3. RENTING MINING RIGS:
This is the last surerest method to getting cryptocoins via mining. In this method the intending miner knowing that he cannot do it alone decides to rent the mining rigs of other people. A very good place to do this is at miningrigrentals.com, the idea is almost similar to the mining contracts above, but with little risks, and
profits are determined by the miner, renting times usually range from 3hrs-136hrs at miningrigrentals.com, but you can rent a scrypt miner at eobot for a day to see how profitable this method is.
More Technical explanations later......
