Golden Recursion Inc. logoGolden Recursion Inc. logo
Advanced Search
Minting

Minting

Alternative method of mining cryptocurrency

What is mining (foraging) of cryptocurrencies and how it works

Mining is not the only option for mining cryptocurrency. Foraging is considered an alternative option, which, unlike labor-intensive mining, offers to earn money by creating new blocks of the network without an impressive financial investment.

What is foraging?

Foraging is an alternative method of mining cryptocurrency without the need for computational processes.

Forging or foraging functions on the Proof of Stake algorithm. The term translates as "forging" and the name of the algorithm can be translated as "proof of stake". This mechanism provides an opportunity for profit in the form of coins for the creation of new blocks within the blockchain. The main resource used to determine which participants will be rewarded for creating a block is Stake - the participant's share of the total number of mined coins.

Mining is based on the Proof of Work algorithm, which literally translates to "proof of work. The algorithm is based on the reward of participants who, using computer technology, were able to prove the hash function, thereby signing the block and implementing the transaction.

How Forging Works

Participants in the Proof-of-Stake algorithm are required to acquire as many coins as possible to increase the share and, accordingly, the yield, without being required to provide computing power.

New coins are obtained by keeping previously mined coins in their account. The creator of the new block is automatically selected by the system based on Stake, i.e., the number of cryptocurrency units available in the wallet. For example, withholding 10% of all the tokens available in the node, a participant can expect to receive approximately the same amount of interest from the commission of the completed transactions.

PoS-based foraging was first used to mine Peercoin cryptocurrency. Today, this mining method is available for many cryptocurrencies. Bitcoin foraging is not possible because this cryptocurrency is mined using the Proof of Work algorithm.

Foraging some cryptocurrencies impose additional conditions. For example, in order to start mining NXT, the user must have the equivalent of 1,440 confirmed blocks, plus a freeze of the user's assets for at least 30 calendar days is required.NXT

Conclusions

Cryptocurrency foraging is an alternative method to mining tokens that does not require the cost of purchasing computing equipment. The main disadvantage of this method is the possibility of creating a monopoly of one or more participants, in which other users will suffer losses and the system will become vulnerable to attacks.

Timeline

Further reading

Title
Author
Link
Type
Date

Documentaries, videos and podcasts

Title
Date
Link
Golden logo
By using this site, you agree to our Terms & Conditions.