What is cryptocurrency mining and why is it necessary?

In the world of cryptocurrencies, the concept of "mining" is often mentioned and plays a fundamental role in the authentication and recording of crypto transactions.

The need for mining and how it works is related to the blockchain technology that underpins most cryptocurrencies.

The term "mining" has probably become common because of the analogy with the process, where digital "miners" solve complex mathematical problems to "mine" new cryptocurrencies. This is similar to how real miners dig for valuable minerals.

But why is mining necessary?

Mining basically performs two main functions within the blockchain network:

Authenticating transactions

Miners are responsible for verifying and authenticating each cryptocurrency transaction.

They do this by solving a computational task that allows them to block transactions and add them to the blockchain.

Creating new cryptocurrency units

Mining creates new cryptocurrency units.

When miners solve a calculation task, they receive a "reward", which includes the newly created cryptocurrency units as well as transaction fees.

These processes not only ensure the authenticity and security of transactions, but also the decentralised operation of the cryptocurrency network.

As there is no central organisation to control the transactions, the role of miners is vital in maintaining the integrity of the system.

Miners are therefore essential to the functioning of blockchain and cryptocurrencies.