From the LBank blog.
Crypto minting and crypto mining are both ways to generate new coins in a cryptocurrency. However, there are some important differences between them.
In this article, we will give you an overview of crypto minting and mining and what you need to know before you start.
What is crypto minting?
Crypto minting is the process of authenticating and creating new blocks, then recording them on the blockchain as part of the “proof of stake” protocol.
Crypto minting is used to create new tokens for many purposes, such as to represent a company’s equity, to fundraise for a project, or to create a new currency.
Minting new tokens can be a complex process, and there are a few things you need to consider before you start. This can be done in two ways: through mining or staking. Staking is the process of holding cryptocurrency in a wallet and keeping the wallet online. Some cryptocurrencies allow users to “stake” their tokens to earn interest. This is how some new cryptocurrency is created.
Steps to minting cryptocurrency
The process of minting cryptocurrency is a simple one, but it can be a bit confusing for beginners.
First, you will need to set up a cryptocurrency wallet. This is where your coins will be stored, and it is vital that you choose one that offers security features like two-factor authentication.
Next, you will need to buy some Bitcoin (or another coin) with real money through an exchange like LBank.
Your last step is to transfer your Bitcoins into your newly-created wallet. You will do this by sending them from one place (the exchange) to another (your wallet).
What is crypto mining?
Cryptocurrency mining is the process of verifying transactions and adding them to the blockchain. In return for their services, miners are rewarded with newly minted coins, which they can use to buy things or exchange for other currencies.
Mining is a vital part of the cryptocurrency ecosystem, but it can be a complex and resource-intensive process like Bitcoin proof-of-work mining, which requires special expensive hardware and software — and also a lot of electricity, which can further increase the costs.
However, there are several other ways to mine certain cryptos, which are less energy-intensive. For instance, Ethereum’s proof-of-stake mining requires a miner to validate transactions, as well as add new blocks to the blockchain, and not solve cryptographic puzzles. The amount of cryptocurrency a miner can earn depends on the amount of cryptocurrency that was staked.
There are also unique ways to mine such as Filecoin’s proof-of-storage. Instead of giving computational power, miners offer storage space to cater to the data-storage needs of users and consumers.
How is crypto mining done?
Miners compete with their peers to analyse a crypto transaction’s hash value. The first computer to solve the equation receives a reward in the form of newly minted coins. These coins can then be sold in an exchange for money or used as currency within a network of users.
The process of mining can be performed by anyone with access to the necessary hardware and software, although it is most commonly done by large-scale operations that pool their resources together to increase their chances of solving the hash puzzle quickly over other miners.
These operations often take place in countries where electricity is cheap, as well as in those with cooler climates — both conditions that help reduce the cost of running computers continuously without overheating them too much (which could lead them to fail).
What are the differences between crypto minting and mining?
Crypto minting and crypto mining are both ways of earning cryptocurrency. However, they have many differences.
- Crypto minting is the process of creating new currency through a certain algorithm. Crypto mining is the process of solving complex equations to earn cryptocurrency for yourself.
- Crypto minting requires less power because it does not involve any human interaction, whereas, crypto mining requires a lot of computing power.
- Minting is the process of creating new coins on a blockchain. When you mint, you are contributing to the security of the network. You are not only receiving monetary value but also contributing to the development of the blockchain ecosystem. On the other hand, mining is about earning money from your computer’s processing power. When you mine, your machine will solve complex maths problems related to verifying transactions on a blockchain. The more processing power you have, the more likely it is that your machine will find solutions before others do — and the more likely it is that you will earn rewards for doing so.
- Mining requires less specialised equipment than minting, but it consumes more electricity and may be less profitable depending on how many other miners are competing for rewards.
Crypto minting and mining are two ways of obtaining cryptocurrency. Despite that, they both serve distinct purposes.
Cryptocurrency minting generates new tokens and keeps track of all existing token transactions. On the other hand, crypto mining is a way of creating new coins, validating crypto transactions on a blockchain network and adding them to a distributed ledger.
Disclaimer: The opinions expressed in this blog are solely those of the writer and not of this platform.
This article came directly from the LBank blog, found on https://medium.com/lbank/crypto-minting-vs-crypto-mining-what-are-the-key-differences-ed57a283cdf8?source=rss-87c24ae35186——2