What is cryptocurrency mining?
Cryptocurrency miningProcess allowing to solve a mathematical or computing challenge imposed by a blockchain’s Proof of Workconsensus. Mining activity requires a variable calculation power depending on the blockchain’s algorithm alongwith difficulty is the process by which new transactions are added to the blockchainA blockchain is a type of distributed ledger technology. It is a huge database formed by blocks,cryptographically linked to each other, containing information such as transactions. These blocks are addedfollowing, the technology that underpins cryptocurrencies. This mining process is a bit like panning for gold in a mine, but in the digital age. The term mining was chosen in reference to the similarity of extracting resources such as gold.
Miners use powerful computers to solve complex mathematical problems that verify and secure the transactions on a blockchain. Once these problems are solved, miners are rewarded with new units of the cryptocurrency, just as a gold minerIn a Proof of Work system, miners contribute to determine the blockchain consensus, respecting the blockcreation protocol by being the first one to complete the current difficulty level and submitting would be rewarded with gold for mining and processing ore. Mining is essential to securing and maintaining the operation of cryptocurrencies, and is comparable to a verification and reward process, similar to panning for gold.
It is important to note, however, that not all blockchains use this mining process, also known as “proof of work”, which is often considered energy-intensive (consumption of electricity by computers). As a result, blockchains such as EthereumSecond most important crypto asset by market capitalization. Ethereum blockchain has been launched
in 2015 by Vitalik Buterin, it is also used for other applications such as DeFi and NFTs. have opted for “proof of stake”, an environmentally-friendly process.
Cryptocurrencies or digital currencies are terms commonly used in the crypto ecosystem. However, the terminology favored by regulators (ACPR and AMF) is crypto-assets or digital assets. This distinction arises because, although often referred to as cryptocurrencies, these assets do not qualify as currencies in the legal sense. They are virtual resources based on blockchain technology, whose value is determined solely by supply and demand.
None of the information contained in this FAQ constitutes investment advice, tax advice, legal advice, or any other type of advice, nor does it serve as an invitation to engage in any form of financial transaction.
Investing in digital assets carries risks and may not be suitable for all investors. It is the responsibility of investors to educate themselves about the risks associated with different digital assets. In particular, it is noted that digital assets can exhibit significant volatilityPrice variation of an asset on a given period., and investments in digital assets involve a risk of capital loss. Accordingly, it is important to remember that the past performance of digital assets, as might be indicated on Banque Delubac & Cie’s website or in documents provided to investors, is not indicative of future performance. Investors should familiarize themselves with the technologies underlying each digital asset and their associated risks, including vulnerabilities, defects, hacks, errors, protocol failures, or attacks on the protocol. Banque Delubac & Cie cannot be held liable for any misunderstanding of the risks associated with digital assets or for any losses investors may incur due to errors in walletPrice variation of an asset on a given period. addresses attributable to the investor.
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