The Role Of Cryptocurrency Mining In A Decentralized Currency World

Unlike fiat currencies, cryptocurrencies are decentralized in nature. This

means there is no central bank or database involved. Also there is no

central authority that manages the currency network. By comparison the

fiat currencies of the United States and other countries are managed by a

single central authority like the Federal Reserve. They are centralized. All

fiat currencies of the world have a centralized oversight organization.

Cryptocurrencies are diametrically opposed to the centralized fiat

currencies because of the nonexistence of a central authority. Instead, the

cryptocurrency community and cryptocurrency miners via the network

nodes manage the validation and generation of the newly mined (“newly

minted”) cryptocurrencies. Due to this unique management method,

cryptocurrencies are commonly referred to as TRUSTLESS because no

single individual controls how cryptocurrency is generated, issued, spent,

or accounted for. There is a definite advantage in not having the need to

trust a individual to perform the moving of asset, generating a transaction

record and storing it.

In this trustless cryptocurrency system, one can still trust the

cryptocurrency community and its means to certify that the blockchain

holds a very accurate and immutable (undisputable), unalterable, proof of

cryptocurrency transactions. Cryptocurrencies are founded using software

algorithms and in it are rules that guarantee that the system can be trusted.

The mining process is also a part of the verification mechanism that allows

everyone to trust the blockchain.

Note that “trustless” is slightly inaccurate because trust is already built into

the cryptocurrency eco system. Although there is no need to trust a single

entity or authority, your trust in the eco system and fully auditable codebase

is still important.

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