Cryptocurrencies have given a definition to the world of trading and investments. Over years, it has gained importance like no other. Veterans to beginners everybody is giving equal efforts and the best part is, this needs no prior experience of the field unless one knows the crux of the cryptocurrencies and blockchain. The traditional way of trading cryptocurrencies is pretty straightforward; one can feasibly buy and sell cryptocurrencies manually on an online platform such as a crypto trading bot. These platforms have been the medium of trading digital assets until the advent of crypto mining.
Crypto mining turned out to be one of the convenient methods of listing desirable digital tokens and coins from the open blockchain to distributed ledger. However, there is the confusion that runs around crypto mining. Many people mistook it as the process of developing and listing new cryptocurrencies in the blockchain. Even though the idea was revolutionary, it didn’t take much time for the investors to realize its actual potential. Crypto investors poured a good amount of money to set up their own crypto mining machines. This trend and technique spread out so fast that lead to market saturation. As a result, mined tokens and coins start to lose their value in the overall market.
What is a mining pool?
A few years after the advent of crypto mining, a new method was launched which was called mining pool. A mining pool is a joint association run by the miner of cryptocurrencies, who collaborate closely and share the resources for the greater good of every member of the group.
A mining pool is one of the latest and collaborative method of mining cryptocurrencies within a shared group. As mentioned earlier, in this process, the members share their mining resources such as processors, hardware, etc. in order to find profitable tokens and coins. This involves the decision and consent of senior or most experienced members of the group. Every mining groups have their own set of terms and policies. Thus, upon successful mining, the outcome is being shared among the members based on the agreed terms.
One of the main objectives of the mining pool is to increase the hashing output. When one goes solo for mining, they might have to invest heavily into the hardware and processor for faster hashing. Hence, a group of six-eight potential can combine their individual hashes and produce an approx. of 2 Giga hashes. Hashes, in simpler words, is nothing but the mining power that processes through the blockchain to mine data.
Merits of Cryptocurrency Mining Pool
While doing individual mining, a person is a solo benefiter of the earned rewards. However, the success rate of individual mining has reduced drastically over years. It is because of the increasing popularity of high-performing cryptocurrencies, increased competition in mining. These reasons have also resulted in increased costs of the hardware required to set up the mining process. The completion has pushed the miner to invest in much-advanced hardware to increase hash power. Hence, a beginner with an assigned budget will have to bear the entire expenses with unpromising returns.
Whereas, the mining pool involves more miners and lesser hardware and electricity expenses with a fair return. The chances of earning a profitable amount of reward for minimum investment within a mining pool are much more guaranteed than individual mining.
Demerits of Cryptocurrency Mining Pool
One of the strong demerits of the mining pool is that every individual compromises their autonomy in the entire process of mining. Every group has a list of terms that all the members have to abide by. These terms also include the division of the reward bagged by the pool, here not all the members might earn equally. Sometimes, terms and policies are set as per the contribution made by the members.
Despite being, not so old in the market, a few mining groups have acquired huge popularity. According to a report, mining pools such as AntPool, F2Pool, etc. are leading pools that mines Bitcoins. High aspiring mining pools usually aim at becoming decentralized; however, these groups emphasize more on governing the protocol of Bitcoin.
The decision to trade online, go individual mining, or pool mining is totally the choice of the individual. If one is able to meet the factors of pool mining mentioned above in the article, one can feasibly go ahead with the same. Further, it is suggested to be thoroughly aware of the pool terms before joining any.
