When Bitcoin first came out, it was possible to mine several coins using a regular home computer without investing a single penny in hardware. However, time went by and Bitcoin mining became a professional business, on top of all the people looking to buy bitcoin or sell it.
In this context, the best alternative is to mine other cryptocurrencies, such as Ethereum and Polkadot. These two are the most promising projects in the crypto industry, especially in terms of scalability and interoperability.
In this article, you will find whether it is best to mine Ethereum or Polkadot.
Ethereum – Bitcoin’s Biggest Rival
In the words of its creator, Vitalik Buterin, Ethereum is a platform specifically designed for the development of decentralized applications (DApps).
The users in the Ethereum network have access to a peer-to-peer communication system and a blockchain with a built-in programming language. In this sense, the network can be used to build financial applications that are fully trustworthy and transparent.
What Do I Need to Do to Mine Ethereum (ETH)?
Ethereum mining is a much more affordable possibility compared to Bitcoin mining, as normal computers are no longer able to mine Bitcoin as much as the expensive ASICs (Application Specific Integrated Circuits).
Although you have to use specific hardware and software to mine ETH, it is possible to carry out the activity with a relatively average computer. The process takes place in a more decentralized way, preventing ASIC networks from being used and allowing miners with less computational power to earn rewards.
The basis of Ethereum’s mining algorithm is called ETHash, also called the “proof of work” algorithm. Accordingly, the ETHash processes the data blocks that go to the blockchain. The larger the hash, the greater the computer’s mining capability must be.
The reward for miners comes in Ether (ETH) for giving up their hardware, time, and computing power to perform the job of validating transactions on the network. As expected, the hardship involved in mining tends to increase as more miners enter the process.
The final amount of profit that comes from Ethereum mining varies depending on a few factors such as the difficulty of the mining and of course, ETH’s current market value.
Based on the network’s algorithm (ETHash), the reward for each block mined correctly is currently 3 ETH. Miners also get rewards for transaction fees. And once ETH 2.0 is live, we can expect the ETH price to pump.
Polkadot – Cross-Chain Interoperability and Next-Level Scalability
Launched in 2016, Polkadot is the brainchild of Gavin Wood, one of Ethereum’s co-founders and creator of Solidity, the programming language used by the Ethereum Network up until this day.
Polkadot is envisioned as the next-level version of Ethereum. The current landscape of blockchains has a structure formed by fragmented and independent blockchains operating in isolation.
For instance, Bitcoin cannot directly interact with Ethereum, and vice-versa. Hence, there is no efficient way for these separate chains to communicate and operate with each other.
In this context, Polkadot proposes to provide cross-chain interoperability. This way, the network allows any blockchain – either private or public – to communicate with each other and be connected in a trustless way under Polkadot’s umbrella.
What Do I Need to Do to Mine Polkadot (DOT)?
In the classic sense of the term, it is not possible to actually “mine” DOT coins. To earn DOT, a user has to own a minimal amount of DOT to participate in Polkadot’s governance and earn rewards by voting and securing the network.
In terms of consensus mechanism, Polkadot’s network relies on a highly sophisticated governance system in which all DOT holders have an equal opportunity to participate in the network’s activities.
There are four distinct roles in Polkadot’s structure – nominators, validators, classifiers, and fishermen. Each one of these roles performs specific tasks to protect and maintain the network while rooting out misconduct.
Polkadot’s network uses the NPoS (Nominated Proof-of-Stake) mechanism to select validators, nominators and maximize the security of the chain.
In NPoS, a proportional representation system allows each minority in the nominating pool to elect a certain number of validators in proportion to their participation, with no under-represented minorities.
Nominators endorse the best validators in the network, sharing potential fines or rewards with them. This way, nominators are incentivized to choose validators with a good track record in terms of performance and best practices.
As it is plain to see, obtaining ETH and DOT via mining requires different types of efforts. Mining in the Ethereum network requires a more traditional approach, which means using specific software and hardware to boost mining performance.
On the other hand, Polkadot has a more sophisticated approach when it comes to obtaining DOT coins. Empowered by a unique and complex block validation system, it is not possible to mine in Polkadot’s network, in the classical definition of the word.