How to Mine Litecoin and Why You Should Do It: A Simple Guide
If you want to mine Litecoin, you should learn what mining is and how it works in regards to a specific currency. Mining isn’t free – you need to have lots of time, resources (since Litecoin is decentralized), and lots of patience to make a profit. That’s why we created this brief guide on how to mine Litecoin.
How Does Mining Work?
When you hear the verb “mining” it represents the process by which the blockchain keeps working. It is used for various cryptocurrencies and serves as a network for every transaction on the network. What miners do is have access to the transaction data since the time the last block was found. Then they work on finding a hash that can be approved by compiling those transactions into Merkle trees, so they can mine Litecoin further.
What is a Hash?
Hash serves as a protection of data – thanks to the hash, you cannot recreate a transaction. Every block has the block’s hash that existed before it. But the network is so well built that it can be seen in a second if someone has tried to mess with data. This means you will not have to search endlessly in the blockchain who wanted to do it. Mining is a competitive sport, and everyone who succeeded in making a hash will get a reward in the form of a block or 25 Litecoin, to be exact.
This process relies on luck and how much power you have, or rather how strong your computer is. That’s why miners usually work together in a set-up environment that somebody will invest in. This is not something that you can do from home anymore, like at the beginning. If you want to mine Litecoin, it is easier and faster than mining Bitcoin, but it’s still hard.
Reasons for Mining Litecoin
Charlie Lee created Litecoin, not to compete with Bitcoin but rather to make something more sustainable and effective. The main proof of that is that Bitcoin takes 10 minutes to mine while Litecoin takes approximately 2.5 minutes. That’s why Litecoin earned the nickname “Silver to Bitcoin’s gold.” The hardware for mining Litecoin is also very specific. The Scrypt hash function is used because it can mine Litecoin and Bitcoin, without creating competition amongst traders and miners. Thus, you can’t mine Litecoin without the excellent equipment we mentioned above.
Scrypt ASICs can still use other cryptos using the same algorithm (or at least the base), but you can choose the primary coin you want to mine and what seems most profitable to you. What you need to be aware of is that you will not be making money right away, but you will have to invest a lot.
Should you Mine by Yourself or in a Group?
Among miners, this is rather called mining solo or in a pool. After researching what equipment you’ll need and use, the next logical step is deciding how you will mine Litecoin.
Many argue that mining solo is a huge risk, mostly if you are failing in finding a block. Yes, if you find it, you will not have to split the prize with others. But this can only be possible if you have more than one ASICs, hence lots of hash power. If you are using a GPU or anything similar, the chances of finding any Litecoin are close to zero.
Litecoin Mining Pool
Pool mining is a term for several miners that gather together to work on hash power. They also have a much bigger chance of finding blocks. Your earnings are steadier, and another important thing is the security you get with it. Once you start gaining profit, it will not be so hard to split the coins between the miners. From scams to reputable mining pools, everyone agrees this is the way to go if you decide to start mining Litecoin. Just be sure to do the proper research. Similar to what you would do if you were trading. Many will want to join the biggest pool at any given moment, but that brings much greater risk.
Cyber attacks are almost regular, and they can easily undermine the work. This can affect the price of Litecoin itself. That’s why once you join a pool you should keep a minimum amount of Litecoin within it, and instead transfer it into a digital wallet.
The Importance of Digital Wallets
Choosing the right wallet is extremely important if you are mining Litecoin. There are many options, but try narrowing them down. Then research what options are the best for you and if there is a wallet that can keep up with almost everything you want. As we mentioned above, this will keep it secure. It’s important to say that as long it is synced with the network, it improves Litecoin’s health, where it can stay decentralized. Some will choose exchanges as a way of holding crypto. But since many will attempt to hack your keys, ask yourself once again if it’s the best option for you.
Many factors will affect calculating profitability once you start mining Litecoin. It can vary from the fees your pool will charge you to the price of Litecoin and the equipment. There are many profitability calculators online, so it’s not a hard job to do if you have everything in mind. Just be sure why you want to mine Litecoin, and if you are in it for the long run.
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