What is the purpose of buying coins and mining coins?

What is the purpose of buying coins and mining coins? In the cryptocurrency market, buying coins and mining coins are two different concepts. Mining coins mainly involves purchasing computational power for digital assets such as Bitcoin and Litecoin in order to obtain Bitcoin returns. On the other hand, trading is a way to participate in mining and earn profits. During the process of participating in mining, investors can make investments from various aspects to improve profitability.

Firstly, investors can purchase various types of coins and choose the corresponding ones based on their needs. Users can then use these coins to mine and earn income in mining pools, achieving the goal of increasing their wealth. Lastly, investors can exchange the mined coins for fiat currency or other legal tender (such as Chinese Yuan) for payment or trading.

Buying coins and mining coins

Editor’s note: This article is from Caicloud Blockchain (ID: cybtc_com), written by irishash, authorized by Odaily Planet Daily for reposting.

In the cryptocurrency trading market, there are two important phenomena that should not be overlooked:

1. Buying coins and mining coins are both investment activities.

2. Participating in projects is a way to gain profits. These two situations have significant differences.

Firstly, we need to understand why we buy coins and mine coins. It is because many investors are not familiar with digital assets themselves. Therefore, they need some knowledge to judge the value, potential, and future development direction of a certain project. So what is “buying” coins? It is actually using a tool or system to engage in buying and selling. If someone regards it as Bitcoin, they would consider themselves clever. However, the problem is that people will store this information on their computers or other devices instead of actually owning it and utilizing its benefits. Therefore, you need to search for this thing, find suitable tools, and choose appropriate products based on your needs to make the best investment decisions.

Of course, “buying” is not the most important technical term in the cryptocurrency industry. It refers to the opportunity to obtain a large amount of capital from anywhere without needing to know how it works. For example, if you can see token lists and smart contract codes on public chains like Ethereum, you can search for these names here. Then you will find that there may be some strange questions: 1. Which tokens have unique and irreplaceable technological characteristics? 2. Do they have specific functions? 3. Are there new technologies available for developing applications? 4. How many types of tokens of this kind have appeared in the market? However, they have no obvious correlation with each other. In other words, “only a few tokens are related to homogenous commodities, and some products may even be considered the same as another category.” For those who are not familiar with cryptocurrencies, this is a very exciting development opportunity. In fact, although there is a lot of information about “mining,” such as “network hashrate,” “block size,” and “average block time,” these information are only used to describe specific purposes. The concept of “mining” became popular in 2017 when the Bitcoin price dropped and mining difficulty increased, causing an upsurge. Currently, with the Bitcoin price approaching its historical high point and the decreasing adoption of PoW mechanism, most miners are willing to invest more in electricity costs. With the continuous decline in hashrate, resources in mining pools have become more concentrated. Moreover, it is estimated that by the end of 2019, the energy consumed by Bitcoin mining will exceed 2 billion kWh, equivalent to spending over 200 million USD in one year.”

In addition, similar situations exist for other cryptocurrencies besides Bitcoin. Although many people saw the long-term prospects of the blockchain industry during the bullish market in 2017, they still perceived the potential advantages of blockchain technology early in 2018. However, in the second half of last year,