How to explain what crypto mining is to your grandma?
I bet that at least once, one of your family members asked you to explain what crypto is, and if they saw your rigs while on a visit, they probably were a bit sceptical about earning real money with a machine behind your sofa. A machine that produces so much heat, that you have your windows open even in winter.
We have all been there. But how do you explain what your machine behind the sofa is doing to a layman, or even better, to your grandma?
1. Explain what a mining rig is
Some people might think that the machine is a specific device that can only be used for mining. But in reality, a mining rig is basically just a computer. It is built out of the same components as their office or home PC. Except that they are more task oriented.
A mining rig also consists of a motherboard, processor, power supply, RAM and graphic card(s). The only thing that differentiates is the amount of GPUs this kind of computer can support.
Most likely a home gaming computer is completely capable of mining. You can try real mining in 10 seconds and earn your first Bitcoin with QuickMiner.
GPUs are important because they can do mathematical calculations faster and more efficiently than CPUs. This is just the way GPUs perform.
There are other mining devices like ASICs or FPGAs, but these are used by institutional, large scale miners.
Why does a mining rig produce so much heat?
Because the GPUs need electrical power to operate. This power/energy is measured in Watts. GPUs draw approximately 100W up to 300W, depending on the model.
First law of thermodynamics says that energy cannot be created or destroyed, but it can be transferred. This means practically all of the used electrical energy is converted to heat. A mining rig with 1000W power draw will dispose 1000W of heat in the surrounding area.
It makes no difference if you run a 1000W mining rig or 1000W electrical heater.
2. Explain what a mining rig is doing
Do not go into too much detail trying to explain everything. Start with the basics. You can use this analogy, which is good enough for understanding the basics:
Imagine withdrawing some cash from an ATM. When you put your bank card in the ATM, the bank must first check if there is enough balance on your account. They must do an inquiry and send the information back to the ATM. If there is enough money on your account, then the ATM will allow you to withdraw cash from the ATM. The bank will normally charge you some small fee for the work they had to do.
With Bitcoin mining, a very similar thing is happening, while it is not exactly the same, the above analogy makes it easier to explain what is happening when mining.
If you want to send Bitcoin to another person, someone must confirm that you really have enough balance on your account. Someone must confirm the transaction. Miners confirm the transactions. The fee from the transactions is then allocated to the miner who confirmed the transaction. On top of the transaction fee, there is a predetermined amount of block reward that is also allocated to the miner who confirmed the block of transactions, but leave explaining block generation and block reward for another time.
This is how to simply explain how mining works. Of course, in reality it is a bit more complicated. We have prepared more advanced articles for grandmas that want to learn more about mining. Show them these articles if they are interested to learn more about mining:
But why do miners need to confirm the transactions?
Can’t the transactions be confirmed without the miners? Why do we need such strong machines to confirm the transactions? Banks do not use such machines.
Bitcoin uses Proof of Work mechanism to allow random miners to validate transactions. If there would be just one miner, then this miner would control all the transactions. If it would decide to be honest and not manipulate the transactions, then everything would be fine. But if the miner has malicious intentions, then he/she can perform a double spend. Which basically means that he/she could send (spend) the same coin twice. Which means that he/she could sell the same coin twice, when in reality, he/she only owned one at start.
Miners are necessary because they create a trustless and truly decentralised ecosystem which Bitcoin and other crypto currencies use.
If you have any questions or would like to learn more about crypto, join our official Discord server or our subreddit and chat with the community!