Blockchain technology is nearly magical.
It depends on a network of strangers scattered around the world, each with their own backgrounds and motivations, to transact and transmit value without any middlemen involved. Despite its disparate components, it still governs itself to be completely free of error. What’s not to love about such an elegant system? And furthermore, how does it work?
The answer boils down to two words: crypto mining. Here’s what you need to know about why crypto mining matters.
Crypto mining forms the basis for everything that happens on the blockchain.
Crypto mining is important for the same reason that a bridge between two populated islands matters: it’s a piece of connective infrastructure that holds things up and makes life more convenient. The weird, complicated math that goes into mining cryptocurrencies actually forms the essential support for everything on top of it, from individual transactions to decentralized applications. Without crypto mining there’d be no Bitcoin, no Ethereum, no blockchain technology at all.
Mining forms the fundamental proof-of-work consensus mechanism that lets blockchain networks operate in so-called “trustless” fashion. The beating heart of crypto is raw mathematics, and there’s nothing to “trust” about a correct answer to a math problem — it’s simply the correct answer. People who run crypto mining operations lend their computing power to verifying and processing this math, then they get financially rewarded for doing so.
Crypto mining changes the world of financial technology and value transfer.
Crypto mining enables a new financial normal for moving money around the world without any middlemen involved. These notorious middlemen (like state-run banks) are predictably grumpy about being cut out, which is why we see a spectrum of attitudes emerging in response.
America, Canada, and multiple countries throughout Europe take positive stances and encourage the development of this emergent technology. But there are other attitudes in play — China famously banned ICOs, and there’s speculation that the country might ban crypto mining altogether. Others have even made it a crime to hold cryptocurrency. Vietnam, Bolivia, and Colombia have also taken hard anti-crypto stances.
This technology is ultimately the work of one person (or a small team) operating anonymously to introduce Bitcoin to the world, and it’s getting from the highest levels of government to everyday financially minded people alike. This open-source software made governments flinch, and it doesn’t have an off switch. You might fairly call crypto mining a “post-state technology.”
Crypto mining expertise is easily expandable to other arenas.
For a number of reasons, crypto mining companies are going to stretch beyond mining itself and start maximizing the usefulness of their data centers. These number-crunching factories are eminently useful beyond mining cryptocurrency — in an era of proliferated internet technology, mobile apps, and mature artificial intelligence technology, the world wants more computing power, not less.
This demand for increased computing power comes at a time when crypto mining businesses already have armies of powerful computers at their command — it’s central to their business functions. These companies could easily pivot to offer high-performance computing (HPC) services useful for scientific computations, drug discovery in the pharmaceutical industry, and data processing for a hypothetical future where driverless cars are normal. There will only ever be new problems to solve, and the powerful number-crunching machines that drive crypto mining stand to play a valuable role to that end. Crypto mining businesses will be ready to fill the gaps.
In figurative terms, crypto mining represents the spinning gears of blockchain technology. It’s the foundational activity that props up Bitcoin, Ethereum, and all other cryptocurrency projects. By enabling this category of technology, crypto mining has incited reactions from nation states around the world, good and bad alike. The skills and technology necessary to excel at crypto mining are furthermore easily expandable to other arenas.
That’s why crypto mining matters.