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I am very new to the world of cryptocurrencies (I first read deeply about them today) and I've just discovered the concept of mining. Everything that I've read so far applies to Bitcoin but I know that there are a lot of different cryptocurrencies. So I was wondering if mining also exists for other currencies.
Is mining something specific of bitcoin or is it possible to mine different cryptocurrencies? If so, is the process different than the one used to mine bitcoins?
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Cryptocurrencies fall into three broad categories:
1) Centralized/counterparty cryptocurrencies are classic cryptocurrencies that are run by some kind of central authority. These can use the same methods that traditional banking ledgers use and aren't particularly interesting technically.
2) Public ledger cryptocurrencies that use proof of work to solve the double spend problem without a central authority. These cryptocurrencies have to incentivize people to provide the proof of work they need to remain secure and typically use mining to do it. Bitcoin was the first currency of this type.
3) Distributed agreement cryptocurrencies that use consensus protocols to solve the double spend problem without a central authority. These cryptocurrencies don't require large amounts of computation to secure their transactions and generally don't use mining. XRP was the first currency of this type.
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Earlier cryptocurrency systems (which predated Botcoin) relied on a central clearinghouse to prevent fraudulent transactions, such as double-spending. One of the objectives of Bitcoin was decentralization. To prevent double-spending without a central clearninghouse, blocks of transactions need to be mined. The process of mining requires a significant amount of computational effort to be expended by the miner. Other nodes on the network will not recognize a mined block of transactions without this proof of work.
1A lot of the competing cryptocurrencies are based on the bitcoin design and also use the mining concept. I do not know if any of them have succeeded in eliminating the mining concept. – kasperd – 2015-12-08T22:04:02.977
@kasperd Ones that use distributed agreement protocols rather than proof of work have no mining. – David Schwartz – 2015-12-09T09:07:31.920
@DavidSchwartz I don't know any cryptocurrency based on an agreement protocol. Could you mention the name of one? – kasperd – 2015-12-09T09:47:23.803
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@kasperd XRP, Stellars.
– David Schwartz – 2015-12-09T10:24:28.107@DavidSchwartz I understand that you are affiliated with those. Based on my initial reading of those links it sound like that is a very relevant cryptocurrency to mention in an answer to the question. Unlike all of the copycats, that one does appear to offer something new which isn't offered by bitcoin. Given how relevant it appears to be to this question, I think you could write an answer covering that cryptocurrency without being in violation with http://bitcoin.stackexchange.com/help/promotion
– kasperd – 2015-12-09T11:12:00.533