Heard people talking about minting but not sure what it is? In this blog we will explain it.
A Simple Explanation Of Minting
Minting is the process of validating information, creating a new block and recording that data on the blockchain. People known as “validators” use this proof of stake method to create or “mint” new coins. Both cryptocurrencies and NFTs (Non-Fungible Tokens) can be minted in this fashion.
The Differences Between Minting And Mining
Minting and mining are two different terms used to describe how new coins are made on the blockchain via two different consensus mechanisms. Validators are required to stake a particular amount of crypto on the blockchain and then use the proof of stake method to validate information and mint or “forge” new blocks. Ethereum is the biggest network that uses the proof of stake method. Miners verify transactions using the proof of work method to mine a new block and create new coins. Bitcoin is the first and biggest network that uses proof of work, along with Dogecoin and Litecoin.
The Crossover Betweeminting And Mining
This is where the terms cross over and can become a bit confusing. Curiously, minting can also be a part of mining new coins via the proof of work mechanism. For instance, when a new block is created or hashed on the Bitcoin network, new coins are “minted” as a result of the mining process.
Anyone can mint crypto because of the blockchain’s decentralized nature. New tokens are created or “minted” by using existing and owned tokens as collateral. Therefore, anyone who owns enough of an asset on a network can create new tokens, making minting an intrinsic part of the blockchain ecosystem.
Is Cryptocurrency Minting Lucrative?
It depends on a few things:
- the blockchain you choose
- the price of the coin you stake
- the amount of the stake you put down
- the percentage of transaction fees the network pays you.
Ethereum validators for instance need to stake at least 32 ETH (around US$50,000). Others require a mere fraction of this but demand certain hardware requirements. It is recommended you have at least 250GB of storage and 8GB of RAM on your computer. You’ll also need a certain level of technical knowledge. Understand that if you are intending to make an income by staking, you’ll need to lock up that “stake” with the blockchain you choose. The more you stake, the more you can earn. But primarily, because staking is a passive income, it’s really more of a supplement to your income rather than a full-time job.
The Pros And Cons Of Minting Cryptocurrency
- no need for expensive hardware
- low energy usage
- can also mint NFTs
- requires a sizeable crypto “stake” to begin
- carries the risk of creating centralized ownership
- has the potential to allow validators to manipulate blockchain records
Just like cryptocurrencies, NFTs can also be minted and made available for purchase. To begin selling NFTs, you’ll need to first “mint” them. The cost of minting can vary wildly from free on some platforms to up to $1000. Whether it is music, art or literature, any digital work can be minted as an NFT. You’ll need to:
- Choose your NFT marketplace
- Link your funded crypto wallet
- Select “Mint an NFT” and upload your digital file
- List your NFT for sale
Want To Know More About Minting?
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