Crypto mining vs staking – how are they different?

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Bitcoin enthusiasts may have had ample reasons to praise the digital coin, but they could not disprove the huge environmental costs of bringing it into circulation. The call for concerted action to limit the climate impact led emerging blockchains to devise ways to make the mining of new coins and tokens more eco-friendly.Let's take a look at how the technology of mining new cryptocurrencies has evolved with the introduction of a process called staking and how it is different from mining--the traditional process that was first followed by the bitcoin network.But first, let's understand why there is a need for either.Blockchain is a decentralised technology, meaning no central authority controls the data.

Cryptocurrency transactions are stored on blockchains, also known as a public ledger. This public ledger is stored in multiple computers (nodes).

Anyone can participate in storing the public ledger. A copy is stored in every node to secure users' transaction data.

The users of these nodes validate the transactions and store them in the public ledger. It can be done by two methods: staking or mining.Also Read | Explained: What is Ethereum staking and how does it work?Crypto mining vs stakingThe basic difference between staking and mining is the algorithm used to validate transactions and add new blocks to the blockchain.What is Mining?Mining uses the proof-of-work (PoW) consensus mechanism.

In this system, miners are users with powerful computational hardware, which they use to solve complex computational puzzles. It validates the transactions and provides security to the transactional data stored in the blockchain.Mining requires powerful GPUs (Graphics Processing Units) that perform complex calculations to solve these