Minting plays a role in relation to cryptocurrencies in that a person can generate a new token themselves without the need for an authority or bank to be involved. This is either crypto coins or a non-fungibility token. Incidentally, the minting of the coins differs in two ways, although the end result, i.e. the production of new coins, is always the same. The only difference is in the process of how they are made.
The different types of minting: crypto
In the two types of minting, one coin needs the so-called mining (proof of work procedure) and another coin needs the so-called staking (proof of stake procedure). Mining is the process of generating cryptocurrency. This is created by validating and storing with trading in a blockchain. Typically, this is done from public devices, which means that any computer can participate. Powerful processors are required to solve the complicated, mathematical problems. In return for solving cryptographic equations, the miner is then paid for their work in the form of cryptocurrency. This is how new coins come into circulation.
The other method, i.e. staking, is considered the better type of minting. Staking is when a user wants to verify a transaction against cryptocurrency, but he first has to stake a large amount. This amount is then referred to as a stake. The responsible stakeholders (group of people or a single person) are selected at random. They then release the desired transactions on a blockchain. The rule is that whoever stakes more coins, the higher the probability of being selected. In the process, stakeholders are not allowed to spend the bet amount set. If they are caught recording inaccurate data or breaking the rules, they can expect to lose their entire stake.
In both processes (mining and staking), new coins are minted. However, the term „minting“ is often used in conjunction with staking. In both mining and minting, new blocks are generated and added to an existing blockchain. Terms such as staking and mining are applied in reference to cryptocurrency minting. However, this is not the same as minting an NFT. This is a different process.
NFTs find their way into the Ethereum Blockchain, where they are used by creators to sell videos, photos or 3D digital objects. In order to perform the minting of an NFT, a wallet with Ethereum is first required. With this wallet, users can then log into a so-called NFT marketplace (for example, OpenSea). Here they then create their NFT, onto which they upload their desired object. For the creation of the NFT, payment is made in ETH. Once a transaction is confirmed, the next NFT is mined. However, minting can also refer to different methods of producing different tokens. In this context, the term minting is the best-known term for the production of new cryptocurrency coins using the so-called proof of stake method.
What is the difference between minting and mining?
In both methods, i.e. mining and minting, new blocks are added to a blockchain and new tokens are generated, respectively. The difference with minting is that existing tokens are used. In mining, heavy, complex and cryptographic computing tasks have to be solved, which require high computing power. In both processes, users exist who are selected to verify such a transaction. For this, they then receive something in return (rewards).
What are NFTs?
NFTs are referred to as „non-fungible tokens“. This means that they are „non-exchangeable tokens“. An NFT is therefore a virtual token that protects a specific digital object. This digital object is marked by the NFT as a unique one-of-a-kind and then assigned to a specific person.
Meaning of Minting NFTs
Basically, mintening means nothing other than embossing. Accordingly, mintening is the process of converting a digital object into a crypto collection file. Once this object is stored on the blockchain, it is also impossible to delete or convert it. The converted file is then a digital asset. This is bought or traded directly on the marketplace using cryptocurrency.
A distinction is made between two types of NFT minting:
- The NFT is created directly on a project’s website.
- The NFT can be generated and uploaded by oneself.
If one decides for the first variant, then either one NFT or also several can be created on a website. However, no previously known NFTs are mined. Rather, as with all generated artwork, randomly generated. As soon as a project becomes a success, the NFT will also become more popular and thus generate profits via a marketplace.