[Ethereum] Explanation on why I need an address, a pool and a wallet


I am very new to this world so this is a very newby question but as much as I have searched there don't seem to be any newbie getting started guide that spells this stuff out.

I am trying to setup my machine as a miner.

I have downloaded Geth and have used it to create an address.

I have kept a copy of the address file somewhere safe so that I can't lose it (and the password for my address).

Apparently I need to mine to a pool – is this necessary? Can't I just mine to my address?

To get money from the pool apparently I need a wallet. Why can't I just transfer money from the pool to my address?

I get another json file and a must-never-lose password for the wallet as well.

Can someone explain when I need my address file and password and when I would need my wallet address and password?

If I want to give my address to someone to receive funds do I give them my address or my wallet address?


Best Answer

Right. I will try and keep this brief such that it is clear.

A wallet and an address are the same. They are synonymous. An address is a 64 character hex string to/from which transactions can be sent. It is sometimes referred to as a wallet because of this characteristic - it can hold Ether like a physical wallet can hold cash.

RE mining. You do not have to mine. Mining is what secures the Ethereum network. It essentially involves computers using their processors to solve complex maths puzzles. As these puzzles are hard it is unlikely that your normal desktop PC will ever succeed in solving a puzzle. As such, pools exist. These pools allow you and many other users to combine your processing power such that it is more likely that you will solve the next puzzle.

Mining rewards are given to the entity who mines a block. If you are part of a pool this is more likely to be you. You then get a portion of that reward. If you mine on your own, you will likely never solve the puzzle and will likely never earn any Ether.

Your key file contains your private key in an encoded format. Your private key is needed to sign transactions. For example sending Ether or submitting a contract. It is encoded such that if someone manages to get your keyfile, they can not sign transactions (unless they also know your password).

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