In today’s explosion of innovation and technology, you certainly have heard the term “bitcoin” and also “bitcoin mining”. All of us know someone in acquaintance who mines bitcoins but none of us knows exactly what this “bitcoin” is. lets put aside these vague and general ideas about Bitcoin and see what it is and does.
Cryptocurrency mining is a demanding and costly job. But today it has a favorable popularity with millions of users. The process during which bitcoins are generated is called “mining”. Miners solve difficult and complicated mathematical problems. they compete with one another or work together in groups to solve a mathematical puzzle. The first miner or group of miners who solve the particular puzzle is rewarded with new bitcoins. miners are rewarded every ten minutes for their work. they have different responsibilities and these responsibilities are spread among miners all around the world. In fact, in order to be rewarded by bitcoin, they must be the first miner to solve the problem. This process is done by specialized computers and miners are to secure network and process every bitcoin transaction. This process is too costly and in order to afford expenses, you need to sell them and pay for costs. unlikely of common currencies which are issued by bank, Bitcoin mining is a decentralized type of money which is not controlled or backed by any government or bank.
Mining Of Mining
The job of mining is done by a very specialized computer which is built for the sole purpose of mining. Some of these computers are called ASICs . A common mistake among people is that they assume that they can do mining Bitcoin by the personal computers or cellphones. As these electronic devices are not powerful enough, it should be inferred that this is an absolute fault and must be avoided because besides, not earning money the computer or cellphone would be destroyed. Moreover it is waste of money because of the cost of electricity.
There are three primary ways of obtaining Bitcoins:
buying them on an exchange, accepting them for goods and services and mining new ones. Mining is a process of adding transaction records to the Bitcoin’s public ledger called the Blockchain. It exists so that every transaction can be confirmed, and every single user of the network can access this ledger. It is also used to distinguish legitimate Bitcoin transactions from attempts of re-spending money that has already been spent somewhere else.
One of the most important problems that any payment network has to solve is double-spending. It is a fraudulent technique of spending the same amount twice. The traditional solution was a trusted third party – a central server – that kept records of the balances and transactions. However, this method always entailed an authority basically in control of your funds and with all your personal details on hand. In a decentralized network like Bitcoin, every single participant needs to do this job. This is done via the Blockchain.
One of the interesting things about mining is that the difficulty of the puzzles is constantly increasing, correlating with the number of people trying to solve it. So, the more popular a certain cryptocurrency becomes, the more people try to mine it, the more difficult the process becomes.
As a cryptocurrency attracts more interest, mining becomes harder and the amount of coins received as a reward decreases. For example, when Bitcoin was first created, the reward for successful mining was 50 BTC. Now, the reward stands at 12.5 Bitcoins. This happened because the Bitcoin network is designed so that there can only be a total of 21 million coins in circulation.