Everyone is searching this technology, what is bitcoin? What is bitcoin mining? How does bitcoin mining work? I am explaining this entire question in this article. First we know what does bitcoin mining mean?
What is Bitcoin Mining?
Bitcoin mining is the process of adding new Bitcoin into circulation; it is also a way for the network to confirm new transactions, and it is also a key component of the maintenance and development of blockchain ledger. “Mining” is performed using complex hardware that solves extremely complex computational mathematical problems. The first computer that finds a solution to the problem will get the next Bitcoin block, and then the process starts again.
Cryptocurrency mining is hard, expensive, and only occasionally pays off. Nonetheless, mining is attractive to many investors interested in cryptocurrency because miners are rewarded for using cryptocurrency. This may be because the entrepreneurial type sees mining as a penny in paradise.
However, before you invest time and equipment, please read this description to understand whether mining is really suitable for you. We will mainly focus on Bitcoin (from start to finish, when we consider the network or cryptocurrency as a concept, we will use “Bitcoin,” and when we refer to a certain number of individual tokens, we will use “Bitcoin”).
- through mining, you can earn cryptocurrency without having to save money for it.
- Bitcoin miners receive Bitcoin as a reward for completing “blocks” of verified transactions, which are added to the blockchain.
- Mining rewards are paid to the miners who first find the solution to the complex hash puzzle. The probability of a participant becoming the one who finds the solution is related to the ratio of the total mining power on the network.
- You need a GPU (graphics processing unit) or application-specific integrated circuit (ASIC) to set up mining equipment. The main attraction of many mining in the
The bitcoin rewards obtained by miners are an incentive that encourages people to assist in achieving the main purpose of mining: to legalize and monitor bitcoin transactions to ensure their effectiveness. Since these responsibilities are scattered among many users around the world, Bitcoin is a “decentralized” cryptocurrency or a cryptocurrency that does not rely on any central agency such as a central bank or government to supervise its supervision.
A Bitcoin block can only hold 1 MB of transaction data. The 1 MB limit was set by Satoshi Nakamoto (founder of Bitcoin), which has become a controversial issue because some miners believe that the block size should be increased to accommodate more data, which actually means that the Bitcoin network can process and process faster Verify the transaction.
“So, after all the work is spent on mining, may I still not get any Bitcoin?”
That’s correct. To earn Bitcoin, you need to be the first miner to come up with the correct answer or the closest answer to a digital question. This process is also called Proof of Work (PoW).
“What do you mean,’the correct answer to a number question’?”
Good news: there is no real high-level math or calculation involved. You may have heard that miners are solving complex math problems, this is true, but not because math itself is difficult. What they are actually doing is trying to be the first miner to come up with a 64-digit hexadecimal number (“hash”) less than or equal to the target hash. This is basically speculation.
The bad news: This is a question of guessing or randomness, but for each of these questions, the total number of possible guesses is on the order of trillions, which is a very difficult task. And the number of possible solutions will only increase the more miners join the mining network (called mining difficulty). In order to solve the problem first, miners need a lot of computing power. To successfully mine, you need to have a high “hash rate,” measured in Giga hash per second (GH/s) and mega hash per second (TH/s).
Mining and Bitcoin Circulation:
In addition to satisfying miners’ pockets and supporting the Bitcoin ecosystem, mining has another important purpose: it is the only way to add new cryptocurrencies into circulation. In simple words, miners are basically “minting” currency. For example, in September 2021, the number of bitcoins in circulation is approximately 18.82 million, and the final total is 21 million.
With the exception of coins minted through the genesis block (the first block created by the founder Satoshi Nakamoto), each of these bitcoins is produced by miners. In the absence of miners, Bitcoin still exists and is available as a network, but there will never be any additional Bitcoin. However, as the speed of Bitcoin “mining” decreases over time, the final Bitcoin will not circulate until around 2140. This does not mean that the transaction will stop verification. Miners will carry on verifying transactions and will pay for them to maintain the integrity of the Bitcoin network.