Emerging as one of the most reliable investment option, have you ever wondered from where the cryptocurrency giant Bitcoin comes from? Do you think about how the Bitcoin transactions are kept secure and under control? Come to think it, Bitcoin isn’t produced by the central government- it’s not printed on paper or deposited in banks nor are given away through cheques. They are actually mined.
Bitcoin mining is the cornerstone of the Bitcoin network, which is performed by specialized computers. The task endowed upon the miner is to confirm the Bitcoin transaction as securely as possible. Now, without any sugarcoating, I agree it is true, that mining any cryptocurrency is scrupulous, expensive and only intermittently rewarding.
Regardless of that, mining has a captivating demand for many investors interested in cryptocurrency because of the fact that it is a give and take process, where in return of their work, miners are given cryptocurrency as a reward. With Bitcoin, miners use specialized software to crack complex mathematical or computational problems and are provided with a certain number of Bitcoins in exchange, as a reward along with transaction fees. This is a smart way to issue the currency and also creates an enticement for more people to opt for mining. If you are technically elite, there is no reason why should not go for it.
Bitcoin mining is the process of adding transaction records to Bitcoin’s public registry of past transactions called “blockchain”, which serves to confirm transactions to the rest of the network as having taken place.
If there are any attempts to re-spend coins that have been used already, then the nodes of Bitcoin use this blockchain to distinguish between the permitted transaction and such fraudulent attempts.
The process of mining, in simple terms, is that you have to guess a random number that would satisfy the equation generated by the system. The chances of you winning at this game are directly proportional to the number of accurate guesses you make per second. So the more, the merrier! When you hit bull’s eye, and earn the Bitcoin and become eligible to go to the next step of Bitcoin transactions.
When your mining software makes a correct guess, your program determines which of the currently pending transactions will be grouped together to the next block of transactions. The compilation of the block is your earnings and marks your place in the transaction ledger. Once you’re a part of this, your solution will be sent to the whole network so that it can get validated by other computers. Each computer that validates your solution updates its copy of the transaction ledger, adding the transaction that you choose to include in the next block.
After this procedure, the system generates a fixed amount of Bitcoin which you get in return for your efforts and time.
So, in order to start mining, you require good Bitcoin Mining software. It takes somewhere around 10 minutes for a calculation to be completed, by your computer obviously! The catch here is that, the problems only get tougher and way more difficult to crack steadily. Hence, the accuracy of your answers will depend on the capability of the software you are using.
That being said, it is pretty obvious that the more mining power a network has, the harder it would be to guess the answer i.e. the difficulty of the problem gets auto-adjusted based on the miner count, which is called “Mining difficulty”. This is done in order to minimize the number of correct answers, which in turn would keep the number of Bitcoins generated in check.
Therefore, primary purpose of mining is to allow Bitcoin nodes to reach a secure, anti-corrupt consensus. This serves the purpose of circulate new coins in a decentralized manner as well as drive people to provide security for the system.