- 1 Bitcoin Mining
- 1.1 How bitcoin mining works
- 1.2 How to mine bitcoin
Bitcoin is a decentralized network of digital currency (cryptocurrency). It is not regulated by organizations or governments. Bitcoin has no centralized force governing or regulating it, and there is no direct link to any World Bank currency. But Bitcoin can be used in payment for goods and online services. However, Bitcoin mining is the act of confirming bitcoin transactions and generating new BTC by solving complex mathematical problems using a Bitcoin mining machine.
These transactions carried out online are executed with tight security by a group of individuals referred to as miners. They do this by solving complicated mathematical problems, the miner that finishes solving the mathematical problem first puts in a block to bitcoins blockchain and then collects a dividend of 6.25 bitcoins. As of 26th February 2021, the worth of a single button was about $46,414.80. This suggests that a single successful bitcoin miner earns over $100,000 worth of Bitcoin.
How bitcoin mining works
Every bitcoin mining procedure starts with the blockchain. A blockchain is a digital decentralized ledger that records all the transactions that go on in the network. A sequence of valid transactions is referred to as a block. These blocks are joined together to form a chain, hence the name blockchain.
In the Bitcoin network, this miner’s goal is to add individual blocks to the blockchain, and this act is carried out by solving a difficult mathematics problem. To achieve this, they’ll need a wide range of computational and electrical strength. While several miners are competing to add a block, the first one who find the solution to the math problem adds a block, a log with its authorized transactions to the blockchain. After the miner has successfully cracked and added a block to the chain, they get paid an amount as a reward.
To carefully understand how this process works, we’ll be explaining the three basic functions of Bitcoin mining.
Giving new btc
Fiat currencies are normally printed every day and given out by the central banks in different countries. But with Bitcoin, it is done differently. The decentralized nature of Bitcoin does not allow any government authority to supervise its systems network and undertakings. The Bitcoin miners own a Bitcoin mining machine with powerful computing strength which they use in solving complicated math problems. Once the math problem gets solved, the bitcoin miners automatically generate a new BTC.
It takes roughly 10 minutes to produce a new BTC when using an Application-specific integrated circuit.
Confirming transactions on the network
Confirmation of a bitcoin transaction is also part of a Bitcoin miner’s duty. The most interesting part of these transactions is that they are not confirmed one after the other but rather the Bitcoin miners link all the transactions into one block and then merge them to the community network known as a blockchain.
The Bitcoin network was designed in a way to avoid double-spending, thereby making the transaction irreversible, once the transaction has been broadcasted in the blockchain network, the transaction becomes irreversible.
Protecting the entire bitcoin system
When transactions are verified by miners, they also secure the entire Bitcoin network in the process. Hackers can’t easily undo a transaction once it has been broadcasted on the blockchain network.
How to mine bitcoin
Listed below are some guidelines on how to mine Bitcoin.
Procure a bitcoin wallet
The first thing you need to do is to obtain a bitcoin wallet. Your Bitcoin wallet is where you’ll store, exchange, receive and access your balance any time. There are two types of Bitcoin wallets, there is the Hot wallets and cold wallets. Hot wallets are referred to the online wallets that are connected to the internet, such as web wallets and mobile wallets. Cold wallets are offline and not connected to the Internet, including hardware, pepper wallets, and desktop.
Lookout for a reliable bitcoin exchange
The next thing is to search for a reliable Bitcoin exchange. Make all the necessary enquires needed before choosing a credible bitcoin exchange. Make sure they meet your demands and requirements and also ensure that is a secured Bitcoin exchange.
Procure your bitcoin mining hardware
Bear in mind that using your normal desktop or laptop for bitcoin mining is a bad idea. It comes with a lot of disadvantages ranging from high electricity costs to low income. For you to be able to mine bitcoin successfully, you’ll need a high-powered and specialized computer known as ASIC miners. These systems are produced mainly for this purpose.
Join a bitcoin mining pool
Mining bitcoin is highly competitive. This implies that it will be hard to generate a new coin if you work independently. A pool and group of miners have been formed to help expedite the mining process.
Acquire your bitcoin mining software
You’ll not only need the ASIC hardware, but also software that enables you to mine bitcoin. This software is used in connecting your hash to any mining pool of choice.