Brief Introduction To Bitcoin Mining
The cryptocurrency sector is barely a decade old, but it has already proven itself that it is here to stay in the world of finance.
16:02 14 June 2018
Of all the cryptocurrencies available at the moment, Bitcoin is the most popular and most valuable. Created in 2009 by a person or group of persons known as Satoshi Nakamoto, it has managed to remain relatively stable.
Bitcoin was the very first digital currency to be decentralized. This essentially means that it works without a central bank or an administrator. With Bitcoin, transactions take place between users directly. There is no need for a third party or an intermediary of any kind, unless you want to exchange your Bitcoin for a physical currency. These transactions are extremely secure and are recorded on a public access ledger known as blockchain.
Since bitcoins are decentralized, this begs the question "Where do bitcoins come from?". Bitcoins are generated by a process known as mining. Bitcoin mining is the process through which new blocks (transactions) are added to the ledger, and new bitcoins are released.
Bitcoin mining involves solving a computational problem/puzzle. The solution to this computational puzzle allows miners to chain together blocks of transactions. Once a new block has been solved, the Bitcoin miner is rewarded with new bitcoins.
This mining helps to secure the network and further solidify the blockchain technology. With each block added to the blockchain by a miner, the miner is rewarded with 12.5 new bitcoins. Back in 2009, that reward was 50 new bitcoins.
The designated reward is designed to reduce by half every four years. In the same vein, miners are also given mining fees that are synonymous with the transactions included in their new blocks.
Bitcoin mining is done these days by professionals with adequate hardware and software to match. Electricity and massive data centers are also a plus if you want to become a successful Bitcoin miner.
This informative piece was put together by BTXchange.io.
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