There are many questions that pop up when one talks about Bitcoin; there are the questions regarding the history, value, and security. And all of these questions eventually lead to the big question – where do these Bitcoins come from?
In this piece, we seek to explain the origin of new Bitcoins which will have us go through Bitcoin mining. We shall briefly introduce what bitcoin mining is. After this, you can navigate to other articles to satisfy your curiosity on other Bitcoin mining topics.
The easiest way to understand Bitcoin mining is to think of it as mining gold. In many ways than one, the two are similar. Like gold, Bitcoins are limited in number. Complex calculations reveal that there only are 21 million bitcoins in existence. This value has remained the same ever since their creation.
Now, given their finite number, the more Bitcoin mined the rarer they become thus increasing on the mining difficulty. More resources are required to get each subsequent Bitcoin. Aside from that, there is one important fact you should note – a major difference between gold mining and Bitcoin mining. With Bitcoin mining, bitcoin is not created per se – it is offered to miners as a reward for solving the complex mathematical problems thrown their way. How they do it is all the more fascinating.
Miners require computers and a software for the mining process (in the recent times, due to the increased complexity of the mathematical problems, most are using dedicated mining hardware to increase their revenue). The process of solving a block takes approximately 10 minutes.
After every ten minutes, give or take a few minutes, the mining computers and hardware collect some pending bitcoin transactions in the network and convert them into a mathematical problem.
The miner who finds the solution to the mathematical problem is required to broadcast it to the network. All other peers/miners on the network check whether the sender of the bitcoins has the authority to do so, and if the solved problem has been completed correctly. If a sufficient number of miners approve the solution, the block is added to the ledger (made permanent) and all miners progress with the rest of the transaction request.
The miner who landed the solution is rewarded with a special number of bitcoins. However, this only happens after the remaining 99 blocks have been added to the system. The bitcoin reward acts as an incentive for miners to participate in the mining process (a core process in the sustainability of Bitcoin).
The thing with Bitcoins and cryptocurrency as a whole is that it is decentralized. It is not regulated by a single body, organization or government. While this gives it much freedom and a bunch of other benefits, it leaves the issue of double spending unattended. For the whole system to hold, the processes have to be verified and authenticated.
The mining process solves this problem. During this process, the transaction requests are validated and added to the system as a permanent block. Double spending is close to impossible with bitcoin mining.
Bitcoin mining is a lucrative business. However, to mine competitively, you need to understand the process and be willing to invest in the necessary resources as well as time. Also important, you need to have access to cheap and affordable electricity. Other than that, give it your best shot.
Below you will find the best hardware, software, cloud contracts so that you easily can get started in your journey to become a profitable miner
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