Bitcoin is again the talk of tinsel town. Yes, it had a bearish year lately and many claimed you are sicher nicht reich werden with BTC. But, interestingly, Bitcoin seems to be fast getting towards a bullish trend after 6 months of low. No wonder, aspiring investors are looking to know more about Bitcoin. One of major things that newbies in crypto often want to know is what Bitcoin mining is and how it is done. The post below offers a brief guide on BTC mining.
BTC mining- what is it actually?
Well, before getting further discussion it should be cleared that Bitcoin is a digital asset. So, unlike your regular fiat money, it is not printed or minted. Rather it is “mined”. So, Bitcoin mining refers to a process through which these coins are brought to circulation. Bitcoin comes with a limited supply. More mining would only imply scarcity of supply but also rise in value of the coin over time.
In Bitcoin mining, miners have to solve computationally tough puzzles to discover new blocks. The new block will be added to blockchain- that makes the very infrastructure of Bitcoin. If you want to become a miner, you should have your own GPU or ASIC to set the mining rig. You have to invest in special software programs that are specifically made to resolve the math problems for Bitcoin mining. When miners solve a math problem and new block gets added, new Bitcoins are issued as their rewards. The reward here is actually halved per 210,000 blocks.
It’s to note here, while 50 Bitcoins was block reward in 2009, it’s 12.5 at present. With more creation of Bitcoins over time, the mining process becomes more difficult. The term “difficulty” here implies the volume of the computing power deployed here. In other words, volume of the computing power increases with more mining. For example, in the initial period in 2009, mining difficulty was 1.18. Currently, after 10 years, it 12 trillion+.
Previously, a regular desktop would have been adequate for mining BTC. But, at present, you need complex and expensive hardware such GPU or ASIC to tackle the growing mining difficulty.
How does mining work here?
Bitcoin mining can be defined as some decentralized computational procedure which caters to two goals. One, it confirms every transaction in reliable manner when adequate computational power has been allotted to block. The other is, it issues new BTC coins in every block.
BTC miners keep BTC network secure through approving transactions. It’s to stress here that mining is extremely crucial to assure fairness and to guarantee a secured, safe and stable Bitcoin network.
Below are the steps that will show you how mining actually works.
- Transactions are verified to check their validity
- Transactions are bundled in block
- Miner will select header of latest block as well as insert it right into new block in the form of hash
- Next, he will the POW (Proof-Of-Work) problem
- After his solution is received, new block would be added to local blockchain as well as propagated to network
Cloud mining getting popular
With the popularity of cloud, cloud mining is fast gaining ground in the BTC zone. the best part about cloud mining is that you don’t need to waste money in offline hassles like hardware, electricity or software to mine Bitcoin. The entire process of cloud mining happens remotely in virtual cloud.
The internet made information global and easy to access. A sound, global currency like Bitcoin will have the same impact on finance and the global economy.
If you understand the potential impact of Bitcoin, it won’t be hard to hard to understand why investing in bitcoin may be a good idea.
Bitcoin is global and not affected by any single country’s financial situation or stability.