What is Bitcoin Mining? How does it Work?

November 16, 2017     blagirr    
What is Bitcoin Mining? How does it Work?

Bitcoin operates as a peer-to-peer network. Therefore, the Bitcoin Network or shall we say, the Bank of Bitcoin consists of tiny fractions, and that tiny fractions are the people who uses it, and the bitcoin miners that does bitcoin mining.

Where do bitcoins come from?

With fiat money, the government makes the decision on to print and distribute money. Bitcoin is not dependent to a central government. With bitcoin, special software are used by miners in order to solve math problems and a certain amount of bitcoins are issued in exchange. With this, a clever way to issue currency is created while also providing incentives for people to mine. Bitcoin transactions requires bitcoin miners in order for it to be approved. Thus, having more miners makes the Bitcoin network more secure.

The Bitcoin network changes the difficulty of the math problems automatically in relation to the speed of the miners in the whole network. Before, bitcoin miners used computer processors to solve these math problems. Later, miners became aware that this kind of problems are solved faster when using graphics cards used for gaming. Graphics cards are faster, however it uses so much of electricity and and produces a lot of heat.

Can I mine bitcoin fast while using less power?

The first profit-oriented bitcoin mining products includes chips that are reprogrammed for mining bitcoin. These chips where faster but still power hungry. Application-Specific Integrated Circuit (ASIC) chips are made specifically for bitcoin mining. Bitcoin mining is made even faster while using less electricity when using ASIC technology.

What is Bitcoin Mining Pool?

As bitcoin became more popular, more miners joined the network thus mining alone became more and more difficult to solve the math problems. In order to solve this problem, miners has created a way to mine together in pools. Mining in a pool is a lot more faster than mining individually. After solving a particular math problem, each miner is given reward proportionate on how much work he or she provides.

Mining is an important activity in Bitcoin Network to ensure fairness, reliable, stable, and more secure network.

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