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How to Mine Bitcoin? Bitcoin Mining
- Soumyaa Rawat
- Jul 02, 2021
What is Bitcoin?
Digital money or a cryptocurrency, Bitcoin was established in the year 2009 by a person or a group of persons who go by the name of Satoshi Nakamoto. The topmost digital currency, Bitcoin, is traded by the name of ‘BTC’ and exists only in the digital form.
A cryptocurrency that works on the basis of peer-to-peer technology, Bitcoin is not sanctioned by any central authority or a bank but is traded on a public ledger. This public ledger is transparent and accessible to all those who trade in digital currency.
An open-source platform where the currency is traded among those participating, Bitcoin is a global currency, unlike other currencies that are sanctioned by central authorities or governmental organizations.
A leading cryptocurrency that has swiped away people’s attention from all around the world, Bitcoin is stored in the form of digital currencies traded through a network of decentralized ledger systems known as a blockchain. A blockchain, in this case, ensures that the information updated on the public ledger cannot be compromised or hacked.
It adds blocks as the information related to Bitcoin keeps increasing, confirming the security and safety of the traders and their financial information. Currently, Bitcoin price till date is at a value of $31,611.
Bitcoin Mining
As we read about Bitcoin, we will now dig deep into this topic and learn about the process of Bitcoin Mining. The process of Bitcoin Mining is defined as the process of discovering new Bitcoins that are brought into circulation after performing a series of highly complex computational problems.
The process directly affects the blockchain which preserves the public ledger. High-end software that are particularly designed for Bitcoin mining are used to mine Bitcoin these days.
These Bitcoin Mining software are developed on the basis of similar algorithms that help in the verification of Bitcoin transactions. A number of hardware are also incorporated to mine Bitcoins.
For instance, the Application-specific Integrated Circuit chips (ASIC) is a hardware computer that has the ability to mine Bitcoins at a high speed and with less energy. It is a device that uses microprocessors solely developed for mining digital currencies like Bitcoin.
All in all, the mining of any cryptocurrency is a painstaking and time-consuming process that results in high rewards. There are numerous ways to obtain Bitcoin - buying the digital currency (trading), accepting it in exchange for goods or services, and mining the digital currency.
While the first 2 methods require an individual to give up money or commodity for possessing Bitcoins, the third way - Bitcoin mining, can get Bitcoins without having to pay for them.
(Also read - Dogecoin v/s Bitcoin)
How to mine Bitcoin?
The process of Bitcoin Mining surely sounds amazing, doesn’t it? Well, it is easier said than done. Let us move on to learning about how the process of mining Bitcoins works.
Bitcoin mining can be done with the help of open-source software and specialized hardware that are compatible with each other to mine Bitcoins. To mine Bitcoin, it is important to create a Bitcoin wallet in order to store what has been earned.
In order to get started, a miner is first required to verify Bitcoin transactions. This is done by opening boxes that hold transactions of Bitcoin in them. For these boxes to open, a miner has to unlock the padlocks that preserve blockchain transactions in these boxes.
This is where the mining software does its work. The software is required to detect the key that will help a miner to unlock the padlock and unbox the transactions in order for them to get verified.
(Similar read: What is text mining?)
Although the presence of the software makes the whole process fairly easy, it still takes lots of attempts to unlock the blockchain for the verification of Bitcoin transactions.
“The current number of attempts it takes to find the correct key is around 1,789,546,951.05, according to Blockchain.info—a top site for the latest real-time bitcoin transactions.” “Bitcoin Mining
As soon as a miner unlocks 1MB Bitcoin transactions (approximately one block) after solving complex puzzles or other computational problems, the miner becomes eligible to be rewarded with a specific number of Bitcoins known as the block reward.
In order to earn a Bitcoin, a miner has to mandatorily unlock and verify 1MB worth of Bitcoin transactions and be the first one to identify the right answer to a computational problem. Therefore, speed and accuracy are the most important factors that help a miner mine this peer-to-peer cryptocurrency.
Even though the computational problems presented in the process are not that advanced or high-end, they are so complex that in order to arrive at the right answer, a miner requires the help of high energy and great computational power to mine Bitcoins.
Furthermore, miners can also operate under a mining pool that lets various miners collaborate their efforts and combine their resources in order to mine Bitcoins. As this process is not feasible to be handled by an individual alone, mining pools often gain success in mining Bitcoins.
The reward gained after the process is divided among the miners. While mining Bitcoins sounds more like mining gold or another precious metal, it is also a way to ‘mint’ cryptocurrency. When the algorithm for Bitcoin trading was first developed, Satoshi Nakamoto defined a specific number of Bitcoins that will ever exist in circulation. This number was fixed at 21 million.
“Currently, more than 12 million are in circulation. That means that a little less than 9 million bitcoins are waiting to be discovered.”Bitcoin Circulation
With around 9 million Bitcoins still needing to be discovered, the process of Bitcoin mining will get harder and harder as the world reaches up to the last Bitcoin.
While anybody can develop resources and install a suitable hardware system for mining Bitcoins, Bitcoin miners are professionally capable of doing the job for individuals. This means that people can hire miners to verify transactions for them and compensate them monetarily.
The time taken to verify one block of transactions is 10 minutes and no matter how much energy or capability is invested in the process, a Bitcoin cannot be mined in time less than 10 minutes. Here is a step-by-step process for Bitcoin Mining:-
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Get your own Bitcoin Mining device set up. For instance, the AISC mining rig.
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Create a Bitcoin Wallet
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Preferably participate in a Mining Pool.
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Install mining programming on your computer. Make sure your software and hardware are fully equipped.
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Get started immediately!
Future of Bitcoin Mining
One of the greatest examples of digital currency, Bitcoin, is here to stay for a long time! There is no doubt that cryptocurrencies have gradually gained popularity and every 9 in 10 people know about it.
Bitcoin Mining, when it comes to its future, is surely going to escalate as more and more people are discovering about it. With only 9 million Bitcoins yet to be discovered, the world is soon going to run out of Bitcoins.
( Must read - Top 10 Companies adopting Bitcoin)
This will only lead to a higher value of the cryptocurrency since Bitcoins would only be left for trading. The future of Bitcoin mining is largely dependent on the energy sector and compatible bitcoin mining hardware as more cost-friendly and sustainable computer power will be required for the process to take place.
As digital currencies like Bitcoin are soon going to overtake paper currencies regulated by central authorities, Bitcoin mining will become a matter of concern and caution too.
Yet, the future that it beholds is strongly in the favour of more and more miners joining the party and trying to mine new Bitcoins for the numerous benefits it provides - secure network, no middlemen required, high rewards, and immediate transaction of coins in wallets. All in all, Bitcoin Mining is fundamentally spreading its wings across the world while it sails across the digital realm unstoppably.
Summing Up
In the end, Bitcoin Mining is a complex process that requires adequate resources and knowledge to get started. A process that leads to the discovery of new Bitcoins, Bitcoin Mining helps in the verification of Bitcoin transactions and also helps in identifying if the same Bitcoin serial number has been used twice. Lastly, the process is also a beneficial way to gain Bitcoins without having to pay for them.
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