Bitcoin mining explained
The popularity of Bitcoin is rising as more and more people are learning about it. However, it is still difficult to understand some ideas related to Bitcoin — Bitcoin mining is definitely one of them. What is Bitcoin mining? How does Bitcoin mining work? How long does it take to mine a bitcoin…? There are so many questions we ask ourselves when we first read about Bitcoin and mining. In this guide, you will find all the answers you need. By the end of this guide, you will have a much better understanding of Bitcoin mining.
Bitcoin mining is the process of verifying, storing and securing Bitcoin transactions. Of course, there is much more to it than that.
But before getting into more about what is Bitcoin mining and how it works, keep in mind these two important things about Bitcoin itself. This is what Bitcoin is all about — it works without middlemen like banks or credit card companies. As you can see, Bitcoin is very, very different from traditional payment systems like banks and credit card companies. As Bitcoin is not printed, though, how is new Bitcoin created?
If you thought it might be Bitcoin mining, you are right! As you now know, Bitcoin mining is the process of verifying Bitcoin transactions and creating new Bitcoin. The people who mine Bitcoin are known as Bitcoin miners. They run software that connects them to the Bitcoin blockchain and solves mathematical problems.
When these mathematical problems are solved, new transactional data is verified and stored on the Bitcoin blockchain. So, the Bitcoin miners are verifying the transactions instead of banks and credit card companies. This means there is no third party to trust or rely on. Clever, right? Put simply, they do it because they are rewarded with Bitcoin. This is the only way that new Bitcoin can be created!
Remember, only 21 million Bitcoin can be mined in total; when all 21 million Bitcoins have been mined, no new Bitcoins can be created! So now you know what is Bitcoin mining in total. You know that Bitcoin uses the blockchain, right? Many Bitcoin transactions happen at the same time. Once a block is verified, it gets added to a chain of blocks that have already been verified.
They just need Bitcoin mining hardware a powerful computer and Bitcoin mining software. As you can see, Bitcoin mining is not that difficult to understand. You may want to mine Bitcoin, you may not want to mine Bitcoin. Follow the steps below and you can become a bitcoin miner yourself.
The first step to start Bitcoin mining is to purchase the mining hardware. Selecting the right hardware is important for the success of mining. So what is Bitcoin mining best hardware? When Bitcoin mining started, back in , you could mine using basic computers — like the ones we buy from retail stores! As Bitcoin started to become more popular, the miners started to use more powerful computers. They used faster graphic processing units GPU that could solve the problems faster, meaning they would win the race and be rewarded with the new Bitcoin!
Guess what happened when Bitcoin became even more popular? Miners got even faster. ASICs that are created for mining is very powerful and fast. They do not do anything else other than mining. You can check the following comparison of different ASICs that are popular among beginners. There are two ways that you can start Bitcoin mining. One is to start by yourself, which is called solo mining.
Another way is to join a group of other Bitcoin miners — these are called mining pools. So, what is Bitcoin mining pool?
Think of Bitcoin mining pools as large Bitcoin farms. Lots of miners combine the power of their Bitcoin mining hardware. They also split the Bitcoin reward that they receive. If you are a beginner, Bitcoin farming joining a mining pool is recommended.
There are many different pools for you to choose from. But, be careful and only choose well-known mining pools with a good reputation. You could have the best mining hardware in the world, but without Bitcoin mining software, the hardware is useless. You also need it if you want to join a mining pool. There are different types of Bitcoin mining software available. Some of the most popular software that supports mining with ASICs are:. Once you have set up your Bitcoin mining hardware, downloaded your software and joined a mining pool, you can start mining Bitcoins!
So, have you thought about where will you store these Bitcoins? Unlike traditional money, Bitcoin cannot be stored in your bank account. Instead, you store them in a Bitcoin wallet! So, what is Bitcoin wallet? You must be very careful when choosing a wallet or you could lose your Bitcoin.
Many people have lost a lot of money because their Bitcoin wallets got hacked. Web wallets and software wallets are always connected to the internet. If you want to download a software wallet, I recommend Exodus , Electrum and Copay. Hardware wallets are more secure because they are not connected to the internet.
They are actual physical devices that you can store your Bitcoin on; you connect your hardware wallet to your computer via USB. Three of the most popular hardware wallets that I recommend are:.
Ledger Nano S. The answer to this question is different from person to person. It might be right for you, but it might not be right for someone else. By answering the following questions, I can help you decide. The current number of Bitcoins that miners are rewarded with per block is This number halves every 4 years, though. So, in , the reward will go down to 6. So, how long does it take to mine a Bitcoin?! Well, one block takes 10 minutes to mine.
That means one Bitcoin is mined every 48 seconds. As more and more Bitcoin miners join the network, the mining difficulty level also increases. This also means that you would need to buy more expensive hardware. Two of the main costs involved with bitcoin mining are:. The easiest way to find out how much profit you can make is to use an online calculator! There are many different Bitcoin mining calculators on the internet.
Make sure you think about the cost of your Bitcoin mining hardware. You should include the cost of your hardware in your calculations so that you find out your real profit. This is something that is completely out of your control but can change everything. We must always remember that this is possible. Source: steemit. So, what is Bitcoin mining? Do you know now? I hope that you have a good understanding of what it is, how it works and how you can get started with your own Bitcoin mining.
Starting to mine Bitcoin requires a lot of planning and money. It could give you a big profit, but it also may not give you a big profit.
Save my name, email, and website in this browser for the next time I comment. Nice article, although in my country, Bitcoin mining is almost impossible because of the high cost of electricity. Error, failed to subscribe. If problem persists contact site administrator.
How Bitcoin Mining Works
What is a cryptocurrency? Is it like bitcoin? In a word, yes. Bitcoin was the first cryptocurrency, and is still the biggest, but in the eight years since it was created pretenders to the throne have come along. But the flourishing ecosystem has provided a huge amount of variation on top of that. Some cryptocurrencies, such as Litecoin or Dogecoin, fulfil the same purpose as bitcoin — building a new digital currency — with tweaks to some of the details making transactions faster, for instance, or ensuring a basic level of inflation.
What is Bitcoin Mining?
Bitcoin mining is the processing of transactions in the digital currency system, in which the records of current Bitcoin transactions, known as a blocks, are added to the record of past transactions, known as the block chain. A Bitcoin is defined by the digitally signed record of its transactions, starting with its creation. The block is an encrypted hash proof of work, created in a compute-intensive process.
Miners use software that accesses their processing capacity to bitcoinn transaction-related algorithms. In return, they are awarded a certain number of Bitcoins per block. The block chain prevents attempts to spend a Bitcoin more than once -- otherwise the whay currency could be counterfeited by copy and paste.
Originally, Bitcoin mining actuslly conducted on the CPU s actkally individual computers, with more cores and greater speed resulting in more profitability. After that, the system became dominated by multi- graphics card systems, then field-programmable gate arrays FPGAs and finally application-specific integrated actualy ASICsin the attempt to find more hashes with less electrical power usage.
Due to this constant escalation, it has become hard for prospective new miners to start. This adjustable difficulty is an coes mechanism created to prevent inflation. To get around that problem, individuals often work in mining pools. Bitcoin generally started with individuals and small organizations mining. At that time, start-up could be enabled by a single high-end gaming.
Now, however, larger mining organizations might spend tens of thousands on one high-performance, specialized computer. In the malware world, one of the more prevalent current threats is mining botnet infections, in which user systems mine for Bitcoin without the owners' knowledge and funds are channeled to the botnet master. Please check the box if you want to proceed.
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When purchasing mining equipment make sure you have done an initial check of the seller, getting some referral and use trusted payment providers such as Paypal if possible. I have been looking to get into bitcoin mining but finding it too difficult to start. I bumped into an article online on investments and profit through bitcoin bigcoin and other alt coins. Breaking financial barriers is one of the sweetest achievement one can achieve and with a profit of One hundred and twenty nine thousand dollars in a couple of weeks should be regarded as a gain.
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