What is Bitcoin Mining and How is It Done?
Cryptocurrencies have been around for a while now. Some enthusiasts have dug around keenly to understand how cryptocurrency transactions work, while others have just sought comfort in buying them. The ones who stuck around trying to work around them found a way to their happiness too. How? Bitcoin mining.
Bitcoin mining is one of the crucial and carefully done procedures in which verification of various kinds of cryptocurrency transactions is carried out. These are then added to the digital blockchain ledger. To stay competitive against other crypto miners, miners require computers with dedicated hardware. It requires great care, utmost precision, and usually is a costly procedure. The reward is, however, sporadic.
Yet mining of cryptocurrencies has its own affinity amongst crypto investors as miners benefit vastly for their crypto token work. This is because the entrepreneurs and enterprises perceive mining as a bag of fortune and for the people who are technologically skilled, it’s like an easy way to earn big.
The miners are generally keen on receiving the profitable bitcoin tokens with mining. But not everybody who wishes to own a bitcoin has to be a miner. So how is this mining done? Let’s see.
How is Bitcoin mining done?
The concept was initiated by the founder of bitcoin, Satoshi Nakamoto. Bitcoin mining prevents the double-spending problem. After the miner verifies 1 MB bitcoin transactions, which completes one block, he is approved of bitcoin as a reward. The limit of 1 MB was kept by Satoshi Nakamoto.
The rewards for mining are given to the bitcoin miner that resolves a difficult puzzle of hashing first. The chances that the participant will resolve the problem are dependent on the total mining power portion that the network has. Miners are basically the auditors who are verifying all the earlier Bitcoin transactions. It is intended to keep the usage of Bitcoin honest and fair on customers’ part.
Some miners trust that the block size must be grown to inculcate more data that would expedite the transactions as well as the process of verification of transactions.
And the transactions worth 1 MB only make the miner of the coin eligible for earning bitcoin and not everyone that verifies them would be paid out. Because 1mb worth of transactions could include one transaction or several thousand. It is based on the data that is taken up.
In order to earn bitcoins, you have to fit two conditions.
- You need to validate 1MB worth of crypto transactions.
- You must be the first bitcoin miner to get the solution to the numeric problem. This process is also known as proof of work.
There is no rocket science or high computational power needed. What miners do is come up with a 64-digit hexadecimal number or a hash, which is less than at par with the hash target. To successfully mine a bitcoin, the miner needs to have a huge hash rate that is gauged in megahashes per second, terahashes per second (TH/s), and gigahashes per second (GH/s).
You are also free to buy bitcoins using fiat currencies, and you can sell or buy them on exchanges like Bitstamp with the help of another crypto-like Ethereum or NEO. You also have the option to earn bitcoins by playing online games and by posting blogs on portals that reimburse their users in bitcoins. Steemit is one such platform. People can blog over this portal and earn rewards in their proprietary cryptocurrency known as STEEM. This currency can be further traded somewhere else for bitcoin.
So that is the gist of mining bitcoins. With the help of mining, cryptocurrencies can be earned without shedding bucks for it. The miners of Bitcoin get bitcoin for finishing the “blocks” of some verified transactions that are included in the blockchain.