There are two ways of Bitcoin mining; solo or via Bitcoin Mining Pools. Solo Bitcoin mining means that the miner tries his luck by himself without joining any pool whereas Bitcoin Mining pools can be likened to lottery syndicates where several users pool their resources together thus giving them more chance to solve the current block found on Bitcoin’s blockchain and at the same time splitting any mined profits equally between all participants after certain fees have been deducted. Although pooling resources together gives Bitcoin miners an increased chance of earning Bitcoin, it also results in Bitcoin’s blockchain being slower as Bitcoin transactions are processed one by one. You can also take help from Quantum AI, where you will get complete information about bitcoin trading.
Importance of Bitcoin Mining
Bitcoin mining is important because the reward for successfully mining Bitcoin blocks currently stands at 25 Bitcoins per block which means 12.5 Bitcoin every 10 minutes or 1 new Bitcoin every 100 minutes. To put things into perspective, if you started mining Bitcoin today it would take about 102 years to mine your first Bitcoin at current conditions whereas last year it would have taken just 9 months. There are only 21 million bitcoins that can be mined in total which means that once all of them have been mined there will be no more new Bitcoins being introduced into the circulation causing the value of mined coins to skyrocket over time. Bitcoin mining is also used to securely send Bitcoin transactions, create Bitcoin wallets and Bitcoin blocks.
Due to its rapid rise in popularity Bitcoin mining has become extremely competitive with users all over the world competing against each other for Bitcoin profits by purchasing faster hardware that can perform more calculations faster than others. It is now nearly impossible for individual miners to compete as Bitcoin mining requires such a high level of computing power that it is now only possible to use specialised hardware which costs multiple thousands of dollars…
To conclude, Bitcoin mining is important due to the fact that it’s how new Bitcoins are introduced into circulation and because Bitcoin transactions cannot be counterfeited. Mining Bitcoin requires highly specialised computer hardware and thus can be very expensive and challenging to do at this point. Bitcoin mining is also how Bitcoin’s blockchain keeps track of all Bitcoin transactions which are made public for everyone to see, making Bitcoin a truly decentralised currency.
Bitcoin Mining is the process in which Bitcoin transactions are verified and added to Bitcoin’s public ledger known as the Blockchain. It can be perceived like the Bitcoin data centre except that it has been designed to be fully decentralised with miners operating in all countries and no individual having control over the network.
This process of Bitcoin mining validates transactions, secures Bitcoin from fraudulent transactions, prevents double-spending, creates new Bitcoins through computational processes, and officially records transaction information on Bitcoin’s public ledger. The reward for successful Bitcoin mining is 25 newly created Bitcoins per block added to the blockchain plus any fees associated with the transactions compiled in said block.
The more powerful a computer (or miner) is compared to all other computers running Bitcoin software at that point in time determines its Bitcoin mining success rate. Bitcoin mining alone is not an activity that will enrich anyone, but Bitcoin has created a multibillion-dollar global Bitcoin economy with its usage growing exponentially every year.
Bitcoin miners are ranked by their Bitcoin mining power which is also referred to as hash power or hash rate; the greater the number of Bitcoin mining, the more Bitcoin miners can potentially earn through Bitcoin Mining. So it would make sense if there were Bitcoin miners who had a huge amount of Bitcoin power (hash rate) and there were those who had less than 1% of Bitcoin’s total amount this would be considered unfair; especially to those small-time Bitcoin miners who at some point in time worked hard to obtain their current Bitcoin hashing power.
Overall, Bitcoin took decentralisation, security, and economic principles into great consideration when Bitcoin mining was established. Bitcoin has become the most popular cryptocurrency in the world with Bitcoin’s market cap valued at $20 billion (USD) as of August 2015.
Conclusion
So it is concluded that the Bitcoin mining process requires Bitcoin miners to solve complex mathematical problems with cryptographic hash functions that are associated with a block containing the transaction data; it can be perceived as cracking a password for Bitcoin transactions in order to validate them.
Once Bitcoin miners successfully mine Bitcoin blocks they earn new Bitcoins plus any transaction fees found within the successfully mined block. Also, since Bitcoin mining is decentralized, individuals all over the world also engage in Bitcoin mining which helps make it fair for everyone involved.
