Bitcoin is a virtual or cryptocurrency which is extremely simple to send or receive. The transaction is as simple as sending or receiving messages. Like any other currency, bitcoin can be used to buy things, or booking etc. The major difference between any usual currency and bitcoin is that bitcoin is not under the control of the government. Satoshi Nakamoto, in 2009 started this concept and today many people are interested in bitcoin. Bitcoin is never midway, it will either give you a great loss or great return. This is because the value of bitcoin fluctuates extremely.
What is Bitcoin mining?
Bitcoin mining is not related to any physical work or on land practice. It is done over high-power computers that are potent in solving strenuous math problems. Such problems cannot be solved manually and thus requires computers. Also, anybody or anyone cannot solve them easily as it does not include some set of formulas or steps. The miner must have some experience in the field and a high-power computer.
The result of bitcoin mining comes with a great reward. When any such high computational mathematical problems are solved you produce a new bitcoin. On the other hand, miners make the bitcoin transaction trustworthy. This is how all miners ensure that all bitcoin payment networks are secured.
What Is The Need For Bitcoin Mining?
Since bitcoin or any transactions related to bitcoin does not come under the protocol of the government, there is a need to make the payment history for the future. To meet the demand all transactions are blocks. These blocks when put together they generate the history of payments; this process ultimately generates a blockchain. Nodes monitor the blocks or transaction for future verification.
Bitcoin exists virtually and there is a great possibility of copying the data and producing a duplicate bitcoin. Thus, there is a huge venture that a bitcoin owner makes several transactions using the same or original bitcoin. The verification of bitcoin is of extreme importance and hence place the role of the miners. Miners basically confirm that none of the bitcoin is on repeat. Since for the physical currency, there is a receipt and once you give them, they are physically gone but this is not the case with bitcoin. Bitcoin does not exist physically and there is no receipt for their use. So, during any transaction of bitcoin, miners guarantee that there is no duplicate or the second use of bitcoin by solving complex mathematical problems. As a result of which the transaction gets verified and miners get a bitcoin as an award.
What Does A Miner Do In Bitcoin Mining?
Earning bitcoin via mining seems easy, but it includes effort and luck. Miner majorly to earn reward focuses on the two things.
- The miner when completes 1MB (megabytes) transaction he/she becomes eligible to earn the reward. This is the effort part of the process.
- The miner must be the first one to come to the right answer if the computational math problem. This is the luck part of the process.
What Is The Math Problem In Bitcoin Mining?
The math problem is what is used to define Bitcoin Mining, but it is not exactly a math problem. They are looking for a 64-digit number or a hexadecimal number which is also known as harsh. This includes guesswork and luck. If you can come at the correct 64 number as the first one compared to all other miners, then you will produce a bitcoin.
What Are The Steps In Bitcoin Mining?
There are some steps and requirements to complete Bitcoin mining. These are listed below:
- Get a Bitcoin Wallet: Unless you do not have a bitcoin wallet you can’t complete mining. A bitcoin wallet is nothing exceptional or different as compared to any other wallet. It helps to send, receive or transact the bitcoin. It is important to do the mining because it verifies the miner. It ensures that a miner is itself a user of bitcoin or has enough bitcoin to exchange them in future. This also verifies that the miner has its Bitcoin address which is a requirement for mining as well as transaction. There are many types of wallet available in the market. SPV (Simple payment verification wallet), Hot wallet and cold wallet. Choosing the right wallet as per your needs is necessary.
- Find Bitcoin: To complete mining you need high power computers but to run those computers you need great power or electricity supply. This itself generates a great expense for the miner. This will also be required during an exchange of bitcoins.
- Get Mining Hardware: It is not at all possible to run bitcoin on a normal computer or laptop. Bitcoin Mining requires special hardware that is potent in solving and handling in big surfing. The reason to use specialized Bitcoin Hardware is that a normal computer makes you go in a loss rather than in profit. This is due to the electricity cost and another additional thing which will allow you to earn less than a penny in the whole year.
- Get Mining pool: Mining pool is where you will get problems. If you can contribute to the pool by generating blocks, you will get a Bitcoin. The reward depends on the current scenario of bitcoins and can fluctuate.
Before going to purchase Bitcoin or making up the mind to do Bitcoin Mining it is important for you to understand the advantages and disadvantages of using Bitcoin. These advantages and disadvantages are listed below:
Advantages Of Using Bitcoin:
- International payments are much faster.
- There is no way that your payment transaction is getting fraud because it is virtually impossible to hack any blockchain.
- Yours and your receiver details are never disclosed. Once you are done with the transaction you two again become complete strangers.
- New user’s verification is not required like those in banks. Anyone having a Bitcoin address can use it.
Disadvantages of Using Bitcoin:
- Mining is done on specialized computers that require great electricity. This generates a much higher expense.
- Some people find it difficult to use.
- There are always trust issues in using Bitcoin because it does not come under any governmental body.
Bitcoin mining is a complicated concept. If you just want to invest in bitcoin, buy bitcoins. But if you want to really get into cryptocurrency, you can learn to mine bitcoins. It will give you extensive knowledge about cryptocurrency and enable you to become better in this subject. There is no guarantee that you will surely be able to mine bitcoin, but you can be assured to learn a lot about this technology by trying it. Also, even if you are successful in mining a bitcoin, you need to learn how you make the best use of it. You need to decide whether you should keep it safe until its value gets higher or sell it at the current market price.