Bitcoin mining is the process by which the system verifies transactions and adds them to the public ledger know as blockchain. New bitcoins are also released through mining. If you have access to the internet and suitable hardware, you can also participate in this process!
Today, Bitcoin has been approved and endorsed by many as a safe way of exchanging money online, without the need for a centralised intermediary like banks. The transaction records are kept in a decentralised digital ledger (blockchain).
The blockchain relies on a network of nodes from dedicated servers across the world, creating an extensive decentralised Bitcoin network that works without a central command centre, automatically verifying and approving transactions. What protects the integrity of the system by ensuring the same Bitcoin is not spent twice? The answer is Bitcoin mining.
How Do You Mine Bitcoins?
The mining process involves solving a computational puzzle. The first participant to solve the puzzle places the compiled transactions (block) on the blockchain and claims the rewards. The rewards for mining is then credited to the miner's wallet in the form of a Bitcoin fraction, commonly known as Satoshis.
After a block has been cryptographically added to the ledger, miners move to the next batch of transactions – that's why it's called blockchain. The miner who found the solution is entitled to a reward of 25 bitcoins, but only after 99 blocks have been added to the ledger.
In Bitcoin's early days, CPUs from your average desktop computers were used for mining. As Bitcoin gained popularity, graphics processing units (GPUs) proved to be more efficient and effective. Today, hardware systems such as ASIC (Application-Specific Integrated Circuit) have been specially designed for mining.
Bitcoin mining has been a super competitive venture today. Everyone wants to get rich fast. From hackers installing malware in software products to secretly mine Bitcoin using your computers to people buying ASICs and GPUs to set up a network of Bitcoin mining, everyone is rushing to benefit from this new craze.