Have you wondered why they call it bitcoin ‘mining’? Well, Bitcoin mining can be as venturesome as mining the Earth’s core and might as well astonish you with treasure like digital ‘gold’. Imagine a tech savvy genius playing with complex math problems on high-powered computers.
I am sure that the nerd inside your intrigued brain must have gotten excited by now. I mean that’s the wonder about mathematics and technology, it always keeps you on the edge. That’s why we indited this article jotting down all the basics that you need to know about bitcoin mining. To start mining Bitcoins, you can create account in bitcoin profit login and get started.
Spoiler: you would want to read up more of our articles about bitcoins after you finish reading this one.
Mining the digital gold/ bitcoin
Just as you need specially designed and equipped instruments to dig the gold out of the Earth’s core, you need a high power supercomputer to get to the ‘digital gold’ or bitcoin. It’s bewildering to even imagine a powerful supercomputer to get taxed but those are the kind of complicated computational math problems that are carried out during the process of bitcoin mining.
Now you must be wondering who would be crazy enough to work that hard on such complexities. But well, there is a reason why people call geniuses crazy, initially. How about I tell you that you can produce gold? Consider referring to the second line of this article before closing it. Guess, you are curious enough to stay. So as and when the computers solve these mind-bending problems on the bitcoin network, they produce a new bitcoin.
Furthermore, solving these computational math problems decentralizes the system and makes the payment network extra secure as it verifies the information. Whenever there is an exchange in bitcoins, it’s known as a transaction. If only you could spend your pocket money or your salary twice so you don’t have to make a choice between spending on food or saving up for an iPhone.
All of your transactions be it on a store or online are recorded and documented by banks. In a similar fashion, bitcoin miners do the job of a bank by putting transactions together in “blocks” and adding it to the ‘much awaited word in any article about crypto’ blockchains. This is done to maintain the records to verify the transactions in the future.
Bitcoin Miners are also supposed to check whether these transactions are accurate. Simply put, a unique thing about crypto is “double spending” where the bitcoin gets duplicated fulfilling your “spending the salary twice” fantasy quite literally. Note that this is an illegal activity and can be caught easily considering how decentralized the system is.
Rewarding the Bitcoin miners
There are roughly 300,000 transactions taking place almost every single day and it’s crazy how miners sitting across the globe verify all of these transactions. There has to be a solid incentive to compensate for the amount of work that they do. Whenever a new block of transaction is added to the blockchain, miners are awarded with a bitcoin.
After every 210,000 blocks in around almost 4 years, the block reward is halved. The trend has gone from 50 in 2009 to 925 in 2013 and gradually getting halved to 6.25 in May 2020. If these figures blew off over your head, relax, we got you covered. This trend of halving that we discussed is basically the number of bitcoins in circulation which will eventually reach a limit of 21 million. This will further make the currency absolutely finite and potentially add value to it in the long run.
Verification of transactions
Two things need to take place if the bitcoin miners want to earn bitcoin from verifying transactions. One megabyte of transactions can be as little as one transaction but since bitcoin can never be that easy to understand in any aspect, it can be in thousands too considering the amount of data that is present in each transaction. The bitcoin miners are supposed to verify this megabyte worth of transactions, to start with.
The simple explanation about what are these ‘super complex computational math problems’ is that it is basically ‘a proof of work’ that is done in order to add a block of transactions to the blockchain.
Bitcoin Mining Analogy
Don’t worry, there won’t be any use of technical language that might appear as complicated as solving the computational problems, hypothetically. To explain the analogy in layman’s terms, let’s suppose you gather three of your nerdy friends to play a fun maths game. The rule is very simple.
The host will think of a number between 1 and 100. The others will be asked to guess a number that is less than or equal to the number that was thought of by the host. The bonus is that the players get as many guesses as it takes for someone to make the appropriate guess.
Say the number that the host thought of was 19 and one of the three friends playing the game guesses the number 12. 12 is less than 19. Thus, it is an appropriate guess making him the winner of the game.
How about I tell you that this is what bitcoin miners do on a complex level. All the so-called bitcoin miners are supposed to guess a 64-digit hexadecimal number. It’s almost as hard as teaching a 4 year old an engineering level- concept. The bitcoin miners are supposed to guess the right hash plus they have to be the first one to do that out of the millions of genius hackers working on their supercomputers.
It’s all about the speed and efficiency of your supercomputer. Bitcoin mining is nothing but guesswork and you have to figure out the correct answer before another miner does.
To sew up, please treat a bitcoin miner like a king if you ever come across one. Note that bitcoin mining activities are performed on supercomputers so if there is anyone who tries to coerce you into such activities, it can be risky and you should immediately take the necessary action.