What is Bitcoin Mining?
If you have come across the functionality of bitcoins, you might have wondered from where do bitcoins come. A government determines when to print and distribute and paper money. Well, there is no central government for bitcoin.
When it comes to bitcoin, there are miners who utilise special software for solving mathematical problems and as a reward a given number of bitcoins are issued. This functions as a smart method to issue new bitcoin as well as it works as incentive for people to do bitcoin mining. Bitcoin (BTC) miners assist the bitcoin network to remain secure by authorising transactions. Bitcoin mining is a significant area which confirms fairness while keeping the network secure, safe and stable. At the end of the day, bitcoin mining is profitable as long as the bitcoin prices remain high.
So, what is bitcoin mining precisely and why is it called so? Think about it as gold mining because it is similar to it in the sense that bitcoins are present in the protocol’s design but no light has been shed to it. Just like how gold is present underground and hasn’t been dug up yet. This is where BTC miners come into light because they are the ones bringing out a few of bitcons at a time.
The process of bitcoin mining begins with validating transactions and then proceeding to bundle transactions in a block. Next step is to solve a computationally difficult puzzle. There will be multiple miners attempting to solve the puzzle, but the participant who solves the puzzle first will be able to place the new block on the block chain, thus claiming the reward. When the first miner obtains a resulting hash within the anticipated ranges declares its victory to the other participants of the network, other bitcoin miners will halt work on that specific block and attempt to guess the mystery number for the upcoming one.
It is hard for BTC miners to cheat at the puzzle solving game. It is not possible to fake this task and get away with the right answer to the puzzle. This is the reason why the method of puzzle solving is named proof of work. However, developers want to put away proof of work, the system for validating transactions and protecting the network from tampering. Proof of stake is the suggested replacement where the block creators will be selected based on the tokens owned.