Before you get into the world of Bitcoin and start to understand how it works, it is useful to know what Bitcoin mining is.
Just like its name says, Bitcoin is a coin in the world of cryptocurrencies. It is the first cryptocurrency ever created and also the first blockchain.
Bitcoin is also a decentralized currency which means that it is not controlled by any government and its price doesn’t depend of any other currency. It has the most number of full nodes in the crypto-sphere and that is why it is difficult to be attacked by any government or hacker group.
Bitcoin was created by Satoshi Nakamoto in 2007. He (or they) decided to stay anonymous; that is why nobody knows their gender or even if it is just one person; even though there had been some declarations by some people trying to declare themselves as Satoshi, nothing has been settled or proven.
What is Bitcoin mining?
It is the means by which every new Bitcoin is brought into circulation to be traded in the market. There is Actually a limit to the number of Bitcoins that can ever be created, and it’s 21 million BTC.
Bitcoin mining requires the use of a computer and a special program. The people that do the mining are called miners.
Bitcoin mining is used to add transactions to the blockchain and to release newborn Bitcoins.
This is how the Bitcoin mining process happens: the mining process includes accumulating recent transactions into blocks, and then the miner will try to solve a computationally difficult puzzle. The first member that gets to solve the puzzle is able to place the next block on the block chain and can claim its rewards.
The person that wins the block is going to get a reward of a number of Bitcoins set by code.
It is important to know that each one of the blocks is created in a sequence. It can happen that two competing blocks are created by different miners and the block with the major total proof of work implanted within is chosen for the blockchain.
Proof of work
The proof-of-work is a system used by Bitcoin to create an incentive for miners to hold into their coins.
Bitcoin is based on Proof of Work system. This system makes it so that proving how much you’ve worked is critical to obtain your rewards; the more you work, the more will be the chances of mining the block.
Proof of work primary goal was to protect network systems from denial-of-service attacks. And the term exists long before Bitcoin was created.
Important aspects of Bitcoin mining
Bitcoin mining is decentralized.
Any person with a computer, internet connection, and the appropriate hardware can participate in Bitcoin mining.
It is recommendable that the place that the miner is going to use as a work space has low electricity prices.