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Published: Apr 23, 2019
By: Jovan Milenkovic
Anyone who has ever heard of Bitcoin must have also been introduced to the process of Bitcoin mining. While most people associate it with free coins, it is actually much more than that.
Miners are a crucial part of the whole Bitcoin mechanism; they are in charge of maintaining its decentralized nature and validating transactions by overcoming the mining difficulty for the appropriate reward https://bitcoinfy.net/crypto-transactions-and-mining
What is Mining?
Bitcoin and its blockchain mechanism make the transaction process fully decentralized, and authority over the process is provided to all miners connected to the network.
Hence, Bitcoin mining is the process of authorizing new transactions by including them in the latest block on the blockchain (updating the ledger distributed among all network users), and getting the reward for being the first one to do it.
How Does Bitcoin Mining Work?
The process of mining begins as soon as the sender initiates the transaction. It can only reach destination once it is verified, which is done by solving a complex math puzzle. Once it is done, the transaction becomes part of the current block in the blockchain, along with other transfers verified at that time.
Miners are the ones competing to get the right hash number first to validate the transaction and get a reward for it. Satoshi Nakamoto, Bitcoin’s creator, opting to make the system sustainable, made the reward amount decrease periodically so as to control the number of new coins in circulation gradually. Until May 24, 2020, the reward is still 12.5 BTC, although it will be halved to 6.25 after that date.
With the rise in popularity, the blockchain quickly became much more crowded than in its early days. Due to this fact and the system’s sustainability as previously mentioned, hash calculations became more and more difficult to solve.
While the initial miners were able to run their mining operations from regular home desktop computers, nowadays, this can only be done by ASIC miners.
ASIC is short for Application-Specific Integrated Circuit and represents the latest piece of hardware used to handle the massive data and processing demands of the blockchain. It is only the latest in a line of solutions used to increase devices’ computing power for Bitcoin mining – the faster the device can solve math puzzles, the greater the chances it will come up first with the solution.
Bitcoin Mining in 2019
Nowadays, people would need to make a considerable investment to engage in Bitcoin mining successfully. The devices are expensive on their own, but so are the additional costs and requirements – cooling systems and electricity costs.
Those that choose to team up with other miners in mining pools to up their chances will most likely face fees as well.
Moreover, the profitability largely depends on Bitcoin’s price. At certain moments, simply buying the coins from an exchange can turn out to be a more solid investment.
In 2019, interested miners are better off with this alternative, or a different coin such as Monero or Ethereum that don’t require so much processing power.
Check out the infographic below to find out more about cryptocurrencies and crypto mining.
Infographic URL: https://bitcoinfy.net/crypto-transactions-and-mining