What Is Bitcoin Mining and How Does It Work?
Blind investing is one of the fastest ways to lose your money. If you want to avoid that, you need to understand the core of your assets.
It’s no different with Bitcoin or any other cryptocurrency so, first, we need to know some things about this currency, such as what is it? How does Bitcoin work? Is it legal to use this digital currency?
Let’s look at these questions in greater detail below.
What is Bitcoin?
Bitcoin is a virtual and intangible currency. That is, it cannot be in our hands, unlike the money we see daily in the form of bills and coins; although, sometimes the payment of this virtual currency can be in those options.
Bitcoin miners are not actually people, but machines. They are the engine of the blockchain that supports this cryptocurrency and of the approximately 800 other digital coins that exist in the market.
The transactions made with Bitcoin are grouped into elements on the blockchain called "blocks", which are checked periodically by the miners.
Checking and verifying each block provides them with a certain amount of new Bitcoins, in addition to earning a fee for the transaction that has been revised.
How does Bitcoin mining work?
Because cryptocurrencies are part of a decentralized system, you need a method that allows you to check all the operations that have been done to prevent someone from using the same amount of Bitcoin more than once and even introduce fake coins in the market.
The mission of mining is to certify that nobody uses the same currency twice and that nobody can introduce ghost BTC on the platform. Therefore, the miners review all the transactions, putting together the last transactions created in a group (called a block).
The more powerful the computer, the easier it is to solve a block and therefore obtain a reward. For this reason, the so-called mining pools have been created which are used for joint work - to obtain a reward among all the members who contributed to the work.
Joining a pool guarantees us more possibilities to be able to solve a block easily. If this were done individually, it is possible that you will never get a reward as the power of the computer you have may not be enough for the demands of mining tasks.
In a Blockchain platform, each user included in this network can have one or more public addresses that can be known as 'wallets' or purses.
Each address has a private key associated with it, which only the owner is able to digitally handle.
Within the Bitcoin code, it has been established that when a block is validated, a certain amount of coins is obtained as a result.
The quantity of BTC generated is halved every certain amount of blocks. In addition, each Bitcoin transaction generates commissions.
As time goes by, more competition is appearing, so you have to increase the power of the computer that is being used to generate it. Taking into account that carrying out this work has difficulties in certain parts, one must be attentive to any transaction executed.