What is Bitcoin Mining?

bitcoin mining

Before explaining Bitcoin Mining, lets dig into how Bitcoin transactions are maintained and who does that for the system overall. We previously know what bitcoin is and how the entire system is different from the banking system we know of today.

Before we learn Bitcoin Mining, lets go through how a transaction is made in the overall system.

What is a Bitcoin transaction?

Consider an example where you have to send 1 Bitcoin to your friend. The process is simple. You'd ask for his wallet unique ID which looks something like as below:

Once you have his Wallet ID which is a unique hashkey (unique for everyone in the world), you'd then send your amount pointing towards that ID/key.

This is called a transaction. Every transaction have a unique key too, that acts like a receipt that you sent payment to your friend.

Anyone in the world could find out what amount was sent looking through the your transaction ID, though no one would know who sent whom.

In real world, the example is equivalant to you paying a Dollar bill at a store for payment. Only you and the store guy knows that you made the transaction, though no one else in the world could keep track of it.

Now lets move on to know what a Bitcoin block is.

What is a Bitcoin Block?

A Bitcoin block is a combination of multiple Bitcoin transactions that are put down together for better assembly. You can assume it as a file that keeps track of all the recent transactions that take place in the world of Bitcoin.

  • [message]
    • ##check## Did you know?
      • All the transactions taking place in the Bitcoin world are synced all together and everyone in the world knows about all the transactions taking place. It's an entire connected system where no transaction is hidden. When you make a Bitcoin transaction, it gets synced to world of Bitcoins.

What is Bitcoin Mining?

Now an obvious question would be, who would do this? Who would put these things together. Who would bring all the recent transactions together and make Bitcoin blocks out of them and sync them to the rest of the Bitcoin world?

Well, that is where a Bitcoin Miner comes in. Anyone in the world could become a Bitcoin miner.

What does a Bitcoin Miner Do?

A Bitcoin Miner keep note of all the latest transactions taking place in the world, create a new block out of them and sync it to the world's Bitcoin network. Though this isn't that simple. If this was to be the case, everyone would start creating their own Bitcoin transaction ledgers and creating blocks out of them, and all the Bitcoins in the world would be exhausted.

  • [message]
    • ##check## Did you know?
      • There can only be 21 million Bitcoins in circulation at a time in the world. As more Bitcoins get mined (found out), it becomes more difficult to mine the upcoming next. This system ensures that the value of Bitcoin would always bound to rise and would never devalue.

How are new Bitcoins injected into the system?

Answer to this question is the true answer for 'what is bitcoin mining'. When a Miner creates blocks and syncs them to the bitcoin network world wide, the person gets rewarded 25 bitcoins for doing so.

These 25 Bitcoins don't come as a response to any trigger point. This is the ONLY time when Bitcoins are injected into the system and don't have a starting point. Thus many call it as 'Bitcoin Mining' as its like Gold mining from a mountain.

bitcoin mine

This isn't that simple. That is the reason why mining Bitcoins is one of the most finance exhaustive task to do. A person would be needing an extremely powerful computer and low power supply cost to mine bitcoins that profits him.

Wrap Up

Bitcoin miners play a vital role in the overall security of the Bitcoin system. I'll share very soon how Bitcoin mining fee system works where I'll lay down how does a Bitcoin Miner actually makes profit and would continue to do so in years to come when the Bitcoin reward would get minimal, as its bound to happen as per the programing behind the Bitcoin master software.

If you're interested to buy/sell Bitcoins, you can read How to Buy Bitcoins?



The Coin Journal: Bitcoin News, Blockchain News , Prices, & Analysis: What is Bitcoin Mining?
What is Bitcoin Mining?
The Coin Journal: Bitcoin News, Blockchain News , Prices, & Analysis
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy