Wednesday, 28 June 2017

What is Bitcoin mining?

Bitcoin operates as a peer-to-peer network. Everyone who uses Bitcoin has a fraction of the bank of Bitcoin, but, where do bitcoins come from?

With paper money, governments decide when to print and distribute money. Bitcoin doesn’t have a central government, the people who mine utilize specific software in order to solve maths problems, and they’re paid with Bitcoins as a reward. This creates an intelligent method to issue the currency and also makes for something to drive more people to mine.

The Bitcoin network automatically the difficulty of the math problems depending on how fast they’re being solved. In the early days, Bitcoin miners solved these math problems with the processers in their computers. Soon, miners discovered that the graphics cards used for gaming where much better suited for this kind of math. Graphic cards are faster, but use more electricity and generate a lot of heat.

The first commercial Bitcoin mining product included chips that were reprogrammed for mining Bitcoin. These Bitcoins were faster but still power hungry. Asic, or ‘application specific integrated circuit chips’ are designed speficially for bitcoin mining. Asic technology has made Bitcoin mining faster while using less power.

As the Bitcoin gets caught up in more and more publicity and rises in popularity, there are more people joining the network to mine. This increases significantly the difficulty level for individuals to carry on solving all the problems. As a mechanism of rising past this, miners have joined together and found ways to team up in order to mine as groups. Groups of miners find to solve problems much faster than other, individual members and each of them are rewarded proportionately to the amount of effort they do to help the group mine.

Can mining negatively affect people looking to sell bitcoin in, for example, India, bitcoin exchanges in countries like India where Bitcoin is part of their economy? No. The best Bitcoin exchanges in India, or anywhere else, for that matter, have nothing to worry about.

Mining is a crucial element of Bitcoin that is there to guarantee the transactions are always fair while making sure that the Bitcoin network remains stable, safe and secure.

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