One of Bitcoin’s most appealing features is its ruthless verification process, which greatly minimizes the risk of fraud. Since Bitcoin is decentralized, volunteers—referred to as “miners”—constantly verify and update the blockchain. Once a specific amount of transactions are verified, another block is added to the blockchain and business continues per usual.
What is “Mining”?
Instead of a single central server verifying every transaction, essentially every other person on the network verifies each transaction.
Cue the “miners.”
Let me simplify the process so we all understand: Miners are presented with a complicated math problem and the first one to solve the math problem adds the verified block of transactions to the ledger. The calculations are based on a Proof of Work (POW), or the proof that a minimum amount of energy was spent to get a correct answer.
There aren’t actual human beings hunched over computers with scraps of notebook paper and calculators doing pre-calculus homework; hardware is used to perform Bitcoin mining.
Bitcoin’s built-in reward system compensates successful miners with a chunk of bitcoins. The reward changes over time per Bitcoin’s programming, and the block reward halves about every four years. The current reward for each new block of verified transactions is about 12.5 bitcoins.
The mining processes have become increasingly sophisticated. The most popular method uses ASICS–Application-Specific Integrated Circuits. ASICS are hardware systems similar to CPU computers that are built for the sole reason of mining bitcoins.
Bitcoin mining operations take a lot of effort and power, and the sheer amount of competition makes it difficult for newcomers to enter the race and profit. A new miner would not only need to have the adequate computing power and the knowledge to use it to outcompete the competition but would also need the extensive amount of capital necessary to fund the operations.
Comments
Post a Comment