Bitcoin took the world by storm. Some experts warned against trading it, touting it as fraudulent. But as time went by, the cryptocurrency remained strong, surprising everyone. These days a lot of people are trading Bitcoin and investing in it, in hopes of making a profit. There are still some skeptics, but more people are on board with the idea than before.
Bitcoin is like having gold with which you can trade. Even though the price keeps fluctuating, it has base value and can be trusted. In this cashless society, Bitcoin could be the future.
Presently, Bitcoin can be used as a transactional tool, with a growing number of people and organizations accepting it as payment.
Bitcoin provides a level of control and pseudonymity. There is no government to track it, no issuance of tax identification numbers, and no paper trail.
The value of a Bitcoin is determined by how much it is accepted but also by the demand. This is why the price has been fluctuating over time. The more people understand and are comfortable with it, the higher it’s value. Without a governing body, the value of a Bitcoin is open to how a buyer interprets it.
However, the primary fear of many people is that there is no central body regulating the Bitcoin trading. This strikes many as odd, but this concern is what Bitcoin mining takes care of. It is a way for miners to regulate exchanges to ensure transparency. That way, nobody is cheated while the network is kept secure, stable, and safe.
But here’s what’s really interesting.
There is no one body that handles Bitcoin mining. It is a “decentralized computing system,” or, a global network. It verifies the genuineness of any transaction and records it to the Bitcoin ledger. It also distributes new coins to the Bitcoin network, rewarding miners for carrying out this essential job.
In simple terms, Bitcoin mining is the computational process through which trades are verified and put into the Bitcoin public ledger. This public ledger is called a blockchain. As trades happen, transactions are put together into blocks and recorded on the blockchain. That way, every trade can be easily tracked. When this is done, new coins are released into the network, sometimes as a reward to miners.
There is no special person somewhere, carrying out these processes. If you have a powerful computer and the right software, you can mine, even though the specialized Bitcoin mining rigs probably would be more successful than a general purpose PC. The field is open to everyone, as long as you stick to the rules.
Bitcoin mining entails solving a difficult puzzle computationally. The faster you are, the better your chances. The first miner to solve it places the next block onto the blockchain. This is Bitcoin mining in a nutshell.
So you see, everyone has a chance to participate. Unlike real money policies, this is open for everybody who wants to join.
But before doing anything, you need to get a few points clear.
1. The difficulty of the puzzles adjusts automatically after 2016 blocks, or every 14 days. The more effort is invested into mining in the network, the harder the puzzle gets. And the harder the puzzles, the more time it takes to solve them.
2. Bitcoin mining is not just a way to record transactions. It is also a way of creating new ones to keep the market going. Without it, there would be a shortage of coins and Bitcoin’s true essence would be lost.
3. To start Bitcoin mining, you can get a special hardware called Application-Specific Integrated Circuit (ASIC). ASIC is made particularly for Bitcoin mining. Mining is highly competitive with every miner striving to stay on top. With this hardware, you can speed up the processes. You do not need anyone to be a middleman and you could earn yourself a good fortune over time. However, the initial investment is not to be underestimated.
Crypto Energy Consumption
A concern with Bitcoin mining is that it may be causing a crypto energy consumption crisis. Check out this infographic on crypto energy consumption.
This story originally appeared in Crypto Currency News. Image courtesy of Shutterstock.