Even if you are brand new to the world of cryptocurrency, you have likely already heard the term 'Bitcoin mining' or 'blockchain mining' at some stage. However, most new traders and digital token users are a little confused about the topic. This guide will answer the following questions:
New cryptocurrency users often assume that Bitcoin mining is the process of looking for Bitcoin tokens. Aside from the name, there is a limit on the total circulation of bitcoin tokens while miners are rewarded with tokens.
However, there is no link between 'bitcoin mining' and the traditional sense of the word 'mining'. Instead, miners are rewarded because it is essentially a form of work.
Blockchain mining is actually a process used to provide a decentralized system that ensures secure transactions without a central authority. It is a peer-to-peer computer process that sees miners verify Bitcoin transactions before adding the transaction data to Bitcoin's global public ledger of past transactions, which is a blockchain.
As such, it is the mechanism that allows new Bitcoins to enter circulation. The process requires miners to solve complex mathematical algorithms, which is done via computer technology. On average, a new block is mined every 10 minutes, while the resulting solution is known as the Proof-Of-Work.
Bitcoin mining is a core feature of the blockchain model. Although it can be a complicated and time-consuming process, it appeals to a lot of people because;
In many ways, blockchain miners can be thought of as auditors who ensure that transactions are completed and Bitcoin tokens enter circulation. However, several miners simultaneously work on the blocks, and only the first one to find the solution is rewarded.
The number of Bitcoin made available after each block will half after every 210,000 blocks. So, pre-November 2012, this meant 50 tokens. Once 21 million Bitcoins are available, only transaction fees will be rewarded.
Bitcoin mining is achieved through an Application-Specific Integrated Circuit (ASIC) that must be purchased along with a dependable power supply. The user will also need a secured blockchain wallet and to join a mining pool. After this, the steps are;
Once the settings have been saved, you'll be ready to mine and (hopefully) win some tokens by finding the Proof-Of-Work.
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