How Does Bitcoin Mining Work?
If you have heard the word bitcoin mining, there is a high chance you must be wondering how does bitcoin mining works? Or more precisely, what bitcoin mining actually is?
If you are among those people, fret not, because bitcoin mining is similar to the analogy of pickaxes digging a mine for gold reward, except in this case, you get a bitcoin reward.
In this article, we will take a deeper dive into the bitcoin world and how its mining works.
What is Bitcoin Mining?
Before we even begin, the very first question is, what is bitcoin mining?
Bitcoin mining is a decentralized computational process that was first introduced by Santoshi Nakamoto to solve complex computational math problems.
These problems are so complex that they require powerful computers. In bitcoin mining the miners, race against each other to guess a particular number.
With every successfully verified transaction, a block is appended to an unchangeable digital ledger of previous transactions. As a result, a chain of blocks or blockchain is created. Bitcoin miners mine to gain bitcoin reward. You don’t need to be a miner to earn these coins. You can simply buy bitcoin from Koinal or receive it by playing games.
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What do Miners do?
Now, the pivotal question, how does bitcoin mining works?
Bitcoin miners – people who mine bitcoin connect their computers – nodes to bitcoin network to perform high profile mathematical calculations.
However, it’s not that simple.
Because miners first have to identify 1-megabyte (MB) worth of transaction, which is known as a block. Then, in order to add the transaction block to the blockchain, miners must solve a highly sophisticated computational math problem. This computational math problem is also known as proof of work.
What this does is that it allows a miner to figure out a 64-bit hexadecimal digit, called a hash. Thus, a higher hash rate indicates the rate at which the total hash being spit out by a node.
However, this is uncertain how many combinations of 64-bit number is needed to find a solution. Therefore, it is always a gamble.
So, you must be wondering, if you have performed the calculations you are bound to receive bitcoin, right?
The answer is NO!
This is because not only you have to verify the 1-MB worth of transaction, you also have to beat the other miners in finding the solution.
When the problem is solved, new data is then verified and added to the blockchain network.
With every successful transaction, the difficulty of the next solution increases. As of writing this article, the difficulty level is around 15.55 T.
This means that the chance that your computer successfully produces a hash below the mentioned target is 1 in 15.5 trillion. The higher the difficulty, the more computational power you would need to guess the next number.
Also, the bitcoin protocol has imposed that the number of bitcoins will not exceed more than 21,000,000. This means that not only its supply is fixed, but also finite which further increases its value.
One thing to note is that the difficulty level of the solution is adjusted once every two weeks or after every 2016 blocks.
This is done so that mining rates remain consistent, which means if there are more miners in the race, the difficulty of the problem will increase. In contrast, if the network’s computational power is decreased, the difficulty is adjusted in such a way that eases the mining process.
Bitcoin Mining Reward
Once you have successfully found the solution to the problem, you will be rewarded 12.5 bitcoins per block. However, this number is halved every four years. So, in 2020, you will be getting 6.25 bitcoins per block.
In addition, one block takes around ten minutes to mine. This means that one bitcoin can be earned once every 48 seconds.
There you have it. Now that you have gained knowledge on how does bitcoin mining works, you can purchase Bitcoin and stay away from the hassle.
So, what are you waiting for? Throw away your pickaxes and purchase Bitcoin from Koinal!
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