Bitcoin is a buzz, it is a hot topic in current times. Bitcoin mining is nowhere behind. Since it’s inception cryptocurrency has seen a lot of ups and downs, but in recent times cryptocurrency has forgotten to fall back. Thanks to the huge demand and Bitcoin Miners, who constantly keep producing the bitcoins.
As we all know that the current paper currency is under the country specific government jurisdiction so it is completely upon the government bodies to print, circulate and maintain the currency. Bitcoin has no governance and comes under no jurisdiction so it can be created anytime, anywhere and by anyone.
But dude, how do I create bitcoins?
Bitcoins operate as peer to peer network which means that everyone who uses Bitcoin is a tiny fraction of the bank itself. Something similar to the torrent engine, anyone who downloads files using torrents become the seeder for someone else to download. Once you have a Bitcoin makes you a small fraction of the bank of Bitcoin.
Bitcoins are created by solving math problems in a process called Bitcoin Mining and the miners(creators of Bitcoin) get a certain number Bitcoins for solving it. Miners are required to approve transactions more miners means more secure the network is.
Whom is this post for?
Three types of people,
- Bitcoin Miners
- Mathematics Enthusiasts
- Other who’s interested in learning new things
What is Bitcoin Mining?
Have a look at this infographic that shows an overview of what’s being served in the subsequent sections.
How does Bitcoin Mining Work?
As said earlier in the post, Bitcoins are a result of solving a complex mathematical problem in order to approve a transaction in the blockchain. Faster the solving tougher will be the problem next time. People who own Bitcoins make transactions in the Bitcoin network, and there are miners who validate these transactions are awarded Bitcoins.
The Bitcoin networks are designed in such a way that it creates a set of transactions happened in a certain amount of time into a list called Blocks and these blocks are validated and written in a general ledger
In earlier days, miners used to solve these problems using their processors and computers. Soon the graphics cards found a new job in mining Bitcoins but consumed very high electricity and produced a huge amount of heat.
The first commercial Bitcoin mining product was launched for mining Bitcoins with the chips that were programmed for solely this purpose. Then came ASIC (application-specific integrated chips) which were faster, energy efficient and still the best.
Satoshi Nakamoto, the creator of Bitcoins designed the algorithm of Bitcoins in such a way that creating new Bitcoins would become more and more difficult with more created Bitcoins, i.e. more Bitcoins are created difficult it is to create further.
This was a basic understanding of how Bitcoin mining works, the technicality is little difficult to understand. Let’s get our hands dirty in this.
- The general ledger is a list of “Blocks” which are a collection of transactions in a certain period of time called the “Blockchain”
- All transaction details including amount transferred are available on the list but the account details are hidden hence maintaining some anonymity.
- Whenever a new transaction or a block is created it adds up to the blockchain and shares in Bitcoin network so that the miners are updated about this.
- Miners take the transaction details and apply a mathematical formula which results in a key for that transaction known as HASH. It is a sequence of random numbers and letters.
- The best part of the HASH is that it is impossible to figure out to know about the transaction, hence it is super secured. And producing HASH is very easy hence there is a HASH for every transaction ever happened in the Bitcoin network, that is, each HASH is unique at any given time.
- HASH is a product of transaction details and HASH of the previous transaction. This way it becomes a chain.
- Faking in this network is impossible as each block has the HASH created and if you try to change it, the block would get a new HASH. So the next time the block goes to a miner, it would easily be spotted as fake because the same block as two HASH values and the latest would be removed.
I understand it is complicated, here’s a visual content that can explain further.
What is Bitcoin Mining Pool?
This is how Bitcoin mining creates Bitcoins and the Bitcoin Miners earn it. But one catch here is that the network is designed to be a more difficult nut to crack with time. It makes impossible to mine a single Bitcoin alone, so that where the Bitcoin Mining Pool comes in.
Bitcoin Mining Pool is a group of miners who have powerful hardware and are connected by various means. Together the miners mine for Bitcoins and the rewards are shared as per the efforts put in.
Bitcoin Mining Hardware
Bitcoins can be mined from anywhere, all you need is a decent internet connection and a computer with a decent configuration. However, in long the energy consumption by a normal configuration would come to be more expensive than what you reap as Bitcoins.
There are dedicated computer solely for Bitcoin Mining and are really powerful for this purpose. In a Mining pool having this hardware will increase chances to earn bitcoins faster. Known as ASIC, these can take a very good care of Bitcoin Mining career.
Bitcoin Mining Software
There are two ways by which you can earn/mine bitcoins.
- Mining Pool
- Cloud Mining contracts
Most of the miners are opting in for Pool as it reduces efforts and effectively validates the transactions in the blockchain. Teamwork is a key here.
Bitcoin Cloud Mining
Cloud mining, as the name suggests is a way to do away with the hassle of hardware, software, electricity bills etc. You will need to buy this cloud mining contracts at
Bitcoin mining for mathematics enthusiasts
Since producing a HASH involves solving mathematical algorithms in computer ambiance, it is very important for a miner to be aware of the mathematical functions and the formula.
Bitcoin mining is basically based on HASH functions, especially SHA-256. Bitcoin calculation behind scenes is majorly on the pigeonhole principle. A lot of guesswork happen so as to create a unique HASH value. The miner has the task of taking the transaction and making trillion of guesses and putting each guess in the “nounce” field of the block header. The block header is the run through the Hash function, which gives the HASH value.
This HASH value is the key to unlock the miner’s share of the reward. Bitcoin Mining is vast and cannot be learned in a day. By now you must have known a lot of things in this regards but there are courses that would do a much better job at teaching the exact concept in your language- Mathematics.
Top courses for Bitcoin Mining
I am sure you would have got a better clarity on Bitcoin Mining. Those who are looking for good careers in mathematics degree or are looking for a job opportunity for math major have a great chance to establish themselves as Bitcoin Miners.
Bitcoin Mining is the next turn in this cryptocurrency industry and students with math major have a seriously challenging opportunity to flourish in. No more orthodox way of opting careers after masters/bachelors in mathematics.
And for those who are interested in this field can also give a shot. It doable.
Over to you, what do you think about Bitcoin Mining? Are you already doing it? If yes share your experience and advice here in the comment section below.
Do you know anyone who’d be benefitted by this information? Share this with them.[KiwiClickToTweet tweet=”Hey, I found the most comprehensive guide on #Bitcoin #Mining. Check it out.” quote=”Hey, I found the most comprehensive guide on #Bitcoin #Mining. Check it out.”]