What Is Bitcoin Mining?
Bitcoin mining is a simple process to secure your Bitcoin transaction. The entire process is performed by specialized systems to regulate and secure the Bitcoin network.
You must be wondering what is the process involved in Bitcoin mining. Well, in this article we will discuss the process of Bitcoin mining, why it is the process used, how it is used and who uses Bitcoin mining.
The Process of Bitcoin Mining
Bitcoin mining is known to be a decentralized process that serves two major purposes. These purposes are:
- It confirms every transaction made on the Bitcoin blockchain in the most trustful manner. It even helps to provide authenticity while making any transaction.
- The most important purpose of Bitcoin mining is to issue new Bitcoin to the miners, as a reward for every new ‘block’ of the Blockchain that has been mined.
How Does Bitcoin Mining Work?
The entire process of Bitcoin mining ensures to provide authenticity and accomplish every stage of the process in the most trustful manner. Due to these elements, Bitcoin mining is successful in serving its purpose by functioning in the following manner:
- Every valid transaction is verified.
- All the transactions are bundled in a ‘block’ to provide security to the transactions made.
- The header of the recent block is used as a hash for the new block.
- Ensures that the information for the new block was difficult. That is why it helps to solve the problem of proof-of-work.
- Once the solution is found and confirmed, it is included in the local blockchain and then further passed on to the network.
What Does Bitcoin Mining Do?
Now the question arises what is the use of Bitcoin and what does it do? There are numerous functions of Bitcoin but there are three main functions of it that are the essence of Bitcoin mining as well. The functions of Bitcoin mining are:
- Confirm every transaction that is made is valid.
- Issue new Bitcoin to create a new blockchain transaction.
- Provide security to every valid transaction made.
Why is Bitcoin Mining Done and Who Does it?
Bitcoin miners undertake the task of Bitcoin mining. They make sure to secure all the networks and the transaction of Bitcoin.
New blocks are created when a new Bitcoin is issued. These are the blockchain transactions for which the Bitcoin miners are rewarded every 10 minutes with new Bitcoin.
Miners are also kept under observation so that they do not cheat and that is why the issuance rate of Bitcoin is always set in code.
Is Bitcoin Mining Costly than it’s Worth?
Bitcoin mining is indeed a costly process in terms of hardware and the energy required to run the equipment which undertaking the computations.
The cost is sometimes more than its worth.
This can be advantageous as well as disadvantageous at the same time. This is because there are heavy costs involved in Bitcoin mining to make it worthwhile and financially valuable.
There are few countries like China that are working to reduce these costs by setting up alternative energy solutions like low cost power generators etc.
Bitcoin Mining is not always advantageous. There is a negative side as well but the most amazing function of it is to provide security and confirmation to the valid blockchain transactions.