Bitcoin Mining

"** Bitcoin Mining is a peer-to-peer computer process used to secure and verify bitcoin transactions—payments from one user to another on a decentralized network. **

Mining involves adding bitcoin transaction data to Bitcoin's global public ledger of past transactions. Each group of transactions is called a block. Blocks are secured by Bitcoin miners and build on top of each other forming a chain. This ledger of past transactions is called the blockchain.

The blockchain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

One of the fundamental questions many people have about Bitcoin Mining revolves around the tokens themselves. Questions about its value, security and history, all eventually lead to one place: Where do bitcoins come from?

While traditional money is created through (central) banks, bitcoins are “mined” by Bitcoin miners: network participants that perform extra tasks. Specifically, they chronologically order transactions by including them in the Bitcoin blocks they find and bitcoin mining hardware. This prevents a user from spending the same bitcoin twice; it solves the “double spend” problem.

Skipping over the technical details, finding a block most closely resembles a type of network lottery. For each attempt to try and find a new block, which is basically a random guess for a lucky number, a miner has to spend a tiny amount of energy. Most of the attempts fail and a miner will have wasted that energy. bitcoin price Only once about every ten minutes will a miner somewhere succeed and thus add a new block to the blockchain.

This also means that any time a miner finds a valid block, it must have statistically burned much more energy for all the failed attempts. This “proof of work” is at the heart of Bitcoin’s success.

For one, proof of work prevents miners from creating bitcoins out of thin air: they must burn real energy to earn them. And two, proof of work ossifies Bitcoin’s history. If an attacker were to try and change a transaction that happened in the past, that attacker would have to redo all of the work that has been done since to catch up and establish the longest chain. This is practically impossible and is why miners are said to “secure” the Bitcoin Mining network.

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