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An ever-increasing number of people are familiar with the existence of Bitcoin, but we can say with relative certainty that it is still a somewhat “niche market”. Even among people who often buy and sell bitcoin, there are only a few who understand the technology on which the cryptocurrency in question is based.
This stems from the fact that cryptocurrencies, at least for the time being, are primarily used as a tool for speculation. Many people seek profit only and are not interested in anything else. In order to get involved in buying and selling, only a minimum of technical knowledge is required. However, we firmly believe that everyone should know at least the basics. Training on this issue will eliminate uncertainty and doubts, which dominate the wider public opinion, regarding Bitcoin and cryptocurrencies in general.
In this article, we will focus on Bitcoin mining. We will give you a user-friendly interpretation of what Bitcoin mining is and how cryptocurrency mining takes place. We hope that in this way we will help you fully understand how Bitcoin mining works.
What is crypto-mining?
We will start with a more formal explanation and then divide the topic into smaller and easier to understand information.
Mining is a distributed consensual system. This essentially means that many people around the world are engaged in the maintenance of the Bitcoin network. The term mining is used to describe the process of validating transactions waiting to be included in blockchain technology.
The chronological order of transactions is achieved through the process of mining. If a transaction is to be confirmed and successfully included, it must be placed in a block that complies with the strict encryption rules. This is verified and validated by the “miners” of the network and there is no involvement by any government authorities. This process protects bitcoin neutrality.
At this point, we can make a quick comparison with the use of credit cards in the traditional electronic money system. Each payment must be verified and recorded by the credit card company (for example, MasterCard or Visa).
It could be said that the entire cash flow of the modern banking system is recorded in centralised systems and that these are prone to manipulation. On the contrary, Bitcoin does not have a central body that can confirm transactions. This work is carried out by its “miners”, who also create new Bitcoins during this process!
The process of creating new Bitcoins is called mining because of the many parallels with gold mining. In both cases, it is necessary to invest a large amount of work and energy in order to produce a high-value investment.
vYou need to have a lot of mining power to do so. You can buy cloud mining power with bitcoin to mine bitcoin from hundreds of hosting providers that accept bitcoin. There is a full list of them here (with bitcoin) and here (with ethereum) if you wanna have a look.
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