If you have been observing the still ongoing digital migration in almost every sphere of life, you will have noticed that money has not been left behind. The year 2009 brought with it the emergence of the cryptocurrency, bitcoin. This is a very simple article on bitcoin mining. It will help you understand what bitcoin mining is all about and give you some hints on how best to go about it.
Human beings have different talents and have always been on the lookout for ways to enhance their own productivity and at the same time benefit from the best that others have to offer. To this end trade has evolved using barter as a medium of exchange, cowrie shells, cash, checks, credit cards, mobile money, and now bitcoin.
Bitcoin is a digital currency that was created at the beginning of 2009. The creators, however, remain unknown. Whereas money as we know it today is regulated by central banks all over the world bitcoin is regulated by the bitcoin network. This network is not owned by anyone and is open-source, meaning that the users are the ones who contribute to its maintenance and development.
Whereas money is secured by the various central banks around the world bitcoin is secured by miners. When you hear the word mining, you probably think of very huge machines digging into the earth in search of precious ores. Bitcoin mining is a bit similar to this, only that it is your computer that does the digging; it works through the bitcoin network system in search of new bitcoins.
Why Bitcoin mining?
When using cryptocurrency, money is exchanged between people without passing through the bank in what we call peer to peer (P2P) transactions. This means that in the bitcoin system, banks have been taken out of the picture. The banking function still needs to be performed, however, and this is where bitcoin mining comes in. Banks provide records and security. The same is achieved by bitcoin miners. Blockchains supply the necessary public records of transactions. A blockchain is a record of groups of bitcoin transactions that have been linked.
How Bitcoin mining works
The bitcoin mining system works by generating equations for miners to solve. There is no need to be told that it is the miner’s computer that does this difficult work. The miner who gets the solution earns a reward in bitcoins. Solving the equation also serves to release new bitcoins into the system. This successful miner also gets to update the blockchain. The miner will get paid some transaction fees for updating the blockchain. Bitcoin mining has evolved into a multibillion-dollar industry.
Who can mine bitcoins?
As long as you are interested in bitcoin mining, you can become a miner. All you will need is a computer. Well, at least that was all that was needed in 2009. Your Central Processing Unit (CPU) was enough at the time to figure out the solution to the math problem generated by the bitcoin system. The more powerful your CPU was, the greater your chances were of being the winning miner severally: Not all the time but severally.
Technology is never at a standstill and soon miners began to use Graphic Processing Units (GPUs). GPUs were originally designed for gamers in a bid to enhance their graphic experience. GPU mining proved to be 30 times more powerful than CPU mining. A couple of years later, bitcoin mining technology advanced once again and brought with it field programmable gate arrays (FPGA) mining. In FPGA mining, FPGA chips are added to your computer and you end up with almost 100 times more mining power than with GPU mining. The only downside with FPGA hardware is that it is more difficult to configure. Finally, ASIC mining was developed. ASIC stands for Application Specific Integrated Circuit. ASIC was specifically designed for bitcoin mining and has been evolving since its inception in 2013.
The long and short of this brief history of bitcoin mining development is just to tell you that apart from possessing the interest to mine bitcoins, you will also need to be very well equipped.
The best way to start
In order to curb inflation, the bitcoin mining system was designed in such a way that the more miners there are that enter the system, the more difficult it becomes to solve the problem. In other words, the mining difficulty increases. Therefore, whether you have the latest Bitcoin mining technology or not, the best way to increase your chances of success in the midst of an ever-growing stream of miners is to join a mining pool. A mining pool is a group of miners that have combined their mining strengths in order to make themselves more competitive. Truly unity is strength. Whenever your pool solves a bitcoin problem, the earnings are distributed to each member of the pool in proportion to the mining strength they contributed. This is a sure-fire way to start earning your bitcoins.