Bitcoin is cryptocurrency, a form of electronic cash which has a network of peer-to-peer payment network that operates on a cryptographic protocol. Bitcoin mining is the process by which transactions are verified and added to the public ledger and it is the mean through which Bitcoins are released. It is defined by the digitally signed record of its transactions, Participating in bitcoin mining is not a difficult task if you have proper internet access and suitable hardware to participate in it.
This system was invented by Satoshi Nakamoto, who published his invention in 2008, and released it as open-source software in 2009, Bitcoins can be used for other currencies , products and services by a reward for a process known as mining.
However it did not seek much attention of the users at that time but in November 2017 Bitcoin broke $10,000 per unit and since then mass has become interested in this cryptocurrency mining. It’s also popular because it protects its owners from theft, taxation, devaluation and confiscation. Current value of 1 bitcoin according to INR is Rs. 464321.79 .
What exactly is bitcoin mining?
Bitcoin Mining is the process of creating or perceiving bitcoin currency. It’s unlike the real world money which is printed on paper, This is more of creating money through a mathematical process called bitcoin mining which is a way to introduce more coins to the system. The bitcoin network contains a public ledger of all transactions called the block chain which confirms all parts of the previous transactions to rest of the network.
that all were legit so that the spent coins can be transferred accordingly. Each block in the public ledger block chain must have a proof of work in order to be considered as valid. Bitcoin mining is called with this name because it resembles the actual mining process with resources and other material.
What is bitcoin miner?
A Bitcoin miner is a computer specifically designed to solve problems according to the proof of work algorithm. Currently, highly specialized chips called ASICs, Application Specific Integrated Circuits, are used as Bitcoin miners.
Bitcoin Miner software works on both Windows 8.1 and Windows 10. The software interface is user-friendly and it supports pool mining with a mode for power saving. The most powerful feature on this Bitcoin mining software is the profit reports.
The most popular bitcoin mining softwares are
- CG Miner : It is the most popular bitcoin mining software which works for mainly FPGA’s and ASICs but downloading an older version (below 3.7.2) of it will allow you to use it for GPU mining as well.
- BFG Miner : It is a fork if CG Miner which adds some advanced features like that BFGMiner uses the newer getblocktemplate vs the older getwork template.
- CC Miner : CC miner is one of the most used NVIDIA GPU mining softwares because it has 3 different forks which brings a lot of competition as well as progress and code checks for feature rich mining software.
A few more among the list are GUI Miner, Multi Miner, CPU Miner, Easy Miner etc.
But if want to invest in bitcoin mining without the hassle of managing your own hardware then here’s another option known as Cloud mining to earn your coins. You only need a home computer for communications and optional local bitcoin wallets.
For Android the Bitcoin wallets are
Bitcoin Wallet, Beither, BRD, Edge, Electrum, Green Address, Greenbits, Mycelium, Airbitz, BTC.com, Coin.space and simple bitcoin
For Iphone you can use
Arcbit, Beither, BRD, Edge, Electrum, Green Address, Greenbits, and Airbitz
However there are risks involved in cloud bitcoin mining which you need to know before purchase
- Risk of frauds
- Lower profits
- Lack of control and flexibility
- Opaque mining operations
Coming to the most important question,
How does Bitcoin Mining work?
Since Bitcoin mining is the process by which transactions are verified and added to the public ledger, known as the block chain, Bitcoin mining can also be stated as blockchain mining, Blockchain is a series of successive block cryptographically linked together. A single block number, data stored in the block, hash of the previous block and hash of the current block.
- A hash (or cryptographic hash) is a long number which acts as a digital fingerprint of any collection of data, To begin the mining process, you need to copy its hash. Beyond this hash, you also acquire a block of validated transactions created by full nodes across the network and begin your work on the proof of work.
- Proof of work (POW) is a correct SHA256 hash. In Bitcoin the SHA256 hashing function is used which generates a 64-digit hexadecimal number, the network only accept hashes starting with a specific number of zeroes “0” before the other characters, For eg. 0000C4156……… The network revaluates and all miners rehash the block with the specific nonce they’ve received from the initial finder of the hash as soon as the correct hash is discovered ,
- The hashing process takes a while, but as soon as one correct hash has been discovered, the block is bundled and broadcast to the network. When the hash is correct and concluded The mining reward, together with the fees for transactions are given to the miner from which the correct hash originated.
- After this, The new block is accepted by the network and the transactions will be engraved forever in the block chain, When the validation is done , miners repeat the process.
- Miners retrieve the latest block which they finished and copy over the hash and transaction data from the full nodes and they start mining for a new hash for the next block.
- This process consumes a lot of energy, time and electricity as well. All the miners works on the same block at any given moment which deeeply secures the transactions and disables any party to see the history of the transaction.
Briefly the process is like
- Check the latest hash
- Get latest transaction block
- Hash for correct Proof of work
- Find the correct Proof of work
- Broadcast Nonce to the network
Once the network validates the hash mining reward and fees are released and the process starts over.
To start mining and know about detailed information visit https://bitcoin.org/en/ .