The mining word envisages people who have little to no knowledge about bitcoin mining. Often they envisage that bitcoin is being dug out of the ground. However, bitcoin mining is totally different from usual mining.
It is somewhat similar to gold mining where a protocol has been set that though surplus gold exists inside the earth, it is not being brought into the light. According to the bitcoin protocol, 21 million coins will exist someday in the future. The miners bring out coins few times. The mining of cryptocurrency is an essential and laborious process.
However, if you still have apprehensions about What is mining in cryptocurrency means and how it works, then go through the following article.
What is Bitcoin Mining?
Mining in cryptocurrency means solving the blockchains that contain info on worldwide transactions. To prevent fraud, all transactions are being stored in a closed network of nodes registered as miners.
A bitcoin is basically being generated by a mathematical formula. The first bitcoin batch had 50 coins and it was launched in 2009. This formula generates new coins after every 10 minutes. Bitcoin mining is a decentralized computational process that serves two purposes. In simple words, the miners use special software to perform difficult mathematical problems and as a reward, they are being given bitcoins. This approach of issuing bitcoin is extremely different from the real world government of issuing and printing currency. In the real world, Government has the supreme authority to give permission to print new currency notes. The bitcoin mining process is quite innovative and smart to issue currency and also encourages more people to participate in this entire process.
The bitcoin mining process is intentionally being designed to be difficult to keep the number of blocks found by miners steady. Even the individual blocks need to go through extensive examination before being considered as a valid coin. A proof of work is being validated by every bitcoin node. Usually, bitcoin uses a hash function to validate each block. The main intent of this entire practice is to allow Bitcoin nodes to reach a secure stage. The miners who have worked to generate a coin are rewarded with transaction fees and subsidies. The coins are being generated in a decentralized way which eventually motivates other people to participate in this entire exercise.
What is the Purpose of Mining in Cryptocurrency?
The main purpose of the network is to keep track of all the transactions that are going around the world. With this secure network, all ongoing transactions can easily be tracked. You can find out who has purchased or sold their coins sitting in any part of the world. It is quite easy to find this information.
Secure: If you are worried about the security of the network, then you should know one thing that currently the cryptocurrency network is one of the most secure payment networks available in the world. It is difficult to figure out how it works. But once you have got the idea of how it works and once the payment is confirmed. It can’t be reversed.
The primary job of the miners is to solve the blockchain problem and inform it. The miners need to upgrade their system on a timely basis as the size of the blockchain grows because it requires more additional software and processing speed.
The bitcoin mining process is immensely secure. The bitcoin miners make sure to keep the platform secure by approving transactions. In the entire cryptocurrency, mining is the most important part because this process ensures safety while keeping bitcoin stable and secure.
What is Proof of work: The proof of work consists of time and efforts invested in mining a coin. It is difficult to predict whether the result satisfies certain requirements. In this entire process, a lot of trial and error is required to achieve a valid proof of work.
How does Bitcoin Mining work?
Node: A node is a powerful computer on which the bitcoin software runs. And it also helps to keep the bitcoin running by participating in the relay of information. If you are thinking that it is hard to run the bitcoin software on a node then you are wrong. You can download bitcoin software on your computer and can easily participate in bitcoin mining. Every node is connected to a large network of nodes spread worldwide. A node would send information to few adjacent nodes it knows and this way they end up sharing the information with a large network.
There are several nodes that are referred to as mining nodes. These nodes are indulged in serious mathematical calculations and add the answer into the block. They need to find a number which is a puzzle. It is extremely hard to find the number.
Solving Puzzle: So how do they solve the puzzle by guessing? However, it is not easy to guess the number. The system is being designed in such a way that there is no scope for guessing. The hash function in work makes it difficult to predict the outcome. Thus, the miners guess the mystery number and apply this number to the hash function and add the data in the block. The resulting block is filled with a majority of zeroes. There are several nonces present in the network that could either produce the desired result or none.
The first miner who gets the resulting hash declares his victory on the network and everyone else who is working on the block immediately stops working on the block. And they all start finding the next mystery number to work. The winner who rightly guessed the puzzle is being rewarded with some bitcoins.
Difficulty: The mathematical calculation difficulty is being fixed in such a manner that it takes ten minutes to solve a problem. It takes usually 10 minutes to process a block. Now you would be thinking why 10 minutes because the miners want to keep the mining speed steady by this method.