Bitcoin is a digital and virtual currency which is controlled, not by any one central authority or government, but by people. Just as the government mints and prints currencies, so are bitcoins generated but the method of generation is vastly different. Since it doesn’t have a physical existence, the generation of this currency happens through virtual means. And, to be precise, this is done by solving mathematical problems online. Once the mathematical riddles are solved, the person who solves these generates bitcoins. You might be inclined to believe that this would be a easy process and many people would be able to do it. However, in reality, this is very difficult and complex. The difficulty level of the mathematical problems has increased considerably over the years in order to keep a check on the number of bitcoins generated in the market. This process of generating the bitcoin is called Bitcoin Mining and now let us know how to mine bitcoin?
What is Bitcoin Mining?
Bitcoin Mining is a process through which transactions are added to the public ledger of past transactions in a blockchain. There transactions are first verified as authentic by network members called miners. Once these are added to the public ledger, these are broadcast to all members of the network which effectively means that a valid transaction between two people has taken place. By validating the transactions, the miners earn some commission for transactions. Just as the parties making transactions are interested in approval and validation of their transactions, so are the miners. They compete with one another to be the first to validate these and earn commissions. This way the ledger is maintained with genuine transactions and the network remains safe and trustworthy.
How to Mine Bitcoin?
Bitcoin mining is done by miners who have to solve mathematical problems. However, this is generally done with the use of hardware and software. The use of hardware and software ensures that the speed of solving the problem increases many folds. There has been a gradual transition in the development of the software and hardware used for this process so that it can unlock the increasing complexity of the mathematical algorithmic riddles. In the early days of this currency, the mining was done using the processes generated by the existing personal or other computers. The speed of these systems was very slow as compared to what it is at present. Thereafter, it was realized that the graphic cards that were being used for animations and gaming purposes were more suitable for mining processes. These increased the speed of mining significantly. At the same time, the processes of graphic cards were consuming more electricity and also generating a lot of heat. These two were the two major downsides of the use of graphic cards based processes used for mining.
Again, the problem was how to mine bitcoin with enhanced speed and by consuming less electricity? By the time this phase of bitcoin mining was existing, the popularity of this currency had increased considerably and there were millions accepting this currency globally. The level of technical progress came with the introduction of reprogrammed integrated chips which has far greater computational power than any other previous machine or software. However, these chips again generated a lot of heat which affected their performance.
It was realized that the reprogrammed chips are not going to meet the requirements in longer run. Therefore, application specific integrated chips (ASIC) were developed which were meant to be used exclusively for bitcoin mining process. This is the latest technology currently being used by the miners to perform their task of bitcoin mining.
Bitcoin Mining Community Pools
Since solving the riddle is not an easy task, there is a need to make use of different ideas or opinions for solving the problem. Therefore, the miners tend to develop pools or communities wherein they can put forth their ideas as well as use those of others for enabling quicker mining. This works as a platform for exchange of thoughts and enriches the thought base which helps in mining process.
Taking to Bitcoin Mining- The Right Approach
If you think that bitcoin mining can generate windfalls for you, then you need to rethink. In reality, there is a lot of variation in the prices of bitcoins. Since its value is not guaranteed by any central authority, there is nothing much that can be done for its volatile nature. At the same time, mining process itself is not easy and is very cumbersome. On top of it all, you compete with a number of miners already in the fray. And, even after that the commissions earned are not significant. For these reasons, it is better to invest only your surplus time in this process, or, when you do it out of your interest.