If you’ve read about Bitcoin, you would have also read about Bitcoin mining. Bitcoin mining is nothing but the process of creating Bitcoins from your computer. In this article, let us read about the meaning of bitcoin mining and if it is still profitable today.
Bitcoin mining involves updation of the ledger of Bitcoin transactions, called the blockchain. A user requires extremely powerful computers to perform mining. As a part of the process, miners race against each other in order to guess a particular number.
Earlier, there were several cryptocurrency adverts on Google, however, the same have now been banned making it difficult for miners to understand what they need to do when.
The first miner to make a successful guess about the number ends up updating the ledger of transactions and is rewarded newly minted Bitcoins.
Currently, if you want to earn profits with Bitcoin mining, there are certain strategies that you need to deploy. In April 2018, several bitcoin miners were at the risk of facing a shakeout and chances of profitability were low.
It is suggested that you put your money on equipment, storage, and cooling. You cannot profitably mine with a PC and GPU at home. Profitability can be calculated with the help of a Bitcoin mining calculator.
What is the need for Bitcoin mining?
Bitcoin has emerged as an alternative to the banking system. This system allows for different operations with the transfer of funds from one account to another. Such a system does not need any central authority.
When users have a trustworthy central authority, money transactions are easy. For instance, when you tell a bank that you wish to transfer $100 from your account to another person’s account, the bank is the authority with the power to process the transaction.
The bank alone takes charge of updating the ledger and holds the balances of everyone in the system
So, what’s the process of establishing a decentralized ledger system? How can you give authority to someone to update the ledger without worrying about the incapability or their negligence?
Bitcoin answers all. It rules and has the required protocol to solve all these problems in a unique and interesting way.
How does Bitcoin mining work?
Bitcoin mining allows anyone to participate. All they need to do is update the ledger of the bitcoin transactions and guess a specific number. The guesswork is more or less done by the computer.
If you have an extremely powerful computer, you have the chance of making more guesses in every second, increasing and improving your chances of winning at the game.
Users that make a right guess earn bitcoins that are transferred into their account. They also get to move on to the next page and write bitcoin transactions on the blockchain.
In a nutshell, mining is the process of earning new bitcoins. It is called mining because you ‘mine’ new bitcoins from the system. However, in totality, mining is just a basic part of the process.
It is actually meant to be the maintenance of the ledger in a decentralized manner.