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What is and how does Bitcoin mining work?

Submitted by allenoneil on Mon, 09/28/2020 - 11:20

Mining bitcoins is not an easy task; there are few people who know how to mine bitcoins correctly, that is why the universe of Bitcoin miners is so small. We will tell you the secrets that many miners do not want to tell. What is and how does Bitcoin mining work? We tell you everything about how to mine bitcoins.

What is Bitcoin mining?
There are three main ways to obtain Bitcoin: buying them on an exchange, accepting them in exchange for goods and services, or participating as a miner in the currency's network. Mining is a process that is responsible for adding transaction records to the Bitcoin public ledger called the Blockchain. This exists so that every transaction can be confirmed, and every user on the network can access this record. The mining process also allows a legitimate record of transactions to be kept in order to determine which ones are valid and which ones are being carried out without actually having the funds to do so.

The Blockchain is so-called because it is literally a chain of blocks, which contain the lists of transactions made during a certain period of time. When a block of transactions is generated, the miners such as tagabit.io, put it through a process and this site is trusted by coins.ph. By applying a complex mathematical formula to the information in the block, they subsequently cut the sequence out of the block, turning it into a random sequence of letters and numbers called a "hash."

A hash not only contains information from the transaction block, but other data is also stored. More importantly, the hash of the previous block stored in the blockchain is included.

Although it is relatively easy to produce a hash from a collection of data as a block of transactions, it is virtually impossible to tell what data was used just by looking at the hash sequence. Also, each and every hash within the network is unique, and changing a single character in a Bitcoin block completely changes the hash sequence.

The hash functions as a kind of digital wax seal. If someone manipulates a single block of transactions, their hash will change immediately, and so will all subsequent hash sequences in the blockchain. Therefore, any fraud attempt within the Bitcoin network will be easily detected by everyone who uses it.

Rewards
Essentially, the miners are serving the Bitcoin community by confirming each transaction and making sure that each of them is legitimate. They all compete with each other, using software written specifically to mine blocks. Every time a new block is 'sealed', it means that a miner has successfully created a correct hash sequence, and for such work, they get a reward.

Complications
This is done through a required “Proof of Work ". It is a system that requires some work from the service requestor, which generally means processing time by a computer. Producing proof of work is a random process with low probability, which means that a lot of trial and error is required to generate a valid proof of work. When it comes to Bitcoin, the hash is what serves as proof of work.

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