What is bitcoin mining and how it works, understand it before investing money in cryptocurrency
Cryptocurrencies are becoming increasingly popular these days. At first only the name bitcoin was heard, but now many cryptocurrencies are in their line. There have been many scams in the name of cryptocurrencies. While people are crazy about cryptocurrencies, on the other hand the government is taking a tough stand on it. When it comes to cryptocurrencies, hardly anyone hears the term, such as blockchain technology and cryptocurrency mining. Let us know it today and understand it in easy language.
What is bitcoin mining? Cryptocurrency Mining 2022
On hearing the name of mining, the first thing that comes to mind is digging of gold, diamond or coal. Cryptocurrency mining or bitcoin mining means creating new bitcoins by solving puzzles. Let us understand in a little easier language.
The way we do a transaction to send money to someone, it first goes to the bank and then the bank verifies it and forwards it. In the case of cryptocurrencies, there is no such thing as a bank between the sender and the receiver of the coin, but only computers. Some people operate these computers, through which every transaction is validated. They get bitcoins in return for their hard work. This is called bitcoin mining. Similar mining happens in other cryptocurrencies as well.
Understand blockchain technology in easy language
When someone sends cryptocurrency to another person, that transaction goes into the computer. Through these transactions, cryptocurrency transactions are validated and included in the distributed ledger. All these transactions are recorded in a block and the size of this block is about 1 megabyte. When a block is filled, a new block is formed by blocking it and the new block is attached to the previous block. All these blocks are connected to each other, forming a chain, hence it is called blockchain technology.
This is how mining earns
Miners are rewarded with new coins for keeping the network safe. Since there is no central authority in the distributed ledger, a mining process is required to verify transactions. Only authorized miners are allowed to update transactions on the digital ledger. For this the Proof of Work (PoW) consensus protocol was created. PoW also protects the network from external attacks.
Who can do mining?
Cryptocurrency mining requires a computer with specialized software to solve the complex mathematical equations of cryptography. In the early days of bitcoin, it was possible to mine it from a home computer using a simple CPU chip, but this is no longer the case. Today this requires special software. It must be connected to a reliable internet connection round the clock. Every cryptocurrency miner must be a member of an online mining pool.