What is Bitcoin Mining?
Mining is an integral process in the Bitcoin network that ensures fairness, safety, and security.
The process is used to verify Bitcoin transactions from one user to another. It involves adding transaction records to Bitcoin's public ledger also called the blockchain. The ledger of past transaction is how the network confirms transactions that have taken place. Bitcoin nodes utilize the blockchain to differentiate legitimate transaction from attempts to re-spend coins that have been used elsewhere.
Unlike governed nations, Bitcoin does not have a central figure that decides when to print and distribute money. Instead, the system uses miners, who, with the help of special software, solve math problems. They keep the network secure. In return, they are rewarded with bitcoins. Hence, mining is also a way to introduce Bitcoins into the system.
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Bitcoin mining is meant to be resource-intensive and challenging to regulate the number of blocks found by miners each day. For a block to be considered valid, it must contain proof of work, a patch of data that is difficult to acquire to satisfy certain requirements.
Producing a proof of work may require trial and effort, as it is a random process with low probability. Bitcoin uses the Hashcash proof of work function.
With the rate of miners increasing, the difficulty metric in Bitcoin mining will consequently rise to regulate the rate of block creation.
Bitcoin mining is named so because of its close resemblance to actual mining of commodities like gold. It requires extensive work and it produces new currencies at a rate similar to the rate at which commodities such as gold are mined.
Miners will receive an agreed-upon amount of Bitcoins when a block is discovered. The bounty is currently at 25. The payment is extracted from the fees paid by users' sending transactions.
