What is Bitcoin Mining

“Just like gold, Bitcoin is mined, albeit digitally. It is a decentralised currency, implying that the transfer of Bitcoins is not subject to any third-party support, including banks.”

So what is Bitcoin mining ? Simple, its just solving math problems.

With Bitcoin, miners use special softwares to solve math problems and are offered a certain number of Bitcoins in exchange. This provides a smart way to issue the currency and also creates an incentive for more people to mine. And since miners are required to approve Bitcoin transactions more miners means a more secure network. The Bitcoin networ automatically changes the difficulty of the math problems depending on how fast they are being solved.

In the early days Bitcoin miners solved these math problems with their processors and computers, soon miners discovered that graphics cards used for gaming were much better suited for this kind of math. Graphics cards are faster, they use more electricity and generate a lot of heat which proved to be a problem in the future. The first commercial Bitcoin mining products products included chips that were re-programed for mining Bitcoin, these chips were faster but still power hungry and that lead to the making of the ASIC chip ( Application-Specific Integrated Circuit Chips ). These chips are designed specifically for Bitcoin mining which has made Bitcoin mining even faster while using less power.

As the popularity of Bitcoin increases more miners join the network making it more difficult for individuals to solve the math problems. To overcome this miners have developed a way to work together in pools, pools of miners find solutions faster than their individual members and each miner is rewarded proportionate to the amount of work He/She provides.

Mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure. Since there is an upper cap of 21 million on the total number of Bitcoins that can be mined, we can foresee the values of Bitcoin soaring in the near future, hence from an investment perspective, users should buy Bitcoins now.

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