Bitcoin mining plays the most important role in validating the huge transactions of its decentralized system which no governing body is authorized to take the responsibility. Bitcoin shares an open-sourced network that is not regulated by the government or any organization. Transactions here are direct and no central point of authorization is technically added making the whole network and the system a bit-iq.io suspicious for unusual transactions.
The process is not that simple but includes a lot of phrases and mathematical calculations. To know this interesting process in detail, read the complete article. It also covers the various aspects of bitcoin mining and how you can make a profit from it too.
Overview of Bitcoin Mining:
Bitcoin mining was first started in the year 2009 when Satoshi Nakamoto, the creator of bitcoin mined the first block of bitcoin, the genesis block (block no- 0), and initiated the bitcoin network. Bitcoin mining serves two purposes. One is to verify transactions and another is to bring new bitcoins into circulation. That is how the whole bitcoin network is run.
Deconstructing The Verification Process: How Blocks Get Verified By Mining
Firstly, you should note that the Bitcoin network runs on a distributed Blockchain that is known to record every single transactional data in the blocks. Once a transaction is initiated the data is duplicated and stored in every block as the network is evenly distributed. Now, the role of the blocks is to store different amounts of data based on the number of transactions made by the users.
Each time, the miner can verify one block that has 1 megabyte worth of transactional data.
While mining, the miner downloads a block in his or her mining computer and gets access to all the transactional history of that block. Then with the computational power, the transactions get verified. The verification process includes solving a complicated mathematical hash puzzle. However, when the transactions are verified, the data get stored in the blocks permanently and a new block is opened. Thus, the verification process is done.
The BIG Reward of Bitcoin Mining: Why It’s Worth Your Time!
After successfully mining a block, the miners get the reward of new bitcoins. But, the amount of reward is not the same as the bitcoin protocol has set a limit on bitcoin supply. After every four years, that is after mining 210,000 blocks, the reward gets halved. The first block of bitcoin had a reward of 50 that was at the time of Nakamoto. After that, in 2013, the reward came to 25, and now, it is 6.25.
Bitcoin Mining: The Math Behind It
Bitcoin mining doesn’t involve the whole block but a part of it that stores the transactional data and is known as the blockhead. The mining process comprises six components or phrases.
- Version: For mining, you need the mining software and the version is the version of software you have downloaded.
- Timestamp: The timestamp indicates the time of the creation of every newblock. Within the block all the transactions are timestamped.
- Previous block hash: This component contains all the transactional data of the previous block that has to be mined with a hash number after that.
- Markle root: Here all single transactional data are hashed together and form a tree-like structure that is called Markle root.
- Difficulty target: It is a hash number and the main focal point or target point of the miners. The number is a 64digit hexadecimal number that has the same string length as the largest hash number of the PoW algorithm, SHA256. The number contains letters and a bunch of zeros after them. Here the targets of the miners are to get a similar number or the closest smaller number of the difficulty target by applying computational power. Also, the miner who will come first with the number needed here will be the winner and get the reward.
- Nonce: When miners fail to come up with the result, in this section, they get another difficult target and thus they continue with their efforts.
Mining is considered a great way to receive income from bitcoin. However, it also requires a huge setup and investment. An easier way is to trade bitcoin which is the main trend now with bitcoin. You can start trading bitcoin with reliable platforms like bitcoinsup.org.