Though it is been 13 years of the creation of the first cryptocurrency bitcoin, the technologies it uses and the facilities it provides, amaze us till now. Such technology is bitcoin blockchain network which has a very important role in safely running the bitcoin network. A few questions and answers that are mostly asked are given below to thoroughly understand its role.
Top Questions About Bitcoin Mining- Answered
1. What does bitcoin mining refer to?
Bitcoin mining is the process of generation of new bitcoin units. The word mining generally means the extraction of commodities from the earth like gold mining. However, bitcoin is also brought out by the process of verifying or mining blocks of its network and that is why here also the word mining is applied. So, bitcoin mining refers to the process of verification of blocks that result in the creation of new bitcoins.
2. What is the purpose of bitcoin mining?
In the bitcoin network the transactional data are stored in the blocks of Blockchain that is the actual structure of the bitcoin. The data are evenly distributed in all the blocks of the Blockchain as the network is a shared network. Once a transaction is initiated, the duplicated form of that transaction gets recorded in each block. While mining, the miner downloads a block and with the computational power that he or she is using to mine bitcoin, verifies the data of the block. Once they are verified, all the blocks save the data permanently.
- After each successful mining, the miners get rewarded with new bitcoins. Thus, mining creates new bitcoins and brings them into circulation.
3. What do you need to mine bitcoin?
Bitcoin mining needs strong computers and electric power. In the early days, miners used to mine with regular computers or CPUs and as a result, the process was time-taking. But, nowadays, miners are using upgraded computers that are dedicatedly made for mining cryptocurrencies. The things you need are-
- Competitive mining computers or mining rigs
- Mining software
- Low-cost but powerful electricity
- Uninterrupted internet connection
- Mining pool membership if you want to do pool mining
4. How much reward do you get from bitcoin mining?
The amount of reward or bitcoins you get from a successful mining is not fixed. As the maximum supply of bitcoin is limited, the protocol sets a pattern of gaining rewards and that is after every four years or after 210,000 blocks the reward gets halved. In the beginning, when the first block that is the genesis block was mined the reward was 50. In 2012 it was 25 which again reduced to 12.50 in 2016. And, in 2020 it gets 6.25.
5. Is bitcoin mining harmful to the environment?
Bitcoin mining is not directly harmful to the environment but, in the process, a huge amount of electricity is used which affects the environment by increasing its carbon footprint. However, the harm can only be considered when it is pool mining where a lot of computers are engaged at a time and the electricity consumption is huge.
6. Who is the first bitcoin miner?
The first bitcoin miner is Satoshi Nakamoto who is known to be the inventor of the cryptocurrency bitcoin. Nakamoto mined the first block of bitcoin which was the genesis block (block number 0) to start the network of bitcoin. By mining the block Nakamoto got 50 bitcoins as a reward.
7. Is bitcoin mining better than bitcoin trading?
Bitcoin mining and bitcoin trading are two different practices but, both are rewarding. However, bitcoin mining needs a lot of setup and investment initially whereas bitcoin trading can be started with a small amount by purchasing fractions of bitcoin. You can see bitcoin-profit.com start bitcoin trading and make some profit out of it by applying the right strategy.
8. Does bitcoin mining have a benefit to the bitcoin network?
Bitcoin mining has some benefits towards making the bitcoin network trustworthy to the people.
- The mining process verifies all the transactional data that the users make in the network. Thus, the network becomes safer to use.
- Data verification prevents the double-spending issue in the bitcoin network that is a vital problem with physical cash.
These are the common questions regarding bitcoin mining and the answers are given thoroughly. Hope these will help make a clear idea about bitcoin mining.