What is Bitcoin Mining?

BITCOIN

 What is Bitcoin Mining?

Bitcoin mining is a complex computational and technological process of validating the bitcoin transactions over the Bitcoin network. It is like a process of validating a block on the chain network and getting paid in Bitcoin. 

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People who are involved in this process of mining are known as miners. The reason why it is called ‘mining’, is because just like any other form of natural resources, there is a finite number of Bitcoins available. The maximum amount of Bitcoin that can be created or mined is 21 million. Just like real mining, in Bitcoin mining, one needs to invest energy in order to generate or create Bitcoins. And here, the energy is in the form of electrical energy to mine Bitcoins. The miners compete against each other to solve complex hash puzzles, which are encoded cryptographically to verify the blocks containing transactions.

Block Chain

In this race of guessing, whosoever becomes the first miner to guess the number gets a chance to update the ledger of transactions on the Bitcoin blockchain network and also receives a reward of newly-minted Bitcoins. It is to be noted that this guessing of specific numbers is all done by the computer. So, the more powerful a computer one has, the more guesses a miner can make per second, and thus it increases the chances of winning this race. Bitcoin mining is primarily done:

A) To bring new coins into circulation and validate ongoing transactions.

B) To check counterfeiting and double-spend.

C) Maintain the ledger in a decentralized manner.