Understanding Bitcoin Mining Like an Expert

Bitcoin mining is a critical part of Bitcoin circulation. It entails three components; 

  • A special group of people known as “Bitcoin Miners.” 
  • Bitcoin wallets.
  • Sophisticated computer software alongside hardware.
  • Bitcoin exchange platforms.
  • blockchain.  

While many people find it to be a bit challenging to grasp, the reality is that the concept of bitcoin mining isn’t that convoluted. If you do too, here’s a simple breakdown to help your understanding:

Bitcoin Mining?

Bitcoin mining refers to the process of creating new bitcoin. This process entails solving a computational puzzle, using a special algorithm known as “SHA-256”. This stands for “Secure Hash Algorithm”. 

Bitcoin mining is performed by computers with special chips known as “Application Specific Integrated Circuits” or “ASIC”. The chips work with the algorithm to solve the computational puzzle in the blockchain. After that mining concludes. 

Bitcoin Exchange Platforms

Each time a client buys, sells, or transfers bitcoin to another person on an exchange platform, a transaction immediately kicks off. 

The transaction will only become legitimate after it has been validated by bitcoin miners. The validation process involves solving a computational puzzle. 

Each time a miner solves a puzzle successfully, the transaction is validated and the miner earns a certain amount of bitcoin as a reward for their effort. That’s basically how bitcoin mining is done. 

Bitcoin Mining Life Cycle

1.Someone goes to a Bitcoin exchange platform and initiates a transaction, using their bitcoin wallet. The transaction can be buying, selling, or transferring bitcoin. 

2. Next, the transaction is broadcast to all computers taking part within the blockchain. Every cryptocurrency exchange website is built upon a specific blockchain. By the way, there are more than 800 blockchains created by different entities in existence today.  

3. After that, each computer checks the transaction against the validation rules set by the controllers of the given blockchain.

4. Once transactions are validated, they are stored into a block and sealed with a lock. Experts call this lock “hash”. 

5. Once other computers in the network verify that the hash on the block is correct, the block becomes part of the blockchain. The transaction is now part of the blockchain and can’t be tampered with in any way. 

Final Thoughts

Many people find the idea behind bitcoin mining to be a bit difficult to understand. But the truth is that it’s not that complex as hopefully, you’ve realized after reading this simple bitcoin mining guide. 

By Errole

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