Bitcoin and Cryptocurrency: A guide to Blockchain, Bitcoin and other Cryptocurrencies (Bitcoin mining, Ripple, Ethereum, Blockchain,) by Oskar L. Braun

Author:Oskar L. Braun
Language: eng
Format: azw3
Published: 2017-08-08T07:00:00+00:00

Chapter 7: What is Bitcoin Mining?

As discussed in an earlier chapter, there are three main ways in which you can earn Bitcoins. The first way is by buying them from an exchange, the second is getting paid in them, and the third is by mining them.

In this chapter, we will look at the third option in detail.

Mining happens to be one of the most important activities in the world of cryptocurrencies, as miners help in generating new coins. Since there is an absence of a central authority that can print new notes or mint new coins, it entirely depends on miners to generate new coins. Bitcoins can be mined on the Bitcoin network using GPU rigs. Once the coins have been generated, the miners spend them so that they can be circulated. It might seem like miners venture out with tools to dig up the coins. But that is not how it works.

Miners make use of software to maintain records of transactions that take place in the Bitcoin universe. This is extremely important to carry out, as, without the maintenance of public record, it will be easier for fraudulent activities to take place. The Bitcoin network is a peer-to-peer cash system, where people exchange their cryptocurrencies. As soon as a transaction goes through, a miner makes a recording of it in a public ledger that is available to all. The miner is then paid a Bit for his effort and services provided. The blockchain system used on the network provides a virtual ledger for the entries.

A CryptoCurrency miner can be compared to a bank manager, who oversees financial transactions that take place in the bank. The only difference here is, he will be recording it manually, while a CryptoCurrency miner will be recording it on a virtual ledger. This system eliminates intermediaries, thereby making it a faster and more reliable system. The documents are available for public access and eliminate room for fraudulent activities.

Miners will be up to date on every transaction and make sure there are no cheats and hackers indulging unwanted activities such as theft and double spending. Double spending refers to a situation where the same currency is spent twice. This can take place in the network if a miner does not keep an eye on the transactions. The fact that it is a decentralized network makes it easier for such activities to go down.

Therefore, miners can be termed as CryptoCurrency vigilantes, who make sure there is nothing-illegal happening in the network.

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