Bitcoin is a cryptocurrency that has been in existence since 2009, and now there are more than 250,000 transactions per day. This virtual, digital currency was created by the elusive Satoshi Nakamoto as an alternative means of payment to use for online transactions to avoid lengthy and costly banking processes. However, Bitcoin relies heavily on a community of cryptographers called Bitcoin miners to produce the currency. So how does Bitcoin mining work?
Periodically, a batch of mathematical problems is released for cryptographers to solve in order to create new unique Bitcoin blockchains. These are unique codes in blocks, which make a chain by linking to previous blockchains. Once the blockchain is created, the cryptographer adds it to the Bitcoin public ledger with the evidence supporting its creation. These blockchains are what distinguishes the Bitcoins from each other, determines ownership and legitimizes transactions.
Source: Federal Reserve Bank of New York via Facebook
In order to become a Bitcoin miner, you will need to invest in both hardware and software to assist you with the mining. Starting with the hardware, Bitmain, https://www.bitmain.com/, is amongst the most popular manufacturers. Their AntMiner S9 is one of the most efficient and advanced hardware suited to the serious miner. If you are more of a hobby miner, then the AntMiner R4 is probably more for you, as it is designed to be quieter for home use.
On the software side of things, GUIMiner, https://guiminer.org, is a graphical frontend for Bitcoin mining, which is configured for many popular mining pools, offers real-time statistics and is able to automatically start multiple miners on start-up. It also offers tools to view account balances and make withdrawals. It supports both AMD and NVIDIA GPUs and CPU mining, as well as allowing the user to be able to choose between pooled or solo mining.
So, being able to create currency through mining may look like a great prospect, but it’s not as easy as it may seem. These mathematical problems are not easy to solve and they are only released in small batches to maintain a steady flow of new Bitcoins. Not only that, but miners are competing against others to claim those Bitcoins, as the reward of creating these blockchains is to be paid in Bitcoins.
How secure is this digital currency, though, if it relies on a community of cryptographers to create it? The community, in fact, acts a safeguard for Bitcoin, and why wouldn’t they when their income is reliant on it and they get paid in Bitcoins? The network is crucial in making the currency safe and secure, as through the addition of new blockchains it verifies the previous blockchains. However, the stability of the currency, like any other, is affected by external factors.
Bitcoin has received a lot of press coverage recently, as the first Bitcoin exchange fund was rejected by federal regulators, which adversely affected the currency price. Prior to this, it had seen some stability in fall 2016, prior to the election of Donald Trump. As a result of the surprise election result, the currency saw a rise in its price, as it was seen as a way for people to store cash in a stable currency.
But is Bitcoin mining the way to make a fortune? For most people, probably not. If you have the time, skills and money to invest in it then maybe you might be in with a chance. But for most people, the skill set required is a barrier, and when this is coupled with the stability of the currency, it is likely to put the majority of people off trying to learn how to become a Bitcoin miner.