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BlockchainXTech
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How does bitcoin mining work?

Tue Mar 23, 2021 1:18 pm


You may have read or heard about this in the news: bitcoin mining. But what exactly is bitcoin mining, and how does mining contribute to the bitcoin network?


Before we dive into this, we need to clear up a few things. When you hear 'bitcoin mining', you may think that it is about creating new bitcoins. But the name has been chosen a bit unfortunate, because creating new bitcoins is not the main purpose of mining.

This is what bitcoin miners do:

Miners process new transactions in blocks
Miners are rewarded in bitcoin for their work
Miners protect the network

Bitcoin is a decentralized network

Before further discussing mining, it is necessary to explain a little more about the bitcoin network. Bitcoin is the first decentralized network that allows you to send, receive and manage money. And that is revolutionary.

Let's say you need to pay some friends after a night out at the pub. With bitcoin, all you need to do is open your bitcoin wallet, scan your friend's QR code, and enter the amount of coins you want to send him. The transaction will be processed instantly from one person to another, without the need for a third party.

Let's compare that process to that of a bank transfer. You pick up your phone and send the amount due from your banking app to your friend's bank account. Now the funds will be sent from bank to bank, and if your friend is in a different bank than yours, this transaction could take a while.

Miners process new transactions in blocks

So how does this work? Anyone is free to add blocks to the existing blockchain. To add a block to the chain, your computer needs to guess the solution to one type of puzzle. The faster your computer, the more possible solutions you can find.

The equipment for miners offers possible solutions as quickly as possible so that they can add a block to the chain. The computer processes the information of all the transactions that you want to aggregate in one block and executes this information through an algorithm.

The output that the algorithm provides must be correct before the miner can add the block. Your computer requires enough processing power to find possible solutions. In other words: you need to be able to show that your mining team has put in the effort or worked. That's where the term 'proof of work' originates.

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lilamls
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Joined: Tue Mar 09, 2021 4:23 am

Re: How does bitcoin mining work?

Thu Mar 25, 2021 5:18 pm

Your blog has provided us with valuable information to work with. Every tip in your message is great.

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