What is Bitcoin Mining?
Where do Bitcoins come from? Normally with paper money, a government or central banking system would print and distribute money when it wants to or needs it. This is called inflation. But in Bitcoin there is no central government or anyone controlling bitcoin. So bitcoins isn’t printed, it is discovered. Computers across the globe “mine” for bitcoins, that compete with each other. Very similar to gold, but Digital. That is Bitcoin Mining.
With Bitcoin Miners, they confirm all the transactions that is being sent over the bitcoin network. Miners collect all the transactions that has happened during a set amount of time on to a list or ledger called a “block”. This Ledger is a long list of blocks that is known as the “Blockchain”. Its the infrastructure behind Bitcoin. It can be used to view the first ever bitcoin transaction or present transactions. Whenever a new block is created it is stored in the blockchain. It is consistently updated and giving to all the miners so that they know what is going on. Every time a block is hit, the individual miner is rewarded a certain amount of bitcoins for contributing to the network protocol.
Bitcoin miners help keep the Bitcoin network secure by approving transaction. Mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure.
Is Bitcoin Secure?
Here is a video that I really liked: Professor Campbell Harvey talks about MtGox and tell skeptics that MtGox isn’t apart of the Bitcoin infrastructure. I wont get to much into the MtGox incident, perhaps it can be another post.
The Bitcoin network is the fastest and most secure computer network in the world, even the top 500 super computers put together would take years to hack into. Therefor Bitcoin is very safe to use. Bitcoin works on a consensus, everyone that has a wallet contributes to the Bitcoin community. Also Bitcoin mining helps keep the network secure. All of us help, increase the adoption of Bitcoin therefor increasing the value of each bitcoin.
Can We Mine Bitcoin Today?
Miners before, when bitcoin was being first traded it was possible that a home or hobbyist can mine bitcoins and earn from it. Now days since the network is global, it isn’t practical to mine at home. Your looking at possible thousands and thousands and thousands of dollars into mining equipment. Also factoring the electricity just to power these mining equipment can be a fortune depending where in the world you are located. Then the heat issue that these units put off. I heard of people selling their old mining equipment to people just to make as heaters in cold countries.
You need at least perhaps 3PH (Pentahash) Systems to even compete in the mining industry now days. 1PH systems can cost an upwords of $250,000 or more. Not factoring also how much power these units eat up. I don’t recommend it at all.
So how can your average person participate in the mining opportunity for Bitcoin?
Simple, you can purchase a mining contract with certain companies. They do the work for you as far as programming and as well maintaining the equipment for mining at lower costs than most of us. I will make a page just for the Bitcoin Mining company that I work with to earn.