Are you interested in bitcoin or other crypto mining? Do you want to start crypto mining on your PC or smartphone? Everyone might have heard about the term mining cryptocurrency, but the mining term is defined differently in the crypto world. Mining cryptocurrency means building the blockchain by adding data of user’s transactions on the network. Mining requires knowledge of hard math that is known as hashing, which is commonly done by computers. If you want to become a miner or want to earn money with mining cryptocurrencies, you are at the right place. Other than bitcoin mining, trading is a great method to earn bitcoin, and you can make your journey successful with the crypto trader software
Why is there a need to mine cryptocurrencies?
Before we dig into the concept of bitcoin mining and learn how it works, let’s learn the basics of blockchain. People worldwide are contributing the power of their computers to the shared global computer means blockchain for making payments. Mining cryptocurrencies is contributing computing power, which provides an opportunity to miners to earn newly minted bitcoins. As the bitcoin network is independent, no government or company controls the blockchain, which means blockchain is decentralized in nature. Let’s read about these terms in brief:
Blockchain is a distributed public ledger. We can say a decentralized global computer that is assembled and handled by people worldwide and can be accessed by anyone who has internet connectivity.
Decentralized is anything that isn’t controlled or governed by any central entity like a bank or government.
Hashing means the process of constricting data into irreversible bits or numbers. Each block or set of data is assigned new and unique has which distinguishes them from others. Changing the data into any data or block will require to computer a new unique hash.
Mining means the process of verifying and validating the record of new transactions on the blockchain network. But what is the reward that miners get for their hard work?
What is the incentive given to miners?
The process of validating and recording the transactions isn’t easy and requires hard work and effort. Miners are the contributors that take responsibility in their hands and work effectively to record data in the blockchain ledger. Companies like Venmo and Bank of America choose random people to work in the mining process and provide them with an incentive for their efforts. The rules of a successful decentralized system are required to be developed to attract random people to maintain the mining process and provide the best and attractive incentives.
Satoshi Nakamoto was the first developer who developed the mining bitcoins protocol and set the incentive provided to miners. Satoshi provided people incentives to maintain the bitcoin’s blockchain by awarding them with bitcoin. This protocol created a transparent and permanent inflation strategy that will boost the confidence of miners to work more dedicatedly and earn a reward of a currency that is the largest cryptocurrency and is worth holding.
Who is eligible to mine cryptocurrency?
Individuals who are dedicated enough and have the significant computational power to solve the highly complex hashing puzzles to add the blocks in the blockchain are the ones who can mine cryptocurrencies. Those who don’t have high computing power tend to join mining pools or mining clouds as it is an alternative way to make a consistent income by joining other miners. Miners who have less computing power join the mining pool instead of mining independently. But it is a complete game of luck, and some miners even earn rewards by mining cryptocurrencies independently. Also, this is a great way to earn block rewards and be a bitcoin holder. As compared to other methods, mining is the best method to earn a good portion of bitcoins.
What is the halving process?
It is important to learn that all miners need to follow the halving process. Bitcoin’s supply is limited, and there are only 21 million bitcoins. Bitcoin was first created in 2009, and the halving process started in 2009 only. At that time, the block reward was 50 BTCs to solve every block, but today the block reward has been halved to 6.25 BTC as of 2020. The block reward is set to get halved after every four years. Once all bitcoins are mined, the miners will start charging transaction fees.