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What Is The Purpose Of Mining For Bitcoins?

Everything You Need To Know About Bitcoin Mining

Everything You Need To Know About Bitcoin Mining

Where do bitcoins come from? With paper money, a government decides when to print and distribute money. Bitcoin doesn't have a central government. With Bitcoin, miners use special software to solve math problems and are issued a certain number of bitcoins in exchange. This provides a smart way to issue the currency and also creates an incentive for more people to mine. Bitcoin miners help keep the Bitcoin network secure by approving transactions. Mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure. Bitcoin mining is the process of adding transaction records to Bitcoin's public ledger of past transactions or blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere. Visualize and Download High-Resolution Infographic Bitcoin mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function. The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a "subsidy" of newly created coins. This both serves the purpose of disseminating new coins in a decentralized manner as we Continue reading >>

Bitcoin Mining Just Became Less Rewarding, On Purpose

Bitcoin Mining Just Became Less Rewarding, On Purpose

Bitcoin mining just became less rewarding, on purpose Digital currency output just dropped by half thanks to anti-inflation code. Thomas Trutschel/Photothek via Getty Images If you have computers chugging away as bitcoin mining machines , don't be surprised if your output just fell through the floor. Reuters notes that code built into the digital currency system has cut the mining reward in half as of July 9th. Where there were previously 25 bitcoins (roughly $16,000) to be mined every 10 minutes, you now have to fight over 12.5. The measure automatically kicks in every four years as part of an attempt to curb inflation that would come from both a growing number of miners and ever-faster computers. To no one's surprise, reducing the reward could have serious consequences for dedicated miners. As you have to work twice as hard to get the same money, companies with not-so-efficient operations may have no choice but to restructure or even close shop entirely. KnCMiner , for instance, declared bankruptcy in May after warning about the impending profit loss. Those miners most likely to survive are the ones that keep costs to a minimum through lower-power computers and minimal staff. You'd think that the industry would have anticipated the halving given that it will happen every four years like clockwork, but that's not necessarily the case. Although bitcoin isn't quite as celebrated as it was a while back, it's still far more mainstream than it was in 2012. There are many more people mining than there were four years ago, and not all of them realize that they'll have to factor in those reward cuts. The bigger question is whether or not the bitcoin business will be better-prepared when 2020 rolls around. Miners will either have to trim costs yet again or hope that they can m Continue reading >>

What Is Bitcoin Mining?

What Is Bitcoin Mining?

Jordan Tuwiner Last updated June 28, 2017 If mining sounds like a process which extracts value from Bitcoin, nothing could be further from the truth! Miners are the backbone of the Bitcoin network: Without miners, the network would collapse and lose all value. The role of miners is to secure the network and to process every Bitcoin transaction. Miners achieve this by solving a computational problem which allows them to chain together blocks of transactions (hence Bitcoins famous blockchain). For this service, miners are rewarded with newly-created Bitcoins and transaction fees. To understand mining, its first necessary to understand the Bitcoin blockchain. All Bitcoin transactions are recorded in the blockchain, in a linear, time-stamped series of bundled transactions known as blocks. The blockchain is essentially a public ledger, which is freely shared, continually updated and under no central control. Certain orthodox economists have criticized mining as wasteful. It must be kept in mind however that this electricity is expended on useful work: Enabling a monetary network worth billions (and potentially trillions) of dollars! Compared to the carbon emissions from just the cars of PayPals employees as they commute to work, Bitcoins environmental impact is negligible. As Bitcoin could easily replace PayPal, credit card companies, banks and the bureaucrats who regulate them all, it begs the question: Not just of electricity, but of money, time and human resources! If only 21 million Bitcoins will ever be created, why has the issuance of Bitcoin not accelerated with the rising power of mining hardware? Issuance is regulated by Difficulty, an algorithm which adjusts the difficulty of the Proof of Work problem in accordance with how quickly blocks are solved within a certa Continue reading >>

Bitcoin - Wikipedia

Bitcoin - Wikipedia

Unspent outputs of transactions denominated in any multiple of satoshis [3] :ch. 5 12.5 bitcoins per block (approximately every ten minutes) until mid 2020, [7] and then afterwards 6.25 bitcoins per block for 4 years until next halving. This halving continues until 2110–40, when 21 million bitcoins will have been issued. ^ The symbol was encoded in Unicode version 10.0 at position U+20BF ₿ BITCOIN SIGN in the Currency Symbols block in June 2017. [2] Bitcoin is a worldwide cryptocurrency and digital payment system [8] :3 called the first decentralized digital currency , as the system works without a central repository or single administrator. [8] :1 [9] It was invented by an unknown person or group of people under the name Satoshi Nakamoto [10] and released as open-source software in 2009. [11] The system is peer-to-peer , and transactions take place between users directly, without an intermediary. [8] :4 These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain . Bitcoins are created as a reward for a process known as mining . They can be exchanged for other currencies, [12] products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. [13] Bitcoin can also be held as an investment. According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin. [14] The word bitcoin first occurred and was defined in the white paper [15] that was published on 31 October 2008. [16] It is a compound of the words bit and coin . [17] The white paper frequently uses the shorter coin. [15] There is no uniform convention for bitcoin capitalization. Some sources use Bitcoin, capitalized, to Continue reading >>

Blockchain: What Is Mining?

Blockchain: What Is Mining?

The purpose of mining is probably a little confusing at first. I will keep the Bitcoin blockchain as an example throughout this article. Mining is NOT about creating new bitcoins. Mining is the mechanism that allows the blockchain to be a decencentralized security. It secures the bitcoin system and enable a system without a central authority. Do not confuse the rewards given to miners ( new bitcoin ) with the process itself. Miners validate new transactions and record them on the global ledger ( blockchain ). On average, a block ( the structure containing transations ) is mined every 10 minutes. Miners compete to solve a difficult mathematical problem based on a cryptographic hash algorithm. The solution found is called the Proof-Of-Work. This proof proves that a miner did spend a lot of time and resources to solve the problem. When a block is 'solved', the transactions contained are considered confirmed, and the bitcoin concerned in the transactions can be spend. So, if you receive some bitcoin on your wallet, it will take approximately 10 minutes for your transaction to be confirmed. Miners receive a reward when they solve the complex mathematical problem. There are two types of rewards: new bitcoins or transaction fees. The amount of bitcoins created decreases every 4 years ( every 210,000 blocks to be precise ). Today, a newly created block creates 12.5 bitcoins. This number will keep going down until no more bitcoin will be issued. This will happen around 2140, when around 21 millions bitcoins will have been created. After this date, no more bitcoin will be issued. Miners can also receive rewards in the form of transaction fees. The winning miner can 'keep the change' on the block's transactions. As the amount of bitcoin created with each block diminishes, the tra Continue reading >>

How Bitcoin Mining Works - The Economist Explains

How Bitcoin Mining Works - The Economist Explains

AS THE bitcoin price continues to fall, sceptics have started to wonder what will happen to the industry underpinning this digital “crypto-currency” . Around the world, hundreds of thousands of specialised computers have been built to create (or “mine”) bitcoins and, in the process, validate transactions and protect the system. How does bitcoin mining work? The aim of bitcoin—as envisaged by Satoshi Nakamoto, its elusive creator—is to provide a way to exchange tokens of value online without having to rely on centralised intermediaries, such as banks. Instead the necessary record-keeping is decentralised into a “blockchain”, an ever-expanding ledger that holds the transaction history of all bitcoins in circulation, and lives on the thousands of machines on the bitcoin network. But if there is no central authority, who decides which transactions are valid and should be added to the blockchain? And how is it possible to ensure that the system cannot be gamed, for example by spending the same bitcoin twice? The answer is mining. Every ten minutes or so mining computers collect a few hundred pending bitcoin transactions (a “block”) and turn them into a mathematical puzzle. The first miner to find the solution announces it to others on the network. The other miners then check whether the sender of the funds has the right to spend the money, and whether the solution to the puzzle is correct. If enough of them grant their approval, the block is cryptographically added to the ledger and the miners move on to the next set of transactions (hence the term “blockchain”). The miner who found the solution gets 25 bitcoins as a reward, but only after another 99 blocks have been added to the ledger. All this gives miners an incentive to participate in the syste Continue reading >>

How Does Bitcoin Mining Work?

How Does Bitcoin Mining Work?

By Euny Hong | Updated October 17, 2017 — 3:51 PM EDT Cryptocurrency mining is painstaking, expensive, and only sporadically rewarding. Nonetheless, mining has a magnetic draw for many investors interested in cryptocurrency. This may be because entrepreneurial types see mining as pennies from heaven, like California gold prospectors in 1848. And if you are technologically inclined, why not do it? Well, before you invest the time and equipment, read this explainer to see whether mining is really for you. We will focus primarily on Bitcoin. (Related: How Bitcoin Works  and our helpful infographic,  What is Bitcoin? ) By mining, you can earn cryptocurrency without having to put down money for it. That said, you certainly don't have to be a miner to own crypto.  You can also  buy crypto using fiat currency (USD, EUR, JPY, etc); you can trade it on an exchange like Bitstamp using other crypto (example: Using Ethereum or NEO to buy Bitcoin); you even can earn it by playing video games or by publishing blogposts on platforms that pay its users in crypto. An example of the latter is  Steemit , which is kind of like Medium except that users can reward bloggers by paying them in a proprietary cryptocurrency called Steem.  Steem can then be traded elsewhere for Bitcoin.  In addition to lining the pockets of miners, mining serves a second and vital purpose: It is the only way to release new cryptocurrency into circulation. In other words, miners are basically "minting" currency. For example, as of the time of writing this piece, there were about 16 million Bitcoin in circulation. Aside from the coins minted via the genesis block (the very first block created by Bitcoin founder Satoshi Nakamoto himself), every single one of those Bitcoin came into being because of min Continue reading >>

Cnbc Explains: How To Mine Bitcoins On Your Own

Cnbc Explains: How To Mine Bitcoins On Your Own

CNBC Explains: How to mine bitcoins on your own Bitcoins act like cash, but they are mined like gold. So how does someone get into the current bitcoin rush? If properly done and willing to take the investment risk, you could wind up with a few bitcoins of your ownwhich currently have an average weekly price of $945 on the largest bitcoin exchange. When the algorithm was created under the pseudonym Satoshi Nakamotowhich in Japanese is as common a name as Steve Smiththe individual(s) set a finite limit on the number of bitcoins that will ever exist: 21 million. Currently, more than 12 million are in circulation. That means that a little less than 9 million bitcoins are waiting to be discovered. Since 2009, the number of bitcoins mined has skyrocketed. That's the way the system was set upeasy to mine in the beginning, and harder as we approach that 21 millionth bitcoin. At the current rate of creation, the final bitcoin will be mined in the year 2140. There are three primary ways to obtain bitcoins: buying on an exchange, accepting them for goods and services, and mining new ones. "Mining" is lingo for the discovery of new bitcoinsjust like finding gold. In reality, it's simply the verification of bitcoin transactions. For example, Eric buys a TV from Nicole with a bitcoin. In order to make sure his bitcoin is a genuine bitcoin, miners begin to verify the transaction. It's not just one transaction individuals are trying to verify; it's many. All the transactions are gathered into boxes with a virtual padlock on themcalled "block chains." Miners run software to find the key that will open that padlock. Once their computer finds it, the box pops open and the transactions are verified. For finding that "needle in a haystack" key, the miner gets a reward of 25 newly generated Continue reading >>

Bitcoin Mining Definition | Investopedia

Bitcoin Mining Definition | Investopedia

Bitcoin mining is the process by which transactions are verified and added to the public ledger, known as the block chain, and also the means through which new bitcoin are released. Anyone with access to the internet and suitable hardware can participate in mining. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The participant who first solves the puzzle gets to place the next block on the block chain and claim the rewards. The rewards, whichincentivize mining, are both the transaction fees associated with the transactions compiled in the block as well as newly released bitcoin. (Related: How Does Bitcoin Mining Work? ) The amount of new bitcoin released with each mined block is called the block reward. The block reward is halved every 210,000 blocks, or roughly every 4 years. The block reward started at 50 in 2009, is now 25 in 2014, and will continue to decrease. This diminishing block reward will result in a total release of bitcoin that approaches 21 million. How hard are the puzzles involved in mining? Well, that depends on how much effort is being put into mining across the network. The difficulty of the mining can be adjusted, and is adjusted by the protocol every 2016 blocks, or roughly every 2 weeks. The difficulty adjusts itself with the aim of keeping the rate of block discovery constant. Thus if more computational power is employed in mining, then the difficulty will adjust upwards to make mining harder. And if computational power is taken off of the network, the opposite happens. The difficulty adjusts downward to make mining easier. In the earliest days of Bitcoin, mining was done with CPUs from normal desktop computers. Graphics cards, or graphics processing units (GPUs), are Continue reading >>

What Is Bitcoin Mining? A Step-by-step Guide

What Is Bitcoin Mining? A Step-by-step Guide

What is Bitcoin Mining? A Step-by-Step Guide Bitcoin may be the next big thing in finance, but it can be difficult for most people to understand how it works. There is a whole lot of maths and numbers involved, things which normally make a lot of people run in fear. Well, it's one of the most complex parts of Bitcoin, but it is also the most critical to its success. As you know, Bitcoin is a digital currency . Currencies need checks and balances, validation and verification. Normally central governments and banks are the ones who perform these tasks, making their currencies difficult to forge while also keeping track of them. The big difference with Bitcoin is that it is decentralized. If there is no central government regulating it, then how do we know that the transactions are accurate? How do we know that person A has sent 1 bitcoin to person B? How do we stop person A from also sending that bitcoin to person C? What is Bitcoin Mining? In Some Ways, Bitcoin Is Like Gold One of the most common analogies that people use for Bitcoin is that it's like mining gold. Just like the precious metal, there is only a limited amount (there will only ever be 21 million bitcoin) and the more that you take out, the more difficult and resource intensive it is to find. Apart from that, Bitcoin actually works quite differently and it's actually quite genius once you can get your head around it. One of the major differences is that mining doesn't necessarily create the bitcoin. Bitcoin is given to miners as a reward for validating the previous transactions. So how do they do it? Bitcoin mining requires a computer and a special program. Miners will use this program and a lot of computer resources to compete with other miners in solving complicated mathematical problems. About every ten Continue reading >>

What Is The Purpose Of Bitcoin Mining? [closed]

What Is The Purpose Of Bitcoin Mining? [closed]

The initial mining revenue was those who created the system and early adopters experimenting. You have to remember at this time they were worth very little. many of those coins may have been deleted, sold or spent at a much lower value. The risk to reward ratio was much larger, many thought they would not be worth anything. Your calling this money because millions of people have now given trust to the system. Back when it started currency from a game like World of Warcraft would have been considered more valuable. The only reason people with "good computers" got coins is not because they had those computers, it is because less people were actively trying to accumulate bitcoin, making it easier for any computer to do so. Nearly everyone who bought specialized mining hardware (whether it be GPUs, FPGAs and now ASICs) would have done better simply buying bitcoins with the money instead. A few did get more than 1 bitcoin back per 1 bitcoin worth of investment in hardware -- it happen to end up such that those who speculated on the right mining hardware vendor that actually wasn't all that late in shipping happened to be the ones who earned more (in terms of XBT/bitcoin revenues) than the cost of hardware, electricity and operating costs. Either way, Bitcoin solves a problem in how to have a decentralized system of money with no authority. The problem you are describing, ... allocation of a resource equally, doesn't exist in nature. Bitcoin is a protocol, with issuance modeled to be similar to what history has yielded as the leading natural form of money (gold). Continue reading >>

Mining - Bitcoin Wiki

Mining - Bitcoin Wiki

Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions (and a " mining rig " is a colloquial metaphor for a single computer system that performs the necessary computations for "mining").This ledger of past transactions is called the block chain as it is a chain of blocks .The block chain serves to confirm transactions to the rest of the network as having taken place.Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere. Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function. The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus.Mining is also the mechanism used to introduce Bitcoins into the system:Miners are paid any transaction fees as well as a "subsidy" of newly created coins.This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system. Bitcoin mining is so called because it resembles the mining of other commodities:it requires exertion and it slowly makes new currency available at a rate that resembles the rate at which commodities like gold are mined from the ground. Mining a block is difficult because the SHA-256 hash of a block's header must be lower than or equal to the target in order for the block to be accepted by the network. This problem can be simplified for explanation purposes: The hash of a bl Continue reading >>

What Is The Purpose Of Bitcoin Mining?

What Is The Purpose Of Bitcoin Mining?

Bitcoin mining is what gives bitcoin value. Miners are not so much solving a math problem as they are spending a lot of effort making guesses until they guess correctly. Bitcoin works by having a linked set of "blocks" of transaction records that document who has what bitcoin. To make bitcoin work, they needed some way to ensure that the record of blocks is immutable, i.e. nobody can change it. The way they accomplished this was to create the concept of mining. Miners take a current set of transactions, which includes a link to the last set accepted, and make many trillions of guesses, each time putting a number into the "nonce" field of the block header. The block header is run through a hash function, also known as a "one-way" or "trap-door" function. In this case, the SHA-256 hash function is used twice. If the output of the hash function is below a threshold value, then the block is valid, is accepted by other miners, and the miner who guessed correctly is rewarded with the block reward, currently 25 bitcoins. The lower the hash function output threshold, the harder it is to provide a guess that will cause the output of the hash function to be low enough, and just how low the threshold is is determined by something called bitcoin "difficulty." Difficulty adjusts every two weeks so that no matter how much mining is happening worldwide, a new block continues to be created every 10 minutes on average. It's a little hard to get your head around, but as soon as you do you'll see that bitcoin has created the world's first immutable ledger, the Blockchain. What you write in it, stays in it. Bitcoin is a currency that is the first asset tracked on the Blockchain, and because it is used to pay the miners, Bitcoin and the Blockchain are intertwined. But as long as the Bitcoi Continue reading >>

Cryptocurrency Mining: What It Is, How It Works And Who's Making Money Off It

Cryptocurrency Mining: What It Is, How It Works And Who's Making Money Off It

Cryptocurrency Mining: What It Is, How It Works And Who's Making Money Off It Shanthi Rexaline , Benzinga Staff Writer   NVIDIA Corporation (NASDAQ: NVDA )'s second-quarter earnings released earlier this month, though exceeding expectations, elicited cautionary reaction from the investor as well as analyst communities. Traders bid down the stock by over 5 percent on Aug. 11. One of the reasons cited for the negative reaction was cryptocurrency contributing to much of the outperformance. Start mining crypto currencies with HashFlare . Analysts Blayne Curtis and Christopher Hemmelgarn of Barclays believes revenue stream from cryptocurrency is fickle. Therefore, the analysts were not in favor of assigning a multiple to it, as it has the potential to become an eventual headwind. Rival Advanced Micro Devices, Inc. (NASDAQ: AMD ) also had a similar tale to tell. The company indicated that cryptocurrency demand remains strong, while also suggesting that the demand might not last forever. Cryptocurrency, as the name suggests, is a form of digital money designed to be secure and anonymous in most cases. It uses a technique called cryptography — a process used to convert legible information into an almost uncrackable code, to help track purchases and transfers. Giving a simple definition, Blockgeeks says it is just limited entries in a database no one can change without fulfilling specific conditions. Cryptography is a technique that uses elements of mathematical theory and computer science and was evolved during the World War II to securely transfer data and information. Currently, it is used to secure communications, information and money online. Cryptocurrencies allow users to make secure payments, without having to go through banks. Some cryptocurrencies include bitcoin, Continue reading >>

What's The Purpose Behind All The Mining?

What's The Purpose Behind All The Mining?

What's the purpose Behind all the Mining? I mean.. there's some kind of calculating work done- but for what is it really being done? What exactly is happening behind the scenes of all this calculating work being done? Tried to search for what purpose all this stuff is done but can't seem to find! 12+ exclusive games The Bitcoin Casino by Primedice Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here. I mean.. there's some kind of calculating work done- but for what is it really being done? What exactly is happening behind the scenes of all this calculating work being done? Tried to search for what purpose all this stuff is done but can't seem to find! I mean.. there's some kind of calculating work done- but for what is it really being done? What exactly is happening behind the scenes of all this calculating work being done? Tried to search for what purpose all this stuff is done but can't seem to find! Mining is ...a way of processing and verifying transactions . (The wiki is a good source in general - I'd recommend having a good browse through it). I mean from where the value is crated for these BitCoins? If all what is done is to generate some random data without any use then How the fck there can be any value to this money? Seems like it's just backed up by a promise to pay something and prices just goes up as there are more people who wants the coins? I mean.. there's some kind of calculating work done- but for what is it really being done? What exactly is happening behind the scenes of all this calculating work being done? Tried to search for what purpose all this stuff is done but can't seem to find! Do not waste your time debating whether Bitcoin can work. It does work. "Early Continue reading >>

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