The bitcoin network, came into existence in January 2009, all thanks to Satoshi Nakamoto, a software developer. The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees. Now, it is one of the most popular keywords in the cryptocurrency world, especially in a country like Nigeria.
However, apart from trading bitcoins, there are people who make money by “mining bitcoins“. Bitcoin miners are those who bitcoins are awarded to, for the solution to a difficult proof-of-work problem which confirms transactions and prevents double-spending. Sounds strange? Read on…
What is Bitcoin Mining?
More often than not, you must have heard of the virtual cryptocurrency, Bitcoin and some of us probably wondered where it comes from and who issues it. The answer is that it gets mined into existence. Bitcoin mining is the process of adding transaction records to Bitcoin’s public ledger of transactions or block chain. This ledger of past transactions is referred to as ‘blockchain’ because it consists of a chain of blocks. It serves to confirm transactions that have taken place to the rest of the network.
The mining process consists of compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The first person to solve the puzzle gets to place the next block on the block chain and claims the rewards. The rewards make mining profitable and include the transaction fee and the newly issued bitcoin.
How hard is it to mine bitcoins??
The difficulty involved in mining bitcoins depends on how much effort is being put into mining across the network. Based on the protocol laid out in the software, the Bitcoin network automatically adjusts the difficulty of mining every 2016 blocks or roughly every two weeks. This means that, on average, one block of transactions is yielded every ten minutes. The rate of block creation increases as more miners join. The network then compensates for this by increasing the difficulty of mining which pushes the rate of block creation back down.
How Secure is the Bitcoin Mining Network?
Bitcoin mining is decentralized. Anyone with an internet connection and the proper hardware can participate. The security of the network is based on this decentralization as this makes the decision making in the network consensual. Any and all disagreements are effectively settled by a simple majority consensus.
How do I get started with Bitcoin Mining
To get started as a bitcoin miner, first off, you need to get a mining hardware. This a called a Bitcoin ASIC(application-specified integrated circuits), a special form of hardware used specifically for mining bitcoins. You can purchase the hardware on Amazon. There are several types of hardware, so you can purchase based on your pocket and your needs. Then you need to get a bitcoin mining software. There are many programs out there that can be used for mining bitcoins and you just need to get one of them. Examples of such software are CGminer and BFGminer. You can check out information on the best mining software here.
Then you need to join a bitcoin mining pool. A bitcoin mining pool is a group of miners working together and pooling their resources together to solve a block and then share the rewards. You can mine bitcoins without joining a pool but you’ll probably never make any bitcoins for years of mining. A mining pool has more hardware and mining power and therefore can solve blocks much faster, so you get rewards on your investment faster. You can check p2pool for a fully decentralized pool. Other pools are Bitminter, and CK pool.
If you don’t have a bitcoin wallet previously, then you need to get one to receive the bitcoins you mine. There are several bitcoin wallet providers and you just need to pick one to get started. I personally recommend Blockchain.
After you’ve done all this, you are ready to start mining. Just set up your hardware, load your software, log in to your pool and start mining.
Is Bitcoin Mining Profitable?
Bitcoin mining is quite profitable if you do it properly. A person with a normal piece of hardware trying to mine alone will probably make nothing for years while a person who joins a pool and mines will make profits in a short time. It is not a get rich scheme as it involves a lot of expenses and hard work, but it is quite profitable.
So if you’ve got the interest, and the purchasing power, then you can venture into bitcoin mining. If you do it right, you’ll do well financially.
You might also want to see – Bitcoin Income Kit
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