What is Bitcoin Mining?
Where Do Bitcoins Come From? 🪙
Have you ever wondered where bitcoins come from? You can't print them like regular money. Instead, people "mine" them using computers. A miner is just a person who runs a special program on their computer. It's called mining because, like gold or diamonds, there's only a certain amount of bitcoin available. In total, there will only ever be 21 million bitcoins.
How Mining Works
To get these bitcoins, miners have their computers solve really hard math problems. It takes a lot of computer power, kind of like how it takes a lot of energy to dig for gold. When a computer solves a problem, the miner is rewarded with new bitcoins. But miners do another important job too! They use their computers to check all the bitcoin transactions and make sure no one is cheating. When more miners are working, it means everything gets checked faster and the system is safer from fraud.
Miners get paid for their hard work in two ways:
They earn brand new bitcoins when their computer solves a math problem.
They get a small fee for helping to check and approve transactions.
Why Mining Is So Hard
You might think this sounds like an easy way to make money, but it's gotten very difficult. The creator of Bitcoin wanted the number of new bitcoins to stay steady, no matter how many people were mining. So, as more people start mining, the math problems get harder and harder to solve.
Back in 2009, you could mine bitcoins with a regular home computer. Today, it would take a normal computer almost 100 years to mine just one! Because of this, people invented super-powerful computers called ASIC miners that are built just for mining bitcoin.
Even with these powerful computers, it's almost impossible to mine alone. That's why miners team up in mining pools. A mining pool is a group of miners who all work together on the same problems. When they solve one, they split the reward based on how much work each person did.
So, that’s how new bitcoins are created—all thanks to the hard work of miners!
- This is a nice introductory video to bitcoin created by a YouTuber called 99 BItcoins.
Transcript
0:00
You may ask yourself “where do Bitcoins come from ?”
0:04
Bitcoins aren’t printed out like traditional money,
0:06
they are mined out of the system.
0:08
A miner is just a person with a computer that runs a mining program on it.
0:12
The reason it’s called mining is because:
0:14
Just like any other natural resource, there is a finite amount of Bitcoins.
0:19
The maximum amount of Bitcoins that can be generated is 21 million.
0:23
Until today over 12 million Bitcoins were mined.
0:26
Just like real world mining,
0:28
you need to invest energy in order to extract these Bitcoins.
0:31
These miner’s computer needs to solve complex mathematical problems,
0:34
and once it solves them,
0:36
new Bitcoins are generated and awarded to him.
0:39
But miners don’t just generate new Bitcoins.
0:41
They also use their computers to verify transactions and prevent fraud.
0:45
So more miners means faster transaction verifications
0:49
and less fraud.
0:50
That’s why we want to compensate miners for their hard work.
0:53
When verifying a transaction
0:55
the miner gets a small fee out of that transaction for his work.
0:58
So Miners get paid twice;
1:01
once for verifying the transactions
1:02
and again when they successfully generate new Bitcoins.
1:06
Sounds profitable?
1:07
Well, not so fast.
1:09
Satoshi, the guy who invented Bitcoin,
1:11
wanted the number of Bitcoins that were mined each time
1:13
to remain constant,
1:15
no matter how many miners come aboard.
1:17
That’s why the difficulty of mining increases as more miners join the network.
1:22
In 2009 you could mine 200 Bitcoins with your personal computer at home.
1:26
In 2014 it will take you about 98 years to mine just 1…
1:31
That’s why ASIC miners were invented.
1:34
Super powerful computers designed just for mining Bitcoins.
1:38
But since so many miners have joined in the past few years
1:41
it’s still almost impossible to mine alone.
1:44
To solve this problem mining pools were invented.
1:47
Groups of miners formed together to deal with the growing difficulty of Bitcoin mining.
1:51
Each miner gets paid for his relative share of the work.
1:54
So that’s how Bitcoins are born,
1:56
through miners.
1:57
For more information visit 99Bitcoins.com
2:00
A non-technical blog about Bitcoin and cryptocurrency.
From 99Bitcoins
How
Posted Using INLEO
Nice explanation of bitcoin mining
Nice written summary and you added transcvript too! Thanks
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