What is Bitcoin?
This is a digital currency that offers users a simple way of exchanging money and at a lower cost than the traditional legal tender. It is a type of Cryptocurrency where balances are managed using public and private keys. The keys are usually linked via a mathematical encryption algorithm. Public key acts as a bank account number and enables you to receive or send Bitcoin to others while the private key is used to authorize transactions. Created in 2009 by Satoshi Nakamoto, Bitcoin is operated by a decentralized authority which means it’s not backed by any government or bank. Although it’s not a legal tender, Bitcoin has become popular thus triggering the launch of other crypto currencies around the world. The currency utilizes peer to peer technology in order to ensure instant payments. What is Bitcoin mining? This is the process where bitcoins are mined and released into circulation mainly the public ledger which is also referred to as the block chain. The block reward is where every new Bitcoin is released with each mined block where it’s halved every 210,000 blocks or after every 4 years. In 2009, the block reward began at 50 and by 2014, it was 25. As years go by, it will continue to decrease. When Bitcoins were first mined, it was much easier. All one needed is access to the internet and the right hardware. When it came to the hardware, users had to assemble processors from desktop computers or GPUs which were more effective than the former. This resulted in an ASIC (Application Specific Integrated Circuit) which were first released in 2013. Today, Bitcoin mining has become very competitive even when using older ASICs because the energy consumed is greater than generated revenue. How to mine bitcoins? The process of mining bitcoins is resource intensive and difficult. This is done to ensure that the number of blocks mined remains steady. It is important to know that blocks mined must contain proof of work. Proof of work refers to a piece of data that is problematic to generate and it’s done to fulfill a set of requirements. This is usually a random process in Bitcoin mining that has a low probability which means miners will endure trial and error before a valid one is generated. The hashcash proof of work is commonly used. Proof of work is usually verified via Bitcoin nodes every time a new block is received. The main purpose of Bitcoin mining is to enable the nodes to attain a secure, tamper resistant consensus. That is why the process is used to introduce the Cryptocurrency into the system. Once mining has occurred, the miners are paid transaction fees together with a subsidy for the newly created coins. Every full node on the network is stored as a block chain that contains blocks validated by the node. If there are many nodes on the network with the same blocks, they are said to be in a consensus. Problems encountered with Bitcoin mining a. Mining Bitcoin yourself is expensive When Bitcoin was introduced in 2009, it was easy to mine because all one needed was ASIC hardware and access to the internet. Today, the equipment has become unaffordable to individuals especially when it comes to purchasing and operating the machine. b. Equipment needed is a lot Although miners require ASIC hardware to mine, the number of machines needed to set up an efficient mining operation is a lot. This is expensive for someone who wants a small operation. c. Solving the puzzle is not easy Yes, mining is not as simple as you may think. The machines must solve puzzles to mine bitcoins. The good news is that there is an answer for the above problems – cloud mining. What is cloud mining? This is the process where mining of Bitcoin is provided as a service which means it happens on the cloud. Individuals don’t have to incur the costs of purchasing or setting up the equipment. This is because mining rigs have already been assembled in large data centers. How it works Data centers located around the world have been set up with mining rigs which actually perform the mining of bitcoins. As highly efficient machines, they are designed to mine cryptocurrencies at an affordable rate. The machines are usually connected as pools and you can select which pool to connect to. This enables you to locate profitable combinations. Once mining is successful, the Cryptocurrency is distributed among customers including you and it depends with one’ share. One of the best cloud mining companies in the world is Genesis Mining. Its data centers are located in Iceland because of cheap electricity thus reducing the costs of operating the mining rigs. Final Thoughts At the time of writing, the price for 1 BTC was $3939.20 which tells you that Bitcoin is one of the most valuable Cryptocurrency in the world. Investing in it today will ensure that you get to reap a lot of rewards. One of the best ways of acquiring Bitcoin whether to spend or make instant payment is through cloud mining. Cloud mining has been identified as the best solution to acquire bitcoins. One of the best companies that allow you to cloud mine Bitcoin is Genesis Mining. It has data centers located in Iceland. Thanks to available cheaper electricity, Genesis Mining runs the mining rigs efficiently. As a result, you are able to receive your Bitcoins within no time. Learn more about Genesis Mining. |