Bitcoins are gaining huge fame and are becoming the first choice of many investors around the globe. For a layman, however, discussions about bitcoins are usually very intriguing and plunges him into oceans of curiosity as to how bitcoin can be earned. This article will help all those explorers out there who want to earn their own bitcoins. The very first way to get bitcoins is known as bitcoin mining. It’s the mechanism by which this digital currency is issued. Let me help you understand the concept of mining, starting with its definition.
What is Bitcoin mining? It’s the process by which transactions are verified and added to the public ledger, known as the blockchain, and also the means through which new bitcoins are released.
Bitcoin is a decentralized digital currency, which is both produced and held virtually. It can be produced by anyone who have access to the internet, specific computer programs and strong hardware. Unlike gold mining, bitcoin mining is done by solving mathematical problems or algorithms on the mining software. The first step involves finding and downloading the right mining software that should be compatible with your hard drive. You can then start solving the algorithms and get rewarded with bitcoins. The more you solve the algorithms, the more they become complex. Complex algorithms consume more time and need strong hardware to be solved.
Mining Pools
As the miners proceed with solving more and more alogrithms, they start becoming more complex and hard to solve. Therefore, miners mostly try to solve them in groups, commonly known as mining pools. These mining pools usually have people with mix of expertise. They work together to complete the work quickly and efficiently. When they get successful in solving the algorithm, they then distribute the bitcoins among themselves based on individual’s contribution. In pool mining, usually networks of computers are used to capitalize the power of software and hardware to the full. The earned bitcoins can be used for different purposes. One can trade them to get cash or can purchase goods and services. Mostly miners simply hold onto them to make profits anticipating the rise of prices.
Competition
Bitcoin network deliberately make the solutions difficult for every new algorithm to keep the competition high. If they don’t do it, all of the bitcoins will be easily mined within few minutes. This competition also results in time to time creation of high power hardwares especially designed for bitcoin mining.
Usual Bitcoin Mining
Usual bitcoin mining means the maintenance of the bitcoin mining hardware is done by the miner himself. Miner buys, accommodates and maintains set up himself, which is quite technical and costly. It also requires sufficient ventilation and proper cooling system for the set up.
Cloud Bitcoin Mining
In cloud bitcoin mining, the mining hardware is maintained and hosted by a bitcoin mining company. The miner opens an account on the company’s website and buys mining contract. He then immediately get access to the company’s software. In this case, miner doesn’t have to worry about the maintenance of bitcoin mining hardware.
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