Bitcoin operates as a peer to peer network. This means everyone who uses bitcoin is a tiny fraction of the bank of bitcoin. But 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 or distribute the currency and also provides an incentive for more people to mine, and since miners are required to ‘approve’ bitcoin transactions, more miners = a more secure network.
The bitcoin network automatically changes the difficulty of the math problem depending on how fast they are being solved. In the early days bitcoin miners used their basic processors in their computers to solve these problems. Soon miners discovered that graphics cards (the type used for gaming) were much beter suited to solving this kind of mathematical problem faster, but while being faster graphics cards require a lot more power or electricity and also generate a lot more heat.
The first commercial bitcoin mining products included chips which were specifically re-programmed for mining bitcoin. While these chips were even faster, they were still power hungry. ASIC (application specific integrated circuit chips) are designed specifically for bitcoin mining. ASIC technology has made bitcoin mining even faster while using less power.
As the popularity of bitcoin increases more miners join the network making it more difficult for individuals to solve the math problems. To overcome this, miners have developed a way to work together in ‘pools’. Pools of miners find solutions faster than their individual members. Each miner is rewarded proportionately to the amount of work he or she provides.
Mining Is An Important and Integral Part Of Bitcoin
Bitcoin mining ensures fairness while keeping the bitcoin network stable and secure. In the beginning individuals could use their computers to solve the mathematical problems and be rewarded with bitcoin, but as bitcoin has increased in popularity, value and the number of miners has increased, so the software required to mine and perform these complex mathematical problems has become much more complex and expensive and the number of people mining also makes it harder to make bitcoins from mining. The solution as mentioned is Bitcoin Mining Pools. If you would like more information on bitcoin mining, and how you can start mining your own bitcoin, click the button below now.