What You Should Know About Bitcoin Mining
Although the price of bitcoin is dropping right, a lot of people are still interested in it. Cryptocurrencies can still change the way we handle money. It is useful to know a few things about these alternative currencies.
One of the things which you might have heard before is bitcoin mining. So. what is bitcoin mining and is it something that you can use to earn money?
Before we discuss what bitcoin mining is. Let’s backtrack on what cryptocurrencies are.
A cryptocurrency is a form of exchange that is based on the internet. Unlike traditional currencies, cryptocurrencies are not controlled by governments, central banks, or banks. The secret of cryptocurrency lies in the technology behind it. This technology called blockchain means that there is no single entity in charge of the currency. Each transaction is confirmed by all the computers that are part of the network.
What Is Bitcoin Mining
Now we can discuss Bitcoin mining.
Don’t be mislead by the term. There is no physical work involved, nor are there any miners who work to achieve it. Bitcoin mining in the simplest of terms is the process of adding more bitcoin to the system of the digital currency. This mining process is performed by computers that solve highly complex mathematical problems.
By letting your hardware perform mining, you become part of the bitcoin network. Before you can earn a bitcoin, two things must happen:
- You have to verify 1 megabyte worth of transactions.
- Your computer must solve a complex mathematical problem. The miners are actually guessing one 64-digit hexadecimal number. The chance of your computer doing that, even with its amazing power of computation is small, very small.
This is why mining requires sophisticated computer setups. As more miners are added onto the network, the difficulty is increased.
Now, you might still be scratching your head right now because that doesn’t make any sense. Don’t worry. You’re not alone in feeling that. The mining process is kind of complicated. Keep in mind that we are putting into words a process that is performed by a computer in seconds.
What’s important to remember is that mining is the process by which hardware can be used to earn bitcoin.
So How Can Your Computer Compete?
The short answer is that it cannot.
Like in actual mining where most of the output comes from large mining companies, most of the bitcoin mining now is done by mining pools. These are miners that have combined their calculating power which makes them faster and more efficient. They also used specifically designed computers that are way more efficient than your desktop.
In short, if you are planning on using your desktop or if you have a specifically designed computer for mining but you’re alone, it’s not worth it. The cost of performing the mining will far exceed the value that you can get. If you are interested in bitcoin then you might be better off buying it and treating it as an investment. Or you can try the other cryptocurrencies which are just starting out.
If you were hoping that bitcoin mining was the get rich quick scheme that you were hoping for, then you’re mistaken. It takes a great deal of work, at least on your computer’s part.