What Is a Bit coin mining: How Does it Work, Proof
of Work, Mining Hardware and More
Table of Contents
What Is Bit coin mining in Block
chain?
Bit coin Profit and the Bit coin
Mining Profitability
View More
As of late March 2022, Bit coin
value hit the clocked in at $43,394.80 on the exchange market. This value is an
indication of the good tidings for the crypto currency. Over the years, there
has been such a growing interest in the Bit coin currency that its value has grown to
resemble that of the gold.
The future is promising for the Bit
coin miners and the enthusiasts, and it’s a potentially rewarding the
enterprise for anyone who wants to give it a go. However, let’s first take some
time to learn the basics about the Bit coin mining.
In brief
·
The block
chain ledger keeps growing as the transactions that have taken place in the
network are constantly added to it.
·
Transactions
in the block chain network are grouped into the blocks that are linked together
to form a chain of the blocks, hence block chain.
·
Block
chain transactions are stored in the chronological order marked by the timestamps
and the hash functions.
·
By this
virtue, the records stored in the block chain network are permanent and
immutable.
There are three ways through
which bit coin miners can acquire the bit coins. These are:
·
Purchasing
the bit coins on the exchange market
·
Accepting
the bit coin in exchange for the goods and services
·
Mining
new bit coins
Of these three, the bit coin
mining is perhaps the most exciting option as it sends miners on a path to the discovery.
There is a caveat. Bit coin mining can be a quite taxing as it requires a very
high computing power to solve the complex mathematical equations to verify the transactions
and add them to the block chain digital ledger.
Simplilearn’s video tutorial
explains the process of the Bit coin mining and the advantages of the Bit coin
over the traditional fiat currencies.
What Is Bit coin?
Bit coin is the first decentralized digital currency that allows the
peer-to-peer transfers without any intermediaries such as the banks,
governments, agents, or brokers, using the underlying technology of the block
chain. Anyone around the world on the network can transfer the Bit coins to
someone else on the network regardless of the geographic location; you just
need to open an account on the Bit coin network and have some Bit coins in it,
and then you can transfer those Bit coins. How do you get the Bit coins in your
account? You can either purchase them online or can mine them.
Bit coin can be used for the
online purchases and or as an investment instrument. Primarily it is used to
buy the goods and services.
Bit coin Advantages
Compared to the traditional fiat
currencies, assets can be transferred faster on the bit coin network. The
system also has lower transaction fees, because it is decentralized and there
are no intermediaries, and it is cryptographically secure—the identities of the sender and
the receiver are kept hidden, and it is an impossible to counterfeit or hack
the transactions. Plus, all the information is also available on a public
ledger, so anyone can view the transactions.
What Is Block chain?
As mentioned, block chain is the
underlying technology of the bit coin. Block chain is a public
distributed ledger in which the transactions are recorded in a chronological
order. Any record or transaction added to the block chain cannot be modified or
altered, meaning transactions are safe from the hacking. A block is the
smallest unit of the block chain, and it is a container that holds all the
transaction details. The block has four fields, or primary attributes:
1. Previous hash: This is an
attribute that stores the value of the hash of the previous block, and that's
how the blocks are linked to one another.
2. Data: This is the aggregated set
of the transactions included in this block—the set of the transactions that
were mined and validated and included in the block.
3. Nonce: In a “proof of work”
consensus algorithm, which a bit coin uses, the nonce is a random value used to
vary the output of the hash value. Every block is supposed to generate the hash
value, and the nonce is the parameter that is used to generate that hash value.
The proof of a work is the process of transaction verification done in the block
chain.
4. Hash: This is the value obtained
by passing the previous hash value, the data and the nonce through the SHA-256
algorithm; it is the digital signature of the block.
SHA-256 is a cryptographic hash
algorithm that produces a unique 256-bit alphanumeric hash value for the any
given input, and that is the unique feature of this cryptographic algorithm:
Whatever the input you give, it will always produce a 256-bit hash.
3 Concepts of Block chain
To understand the bit coin
mining, you have to first understand the three major concepts of the block
chain.
1. Public distributed ledger: A
distributed ledger is a record of all the transactions maintained in the block
chain network across the globe. In the network, the validation of the transactions
is done by the bit coin users.
2. SHA-256: Block chain prevents
unauthorized access by using a hash function called SHA-256 to ensure that the
blocks are kept secure. They are digitally signed. Their hash value which is,
once generated cannot be altered. SHA-256 takes an input string of any size and
returns a fixed 256-bit of output, and it is a one-way function—you cannot
derive the reverse of the input but reverse it fully from the output (what you
have generated).
3. Proof of work: In the block
chain mining, miners validate transactions by solving a difficult mathematical
puzzle called proof of work. To do that, the primary objective of the miner is
to determine in the nonce value, and
that nonce value is the mathematical puzzle that the miners are required to
solve and to get generate a hash that is less than the target defined by the
network for a particular block.
What Is Bit coin Mining in Block chain?
Bit coin mining is the process by
which the Bit coin transactions are validated digitally on the Bit coin network
and added to the block chain ledger. It is done by solving the complex
cryptographic hash puzzles to verify the blocks of transactions that are
updated on the decentralized block chain ledger. Solving these puzzles requires
a powerful computing power and sophisticated equipment. In return, the miners
are rewarded with the Bit coin, which is then released into a circulation hence
the name is Bit coin mining.
Bit coin Profit and the Bit coin
Mining Profitability
Bit coin Profit is an automated
crypto robot that helps to trade the Bit coins and the other crypto
currencies to earn profit. It uses an AI algorithm to identify the trading
opportunities in the crypto market that can automatically close and open your
trade, saving your time and the manual intervention during trading. It claims
that around 85% of its trades produce profits in the normal market conditions.
However, the technical knowledge is also required to calculate the profit
generated through the Bit coin mining process.
Talking about the actual Bit coin
profit – and the real money making - it depends upon the cost of the AISC
hardware, electricity consumption, and the effectiveness of the mining software.
Bit coin Mining profitability has decreased in recent times compared to the
previous years because of the rise in electricity costs, costlier hardware,
difficulty in mining due to an increase in the competition, and a decrease in
the Bit coin prices. Earlier, Bit coin Mining was initiated using CPUs and easy
AI Algorithms, making it profitable and less costly.
Bit coin vs. Traditional
Currencies
While both the Bit coin and the
traditional currency are similar in that both are a store of the value, they
differ in many ways. First things first, Bit coin is the first and a most
recognized crypto currency - a digital currency that is secured by the cryptography.
Traditional currency, also referred to as fiat money, is a government-issued
and a regulated currency
No comments:
Post a Comment