How to mine Bitcoin?
Mining is a process of maintaining the block chain, after which the people that engage in such are rewarded with new Bitcoins and transaction fees. Miners are all around the world, they ensure the processing of payments after the verification of all the transaction and they are considered valid and added to the block chain. Those who process payments are rewarded with 25 Bitcoins as of 2014 for a block chain. You must conclude some transactions which are known as Coinbase before claiming the reward. The Bitcoins in circulation may be tracked with the record of the transaction in Coinbase. In every four years the Bitcoin protocol makes specification that the reward for adding a block will be shared into two, though it may be cancelled when the 21 million Bitcoins limit is reached.
It is not mandatory to pay for transaction fees but it might speed up your transaction process. The competition in Mining has increased over the recent years, and it has been easier when the new technology has been introduced. The mining hardware that is efficient and uses custom design application of integrated circuits, which is outstanding and it is better that CPU and consumes less power. The newly created machines for the purpose of Bitcoin mining makes you earn enough to cover the cost of electricity utilized in carrying out all the processes.
HOW MINING HAPPENS
There are transactions of Bitcoins over the internet from one person to another, but you have to keep track of records of all the trading or else it will be hard to find those who had paid. The network of Bitcoin makes it easy in collecting data of transactions known as block. The miners can then check through the transactions and transfer it to the general ledger.
MAKING HASH OF MINING
The general ledger contains a long description of blocks which is referred to as block chain. One has to count on the general ledger, and all the things are made digitally. When creating a block transaction, it is subjected to some process by the miners. The information would be taken in the block, whereby a mathematical formula is applied, changing the whole data into a shorter and random sequence which is classified as hash. It is saved in the block at the conclusion of the block chain. The hashes are easily produced from the collection of block chain data. The whole part of the hash is unique and the status can be uttered if one of the Bitcoin blocks is changed. Every of the hash is generated from the block before turning to a digital version of wax seal. It makes the arrangement of the block legal and reducing the risk of hacking.
It is used to confirm the transactions of Bitcoin address through network anytime. The block chain contains the new block of transaction and creates a long list of the whole transactions that has been made in the network of Bitcoin. If a fake transaction is tried by uttering a block that had been stored in the block chain before, it will change the hash of the blocks. Block authentication may be managed using the hash function which if the hash is different from the one stored in the block chain; it will be classed as fake. Every part of the block hash is used to aid the production of the following block in the chain; blocks changed can also affect the next one.
There is competition for miners to seal off, with the use of written software to mine blocks in a specific manner. When hash is created successfully, they are rewarded with 25 Bitcoins, the block chain updates, and create awareness for everyone. It is easy to produce hash from set of data causing little problem. It must be changed to a difficult status by the Bitcoin network, or else people will start hashing transaction blocks overtime and may result in mining the whole Bitcoins in few minutes. Old hash is not accepted by Bitcoin protocol. It states that a block hash must be in a structure, containing 0 numbers at first. You do not have to change the transaction data on a block as a miner, but data must be changed in creating new hash. This is done by a random piece of data called”Nonce”. It is combined with the transaction data in producing hash. The nonce can be changed if it does not suit the format and the hashing starts over again. It might take many attempts to find a nonce that suit, which can be tried by all the miners on the network attempting to do that.
The odds of individual in winning the reward for adding a block to the block chain falls with the numbers of miners increasing. There are now many miners that are involved, but the reward can only be transferred to one Bitcoin address. There have been organization mining tools started in 2014, making it easy to share rewards among participants and reducing the risks encountered.