Seven Things To Know About Bitcoin Mining
Here are seven fast facts about Bitcoin Mining.
- Bitcoin Mining happens digitally. The ‘miners’ - not real people - are a decentralized network of computers that are constantly connected and recording transactions in a ledger for posterity.
- New units of bitcoin are created using a process called mining and no company, country, or third party is in control.
- Bitcoin mining relies on a network of participants who record transactions on the blockchain through the mining process. Transactions are recorded publicly on a ledger which is called the blockchain - and every single individual transaction is tracked to create a log.
- Miners using fast computers try random numbers in different sequences in many many different variations to record the transactions that take place on the network. As a reward successful miners receive a certain number of bitcoins per block as well as transaction fees from network participants.
- Mining can be technical and complex. On the blockchain there is a negative feedback mechanism which means that the more people participate, the more the difficulty is raised.
- Bitcoin also tries to maintain the time to build blocks to be around 10 minutes. The first reference to having 10 minutes as the bitcoin block time was referred to in the original Satoshi research paper.
- Miners often form groups where they pool their resources and split the winnings, just like groups of people do for lottery pools, whilst this might increase the chances of some success it’s often done to ensure that the miners have a more recurring revenue flow of smaller payments received more frequently.
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