Bitcoin Mining Isn’t as Daunting as It First Seems
Bitcoin mining can seem like a highly complex system to get your head around at times. There are many factors to take in when getting into the industry, and many people are put off by the complexity of it. Some of the terminology is new to most people, and of course the profitability of mining Bitcoin.
If you are interested and you’re not sure, allow me to clear up some of the mining process and how it works. I’ll explain some of the mining jargon that should give you a good foundation to start after reading.
Bitcoin a Decentralized Money
Bitcoin as a digital money isn’t revolutionary. There were many attempts before it, and we can go back as far as the 1980s when a digital payments system was created in the Netherlands to allow facilitate a safe payment method for truck drivers, who were getting caught up in late night robberies.
Then we had the DigiCash attempt that introduced cryptography to digital money, but again this attempt ultimately failed. There have been several others since, and they all failed because they had two major flaws: centralized and/or double spending problem.
On 3rd January 2009 Satoshi Nalamoto gave Bitcoin to the world. A true decentralized, peer-to-peer digital money, that combatted the double spend problem with a timestamp mechanism.
Basically, every transaction that takes place on the Bitcoin ledger is validated by miners and nodes, who all have to be in unison for the transactions to be added into the block and the block to be added to the blockchain. This is known as proof of work (PoW).
PoW must have the miners and nodes processing the information picked up by the network. They are the ones validating and securing everything, and without them Bitcoin couldn’t work.