Mining

New Bitcoin are in a competitive and decentralized process, which is called “mining”. This process implies that people receive compensation from the network for their services. Anyone who is engaged in mining, in fact processes transactions and provides network security by using specialized equipment, and for that gets new bitcoins.

Bitcoin protocol is designed so that the new bitcoins generated at a fixed rate. This makes bitcoin mining a very competitive business. When a larger number of earners joins the network, it becomes harder and harder to make a profit, and miners have to look for ways to reduce their operating costs. No central authority or developer, has no authority to, control or manipulate the system to increase their income. Each bitcoin site in the world will reject any transaction that is not subject to the rules followed by the entire system.

Bitcoin created with constantly reduced and predictable rate. The number of new bitcoins generated each year is automatically reduced by half, until production stops completely, and the total number of bitcoins issued no equals 21 million bitcoins. From this point, bitcoin miners will probably be maintained only a small stream of commissions for the transaction.

Some of those who supported the project before the other, have a large amount of bitcoins because they took all the risks and invested time and resources in an untested technology, which almost no one used, and which was much more difficult to adequately protect. Many of them have spent a huge amount of bitcoins, before they become so valuable, or bought a small number of them and earn more profits. There is no guarantee that bitcoins further rise or fall. This can be compared with investing in a startup, which can either purchase cost, thanks to its usefulness and popularity, or it can burn completely. Bitcoin has not yet grown out of short pants, it was designed with a very long-term prospect; it is difficult to imagine how it might be less biased to those who supported him before. In addition, today’s users, too, can be “those who supported him before,” for those who will come tomorrow.

Mining is a process, when you use computer resources to process transactions, network security, and the synchronization status of all users in the system. Mining can be perceived as data center Bitcoin, except that it was designed to be fully decentralized, with the participants may be in any country, and no one has control over the network. This process is called “mining” by analogy with the extraction of gold, because it is also a temporary mechanism used for the production of new bitcoins. However, unlike gold mining bitcoin mining generates a reward in exchange for essential services required for network security payments. Mining will still be needed even after the last bitcoin will be released.

Anyone can become a bitcoin miner running software on specialized equipment. Equipment for mining listens broadcast transaction through a decentralized ad hoc network and performs the necessary tasks for the processing and approval of these transactions. Bitcoin miners do this work because they can earn a commission from the transaction that pay users to more quickly commit the transaction, and the newly created bitcoins, which are produced according to the same formula. That new transactions have been confirmed, they should be included in the block, along with a mathematical justification of the work done. This evidence is very difficult to establish because there is no other way to do it other than trying to millions of calculations per second. Miner make these calculations, until their unit is not accepted by the system, and they receive a reward for it.

When more people start mining, the complexity of finding a new unit automatically increases the network, in order to ensure that the speed of finding a block of an average of 10 minutes. As a result, mining – a very competitive business, where no miner can control what is included in the chain of blocks. Proof of this work also depends on the previous block, to ensure that the chronological order of blocks in a chain. This makes it exponentially more difficult to reverse the previous transaction, because it would require translation of the work done for all subsequent blocks. When two blocks appear in one and the same time, miners working on the first block, which they have received, but switched to the longest chain block as the next block is found. This allows miner to maintain and protect the global consensus based on computing power.
Bitcoin miners can not cheat to increase their earnings, they can not make fraudulent transactions that could damage the Bitcoin network, because all bitcoin nodes reject any unit which contains incorrect information, according to the rules bitcoin protocol. Therefore, the network is secure, even if not all bitcoin miner can be trusted.

Energy use for the payment system and to ensure its security can not be called a waste. As with any other payment systems, the use of bitcoin entails operational costs. Services, that are necessary for the operation of existing financial institutions such as banks, credit cards, and transport for the collection, also used a lot of energy. However, full amount of power consumed for these services is not obvious and can not be easily measured.

Bitcoin Mining is designed so that over time it will become more refined, with specialized equipment, consume less energy, and its operating costs should be proportional to demand. When bitcoin mining becomes more competitive and less profitable, some miners exit business. In addition, all of the energy consumed in the mining somehow converted into heat, and the most successful will be those miners, who will also use this heat for something else. Optimized network of mining, is the one that does not consume any additional energy.

Mining creates a semblance of competitive lottery, which complicates the possibility of someone consistently adding new blocks in the transaction chain blocks. This protects the neutral network without giving someone one block any transaction. It also prevents the cancellation of someone’s transactions made previously. Mining makes it exponentially more difficult to reverse the previous transaction, because it would require translation of the work done for all units subsequent to this transaction.

In the early days of Bitcoin, anyone could find a new block using the most common computer. As more and more people do mining, the complexity of finding the new units has grown and the only efficient way of mining today – is the use of specialized equipment. You can go to BitcoinMining.com for more information.

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