A new wave of miners is participating in a cryptocurrency gold rush. Pack up your pick axe and pull up your Levi’s. We’re going to give you a quick overview of bitcoin mining.
Can you conjure up an image of the miners of old? For most of us, it’s the vision of a grizzled man, dirty from a day’s work, wearing a dusty beard, and tattered blue jeans. The 49ers settled the west with a dream of striking gold and setting themselves up for a life of luxury.
Long, hard days in the mines and panning the rivers sometimes netted a rock worth the while. But for most, mining was an exercise in futility. The difference between great riches and disappointing failure was often the result of where you staked your claim.
Nowadays a new type of mining is sparking a gold rush for the 21st century. Bitcoin mining is making money for those with the muscle – in the form of raw computer power – to mold transactions into blocks on the blockchain.
If you spend any time in the blockchain and cryptocurrency space, you need to know what bitcoin mining is and how it is done. To get you started, we offer up this 101-level explanation.
Bitcoin Mining: The What
About every 10 minutes a new block is created on the bitcoin blockchain. The process of building this block and adding it to the chain is called mining. Popular thought posits that the term “mining” came into use because bitcoin is similar to gold. That is, it is of a limited quantity, and it “exists out of site” until someone goes to the effort to collect it.
Bitcoin Mining: The How
The whole process of mining is orchestrated by “nodes” or computers. These nodes are designed specifically to work with other computers on a decentralized network to confirm bitcoin transactions. The nodes search for outstanding transactions and group them into a block by solving a complicated mathematical puzzle that is part of the bitcoin. Once this problem is solved, it is added into the block and ready for the next block to be attached to it.
Bitcoin Mining: The Who
Again, the term “miner” brings to mind the Levi clad, long bearded 49er. The “who” at the center of bitcoin mining, however, is the high-powered computer. While the processing powerhouses require humans with a little know-how, the computers really are the star of the show.
Remember, this is just an overview of bitcoin mining. Many other cryptocurrencies are minable-but not all-and some are more easily mined than others.
As always, continue to follow Iowa Blockchain as we dig deeper (mining pun fully intended) on other forms of mining in the weeks to come!