Bitcoin mining - how does it work?
Hello. Could somebody explain to me how bitcoin mining works? I heard something about consensus algorithm, but it's simply dark magic to me.
Hello. Could somebody explain to me how bitcoin mining works? I heard something about consensus algorithm, but it's simply dark magic to me.
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2 answers
Crypto mining involves approving new blocks and attaching them to an existing chain of blocks. A block is a place where new coins are issued and subsequent transactions are approved. The process of mining is handled by so-called miners. Mining is most often carried out by means of appropriately strong computers - excavators. The process of mining is usually based on the Proof-of-Work (PoW) consensus algorithm or its alternative - Proof-of-Stake (PoS).
In order to dig a new block with the Proof-of-Work method, a specific cryptographic problem must be solved. In the case of Bitcoin, the problem is to find a sequence of characters, the so-called hash, which meets the relevant equation. The miners' task is to generate a baseline value, consisting of the hash of the previous block and a random number (nonce). The output value must be smaller than the target value set by the protocol. The miner, who will generate an appropriate solution, announces it in the network. The other participants check the correctness of the found hash. If the solution is confirmed, the block is considered excavated. Then the miner who has generated the hash receives a reward in the form of a specific number of cryptocurrency. In the case of the Proof-of-Stake method, the extraction of coins depends on many factors, one of which is the state of the crypto wallet. The more coins you keep on your wallet, the greater the chance to get more cryptocurrencies. However, the amount of coins is not a decisive element in confirming the transaction. Other factors, including random ones, are also important. Such solution protects against creating a monopoly. Mining by PoS method, does not require investment in specialized equipment. For mining crypto an ordinary computer is enough. On the hard disk you should install a wallet that contains the whole chain of blocks, that is, all transactions from the beginning of the existence of a given coin. When the wallet is ready for operation, you should pour coins on it and start mining. At all times of the mining, the computer must be running and connected to the Internet.
Crypto mining involves approving new blocks and attaching them to an existing chain of blocks. A block is a place where new coins are issued and subsequent transactions are approved. The process of mining is handled by so-called miners. Mining is most often carried out by means of appropriately strong computers - excavators. The process of mining is usually based on the Proof-of-Work (PoW) consensus algorithm or its alternative - Proof-of-Stake (PoS).
In order to dig a new block with the Proof-of-Work method, a specific cryptographic problem must be solved. In the case of Bitcoin, the problem is to find a sequence of characters, the so-called hash, which meets the relevant equation. The miners' task is to generate a baseline value, consisting of the hash of the previous block and a random number (nonce). The output value must be smaller than the target value set by the protocol. The miner, who will generate an appropriate solution, announces it in the network. The other participants check the correctness of the found hash. If the solution is confirmed, the block is considered excavated. Then the miner who has generated the hash receives a reward in the form of a specific number of cryptocurrency. In the case of the Proof-of-Stake method, the extraction of coins depends on many factors, one of which is the state of the crypto wallet. The more coins you keep on your wallet, the greater the chance to get more cryptocurrencies. However, the amount of coins is not a decisive element in confirming the transaction. Other factors, including random ones, are also important. Such solution protects against creating a monopoly. Mining by PoS method, does not require investment in specialized equipment. For mining crypto an ordinary computer is enough. On the hard disk you should install a wallet that contains the whole chain of blocks, that is, all transactions from the beginning of the existence of a given coin. When the wallet is ready for operation, you should pour coins on it and start mining. At all times of the mining, the computer must be running and connected to the Internet.
Bitcoin mining is the process of adding transaction records to Bitcoin's public ledger of past transactions or blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The main purpose of mining is to confirm transactions in a decentralized manner. By confirming transactions, miners are helping to prevent double-spending and securing the network. Miners solve complex mathematical problems to create a new block in the blockchain. This process requires a lot of computational power and energy. The consensus algorithm used in Bitcoin mining is called Proof of Work. It requires miners to solve complex mathematical puzzles to find a new block. Once a miner finds a solution, they broadcast it to the network for validation. Other miners then validate the solution, and if it is correct, the new block is added to the blockchain. Overall, Bitcoin mining is essential for maintaining the network and securing transactions. It is a competitive process that rewards miners with newly minted bitcoins for their efforts.
Bitcoin mining is the process of adding transaction records to Bitcoin's public ledger of past transactions or blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The main purpose of mining is to confirm transactions in a decentralized manner. By confirming transactions, miners are helping to prevent double-spending and securing the network. Miners solve complex mathematical problems to create a new block in the blockchain. This process requires a lot of computational power and energy. The consensus algorithm used in Bitcoin mining is called Proof of Work. It requires miners to solve complex mathematical puzzles to find a new block. Once a miner finds a solution, they broadcast it to the network for validation. Other miners then validate the solution, and if it is correct, the new block is added to the blockchain. Overall, Bitcoin mining is essential for maintaining the network and securing transactions. It is a competitive process that rewards miners with newly minted bitcoins for their efforts.