There is always a system to perform a particular work, and mining is also a system for the bitcoin transactions to validate. Third parties help us send money from one account to another and charge some fees for providing the transaction service. Some domestic and international intermediaries such as Google Pay, PhonePe, PayPal and online banking systems provide us with that system to transfer fiat cash from one account to another. Every intermediate is legally registered under the policies and rules of the government, and they have to give the record when required. Similarly, the mining process of bitcoin validates the approach of bitcoin without the help of intermediaries. Still, you would think that if there are no intermediaries, how the bitcoin transactions process works that you will get the answer in this article. Bitiq.org is a good place to go if you want to learn more about bitcoin trading.
What is bitcoin mining?
Bitcoin mining is similar to mining gold and other metal but using computers, not the earth. Since there are no third parties involved, the people worldwide who have the mining resources validate the bitcoin transactions for the smooth function of the bitcoin system. In simple words, Bitcoin mining is validating or solving complex mathematical equations or algorithms in programming languages by using computation powers to broadcast a transaction on the blockchain platform.
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What is the objective of bitcoin mining?
There are some bitcoin mining objectives or purposes given below:-
- The first objective of bitcoin mining is to mine the bitcoin or produce bitcoin on the blockchain network to control the supply and value.
- There will be fewer transactional fees or charges to remove the intermediaries of bitcoin or other cryptocurrencies.
- Ensure that the proper transactions are happening on the blockchain network or platform.
- To make the cryptocurrency or bitcoin a global currency.
- To give the rewards to the node owners (miners) for doing their work to validate the transactions and to make the blockchain a fully secured network.
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What is the process of bitcoin mining?
There are the following step by step processes of bitcoin mining to understand in a clear way given below:-
- Suppose you send one bitcoin from your bitcoin wallet to your friend Mr X’s wallet after receiving the public address or QR code.
- He will not receive the bitcoin until the miners verify the transaction you just sent now, and it will take ten minutes to confirm.
- The one bitcoin you sent will be broadcast on the blockchain platform or transferred to all the nodes working behind the blockchain network.
- The people working behind the blockchain network (miners) will clear up the transaction by resolving the complicated mathematical algorithms in the programming language. Then, they will collect all the inputs and validate them if the transaction is not spent previously (double spending), and if not paid yet, the inputs go to the blocks.
- Then the block is validated by the other miners to broadcast on the blockchain platform. And if the block is disclosed on the network, that means the transaction is successfully validated and transferred from your wallet to your friend’s wallet. So the one bitcoin will start appearing in the wallet of your friend.
Bitcoin mining rewards
The persons working to solve the bitcoin transactions are not social servitors since they are also doing it to earn money. The fees a bitcoin user pays at the time of a bitcoin transaction go to the bitcoin miner who validates that user’s transaction. The miners are the people who earn a more considerable amount of money through this method than other methods of making bitcoin such as investing, consulting, trading, eCommerce integration etc. In the initial stage of bitcoin, every miner who solved the bitcoin transaction successfully got twenty-five BTC because the competition was low and algorithms were easy to solve. There was also a need for less computational power. With time, competition among the miners starts increasing, and algorithms also become complex. The reward for solving a bitcoin block starts halving after every four years, and the current reward for bitcoin mining is 6.25 BTC which is enough for a bitcoin miner now. But in 2024, the price of bitcoin will be 3.125 bitcoin and so on.
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From the above information, it is clear that bitcoin mining is the system for decentralized transactions validation because no third parties or intermediaries are working to manage or control the transactions. The people who use their resources for resolving the blocks are called miners, and they also get rewarded for contributing their efforts, time and resources(computers, electricity).