What Is Mining?
Bitcoin consists of three parts; the first part is the instructions which are also called the protocol that defines how the network should operate. The Second is the software project that implements that protocol. The last part is the network of computers and devices running software that manages the Bitcoin currency. Mining is the part that is defined in the protocol and transferred to the software for implementation.
This is an important element in how the Bitcoin network is managed. Mining prevents double-spending, verifies transactions, creates the money supply and collects transaction fees. Mining also piles tons of processing power on top of the past transaction to protect the network verification of transactions done via mining. This is done by evaluating them against the transactions that occurred previously. Transactions cannot spend bitcoins that were spent before or bitcoins that do not exist. They must send bitcoins to validated addresses and comply with every rule defined by the protocol.
Having a frequency that is targeted after every 10 minutes, mining produces new blocks from the latest transactions and creates some bitcoins defined by the current block reward (50 BTC until 2012). Miners can also verify blocks produced by other miners to allow the entire network to continue building on the blockchain.
WHY BEGIN MINING?
Many people start mining as a side operation in conjunction with their current occupation. For instance, Bitcoin mining is similar to other grid computing projects that have evolved because they are fun and give an opportunity to solve a big problem. If you look at the case of Folding home, a distributed computing project focused on studying protein folding; users contribute their computer’s processing power to help scientists understand protein in foods. Teams and Donors compete and cooperate to see who can assist the project the most. By mining cryptocurrency, you help to solve the problem of creating a payment network that does not rely on a central governing body.
People who are involved in technology continuously innovate and realize it is important to be informed as new technologies are developed. Bitcoin is a new combination of several novel technologies like cryptography, peer-to-peer networks, distributed databases and some users mine bitcoins to develop technological experience.
Bitcoin functions as a currency and mining it is taken to be a business process where some miners engage in it for profit. It is not an easy business because Bitcoin prices are volatile in nature and investment costs for a mining business easily rise to thousands of dollars. If you can operate efficiently, you may want to make a trial at mining for profit, but be sure to research before making any big purchases.
To get bitcoins, one has to mine, and this appeals to those who might want to obtain bitcoins consistently without using services like exchanges or by selling any good they produce or service they perform as a profession. Another advantage is the anonymity provided. If you solve a block and you connect to the Bitcoin network using Tor (The Onion Router), mining will help you obtain bitcoins completely anonymously.
Apart from it being a payment network, Bitcoin is a software project in a sea of many software projects that rely on the Bitcoin network for their success. If you have a project that depends on Bitcoin, you may want to contribute some hashing power into the network to increase, even in some small way, the chance of success. There are many reasons still, but the final reason we are going to state here to mine bitcoins is if you rely on the Bitcoin network to conduct e-commerce or purchase products and services online and you want it to be strong as ever.