The task of Bitcoin miners
Bitcoin's bull market phase is still going strong and has triggered a lot of attention from investors across the world. Investing on online exchange platforms is way more convenient for the majority of people who want to invest in BTC. But mining is still a viable way of obtaining Bitcoin, and its popularity is far from over.
However, if you want to start mining, it's essential to familiarise yourself with the task of the Bitcoin miners and the blockchain network. So, let's take a look at what you can expect from Bitcoin mining in 2021.
What is blockchain technology?
Blockchain technology is a peer-to-peer, decentralised system of recording transactions without the assistance of a third-party institution or authority because the network is managed on thousands of computer systems (also known as nodes) around the world; thus, it's very difficult for one person to take control of it or make changes.
Plus, blockchain technology is created in a way that offers complete and total transparency of the data in the network. When it comes to the transactions, they are authorised by the digital signature of the owner and are tamper-proof. Another reason why the blockchain network remains highly secure is bitcoin mining.
More specifically, the Bitcoin miners are tasked with approving the blocks of transactions in the blockchain network, and when they do that, a new BTC is generated. So, this means because the network is decentralised, the miners have a crucial role when it comes to the processing of the BTC transactions.
The main reimbursement for your work on the blockchain network is the block reward. The block reward was set to 50 BTC until the first halving in 2012. Afterward, the reward was halved to 25 BTC. This event keeps happening every four years, or whenever 210 000 blocks are mined. In addition, they get transaction fees for working on the network. But compared to the main incentive, which is the block reward, the transaction fees are negligible.
Consequently, people choose to invest on trading sites because it is not as costly as mining, and it's very easy and accessible. Bitcoin Digital is an automated trading system where you can earn up to 60% ROI on a daily basis. The cutting-edge AI technology is what makes this platform a top choice for crypto newbies and experienced investors. The minimum deposit to start trading is $250.
The mining process
Before you start mining, you need to buy special mining equipment, also known as a high-quality computer system. This is another reason why mining is considered expensive. Moreover, in order to complete your task of approving blocks of transactions, you need to solve a computational puzzle.
If you're the first one that solves the hash puzzle, and you have successfully approved 1MB worth of BTC transactions, you will receive the block reward as compensation for your effort.
But, you also need to know that the blockchain network was programmed by Satoshi Nakamoto to increase the level of difficulty of the mining as the computing power of the network surges. Hence, when there are more users on the network, every two weeks, the blockchain system adjusts the difficulty of mining. In other words, mining is an arduous process and takes time, energy and effort.
Mining farms and pools
This leads us to the next point of mining farms and pools, which is another way to mine but as part of a group of other miners. Essentially, you will work together as a team; you combine your computing power as a group in order to get the block reward. Mining farms do mine on a large scale, and joining a mining pool or farm puts you at a competitive advantage on the blockchain network.