Bitcoin mining

Introduction: Bitcoin mining

We hear about cryptocurrencies every day. Ethereum, and Dogecoin—there are various kinds of cryptocurrencies. When we understand trading, we purchase at a low price and then sell at a high price. But how are all these cryptocurrencies made, and who is making them? If we talk about Bitcoin, it’s also a cryptocurrency, and because it’s pretty famous, we’ll take Bitcoin as an example.

Bitcoin mining

So how is Bitcoin made?

The way our normal currency prints, such as notes of 100 and 50 rupees. Bitcoins are not printed that way; they are generated through Bitcoin mining. And it is being called mining because our national resources are finite in number and we mine them. The quantity of bitcoins is finite, and we mine them in the same manner. There are 21 million bitcoins, out of which we have generated more than 18 million. And each day, we produce roughly 900 bitcoins; however, this figure is only an estimate because it is dependent on the number of participating miners. It was developed by Satoshi Nakamoto as an alternative to the banking system we have today. In our current banking system, suppose you want to give money to someone. Your bank will deduct the money from your account and add it to the account of the person you want to pay. Additionally, the bank will charge you for keeping this information. And with the money that is in your account, the bank invests it in different places. And generates money. And suppose that if the investment goes down, your money is at risk. As was the case with PMC Bank, a small number of carefully chosen institutions are in charge of the entire structure.

So how is Bitcoin different from that?

So bitcoin has given us an alternative to the current banking system. Bitcoin transactions are also possible, much like bank transactions. But in the bank, there is a centralized system to maintain records. But we cannot use the centralized system of Bitcoin. All the power would have gone to some selective institution. Instead of centralizing the records of transactions, Satoshi Nakamoto put them into the hands of millions of people through the blockchain. And he will get Bitcoin as a reward, so in this case, you don’t have to do the calculations; you just have to install your system and leave it; it has an automatic algorithm. Which will run itself, so this is how bitcoin is generated. The people who run automatic algorithms by installing their system are called miners. and thus the whole process is called Bitcoin mining.

Then everyone should start generating these 45 million and 50 lakh bitcoins with their computers. So it is not that easy either; in actuality, Satoshi Nakamoto also carried out former government functions. Our government has the option to generate additional currency, but it chooses not to because it understands that doing so will only drive up inflation. There will be no solution if there is only one bottle of water for 10 rupees left in an area and all the people who want to purchase it have one for 1 lakh rupees. Then the cost of the bottle will be 1 lakh rupees. So printing more cryptocurrency will only increase inflation; there will be no real solution. When the resources rise, the problem will truly be solved. It’s the same thing Satoshi Nakamoto did with Bitcoin. Satoshi Nakamoto made a rule that only 21 million bitcoins would be generated. And the more people who do bitcoin mining, the less reward will be given in bitcoin. In 2009, you could generate 200 bitcoins in 2 or 3 days, but today, if you want to develop one bitcoin, it will take you more than 15 or 200 years. And it could be even less if Bitcoin miners go down. The faster your computer operates, the more quickly you can generate Bitcoin. To generate Bitcoin faster, people use GPUs. And then, when all people started using GPUs for Bitcoin, they started using FPGAs, and today, only to generate Bitcoin, ASIC hardware has come, and their job is mining Bitcoin, and they are very fast.

Leave a comment