Many of you already know, by now, the basics of how bitcoin works. But since this is a digital currency, how exactly do you get your hands on some?
There are two known ways users can get bitcoin—and one of them is through a process known as ‘mining’:
What is Bitcoin Mining?
Do you know how miners dig underground for diamonds? Bitcoin kind of works like that. It all begins with the blockchain, which is the technology that runs Bitcoin. All bitcoin transactions are recorded on this “digital ledger”, which is an open source that practically anyone can access. It is not run by one central person and all transactions are encrypted, so even if other people can see these records, they won’t be able to tell which one of these transactions belong to which person. Hence, the term “CRYPT-ocurrency”.
Now, this is the part where things can get a bit technical. With an estimation of only 21 million bitcoins in existence, this limitation is what gives bitcoin value. When a person sends out bitcoins, this information will then go out to the blockchain in the form of a “block”. These blocks are actually complex mathematical problems that miners need to solve in order to verify the transaction.
These blocks can take about 10 minutes for miners to solve, which is done through special software and computer. The miner to first solve the puzzle is then rewarded bitcoins, which are then sent out to other miners who will then double-check and verify if this is correct. If enough people end up with the same solution, then this block gets approved and added to the digital ledger, which is how the term “blockchain” was formed.
Think of the whole process as a race! And since people want to win the race, “mining pools” are created. These are a group of miners who have teamed up their computing prowess in order to solve each block at the same time. Once a miner has solved the puzzle, the reward is then split up between members of the pool.
So that’s one way to get bitcoins! If you think the miner’s life isn’t for you, then don’t worry as there are more ways you can get bitcoins!
Looking for a more visual presentation? Feel free to click the link below to watch our original video on the same topic: