How Bitcoin Mining Works?

[Muthukrishnan]

When you hear about bitcoin “mining,” you envisage coins being dug out of the ground. But bitcoin isn’t physical, so why do we call it mining?

Because it’s similar to gold mining in that the bitcoins exist in the protocol’s design (just as the gold exists underground), but they haven’t been brought out into the light yet (just as the gold hasn’t yet been dug up). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point. What “miners” do is bring them out into the light, a few at a time.

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[onnz423]

The bitcoin miners solved cryptographical problems known as hashes, solving these hashes leads to a reward of bitcoins, the number of bitcoins awarded is reduced over time, and the difficulty of the hashes increases over time, leading to increased scarcity of bitcoins as time progresses. Bitcoin miners also receive the transaction fee for their involvement in the transaction confirmation process. I guess we call it mining due to the way that the miners chip away at the problem.

[joeydangerous]

When you hear about bitcoin “mining,” you envisage coins being dug out of the ground. But bitcoin isn’t physical, so why do we call it mining?

Because it’s similar to gold mining in that the bitcoins exist in the protocol’s design (just as the gold exists underground), but they haven’t been brought out into the light yet (just as the gold hasn’t yet been dug up). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point. What “miners” do is bring them out into the light, a few at a time.

Go to YouTube and look up the mining videos, you can make a study list from there. The difficulty level is strong.