Everybody is talking about the blockchain and crypto currencies, especially about the Bitcoin. But how are they created and can you create them yourself? In this article we want to explore these questions and shed light on the darkness of so-called Bitcoin Mining.
In a way, Bitcoin Mining is the digital version of gold mining. The mining of Bitcoins, however, is not intended to allow every single miner to profit from a digital gold bar. Rather, it is a process that is necessary for transaction processing. The orientation of the crypto currencies makes it clear that they see themselves as independent currencies. Accordingly, authorities, banks or governments are not integrated in the management of money. The processing of the individual transactions, the securing of the system as well as the synchronization of the individual users takes place exclusively via the Bitcoin network.
It is therefore a decentralized system where users from all over the world can integrate themselves as Bitcoin miners. This is the main advantage for the inventors of digital currencies. After all, no single natural or legal person can exercise control over the system. For their participation in Bitcoin Mining, users receive a pro-rata remuneration. How high the corresponding share is depends largely on the Bitcoin Mining hardware provided.
Since its introduction, several million people worldwide have joined the idea, most of them using their computer’s computing power to support the network.
Bitcoin Mining – The Multiplication of Digital Money
The increase of paper money such as dollars or euros is quite simple, it is simply printed by central banks. In contrast to classic money currencies, money values in digital currencies cannot be reprinted if there is a corresponding need. Since Bitcoins do not consist of banknotes or coins, the reproduction takes place in a different way. Instead of printing money, Bitcoins are generated by Bitcoin Mining or Cloud Mining.
People all over the world mine or mine Bitcoins, which increases the currency. The idea behind this is that countless transactions are carried out over the network every day. These are collected by the system at a certain point in time. The transactions carried out within the time span are then put together in a block. With Bitcoin Mining or Cloud Mining, all collected transactions are now confirmed by the user through the Bitcoin Mining hardware. They are then stored in a virtual account book by the computing power. In this respect, it is the modern digital way of bookkeeping. The account book is therefore made up of all calculated blocks. In technical terminology this is called blockchain.
The account book is therefore a central element for storing the transactions made with Bitcoin Mining. This is to ensure the transparency of the system. Every user has the possibility to view the blockchain. This means that he is allowed to track which transactions have been made. Nevertheless, it is an anonymous network because the blockchain does not contain any information about the initiator.