ever since satoshi nakamoto, or a group of people going by that alias, launched the bitcoin blockchain network in 2008, the world has been excited about the potential this technology has to change one of the most important things of our world: money. .
There’s another reason so many people are rushing to get bitcoin like they were in california in 1849: bitcoins have become extremely valuable.
Reading: How much data does bitcoin mining use
nearly $40,000 currently, up from $7,000 in 2020. However, getting to this price point has been a bumpy ride filled with highs and lows, which speaks to an inherent instability in the market, a natural phenomenon for something. so new.
When most of us hear this, we often think “where can I get some of this stuff?” well, you can buy them on bitcoin exchanges, or you can purchase them as payment in a transaction. alternatively, you can go and get them yourself by becoming a bitcoin miner.
As a bitcoin miner, you help make all the technology work, and as a reward for your work… free bitcoins!!
sounds great, right? wait a second. While it is true that you can make money mining bitcoins; It is much more difficult than it seems and requires a large initial investment. To understand why, let’s break down everything you need to know about bitcoin and bitcoin mining.
what is bitcoin?
bitcoin is a cryptocurrency. it is a digital asset, in this case a piece of code, that can be used as a medium of exchange; in other words, it works similar to money.
There are many cryptocurrencies, up to 3000, but bitcoin was widely considered to be the first and is by far the best known in popular culture. Its development has been credited to a Japanese man, Satoshi Nakamoto, although Bitcoin maintains this alias “used by the person or entity that created Bitcoin.” the mystery surrounding bitcoin’s creation and eventual launch is a fascinating layer of its history, but we won’t go into it here.
what about bitcoin?
Most of the buzz about cryptocurrencies has to do with their decentralized verification system. this is in direct contrast to our current monetary system, which is centralized. a third party verifies all transactions.
An example would be visa, which facilitates transactions between your bank and the merchant. however, at the core of banking systems around the world, central banks verify all transactions. In the United States, this is known as the Federal Reserve Bank of the United States.
Without getting into currency economics, some believe that centralized currency systems are bad for society. they put tremendous power in the hands of a relatively small group of people, those who control the central bank or influence its policy, whose interests are often different from those of the working class.
but there are many reasons why a central bank is important, one example being the covid-19 pandemic that has gripped the world for the last two years or more. central banks around the world pumped money into economies to keep people afloat while the disease was contained. and while the long-term effects of such a policy have not yet manifested themselves, it is hard to imagine where the world would have gone without this ability to simply “create” money and add it to the economy during hard times, something that is impossible to do with a cryptocurrency.
It is impossible because the technology on which bitcoin is based, the blockchain, by design only creates new bitcoins at set intervals, and this process cannot be accelerated in any way. the creation of new bitcoins is slow and gradual, but also predictable.
However, the flip side of all this is that the system is much more secure. no one can perform a transaction without group verification, not just one entity. therefore, while you can’t just “create” currency during a crisis, much of the power associated with currency control is eroded when we use a cryptocurrency, which could have a radical impact on societies around the world.
other impacts of bitcoin
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Not everyone sees this bitcoin future that will change society. instead, some see it as something that will develop and exist alongside other currencies, including the traditional ones we have now.
for example, bitcoins or any other cryptocurrency could be used to control transactions within a group, such as a community, a city, a company, etc.
Bitcoin has also been seen as a tool for economic development in poorer parts of the world as it could help distribute funds to certain groups more easily, specifically when there is a currency exchange involved and the need to hire a bank. it can also provide a means of transacting without having to carry “cash”, something that can be very useful in poor rural areas.
bitcoin, and by extension cryptocurrencies in general, have taken a bit of a hit to their reputation since they emerged into the mainstream after being associated with websites like silk road, which sold all sorts of illicit stuff, from drugs to body parts.
the market only allowed transactions in bitcoin due to the private and secure nature of the cryptocurrency. when authorities arrested the person behind it, bitcoin became forever associated with this type of activity. The public turned somewhat against bitcoin and similar currencies because they saw them as a way to allow thieves, hackers, and drug dealers, among other things, to operate anonymously on the internet.
however, the founders of a bitcoin exchange that faced heavy regulation in the wake of the silk road scandal were quick to point out that traditional currencies are used for “bad” things all the time, but that’s not made those coins inherently bad. however, to some extent, the damage had already been done in the public eye.
Also, the underlying technology of bitcoin, the blockchain, is having its own impact, in addition to the one that bitcoin is having as a result.
Governments and businesses are now working to implement blockchain technology in their systems to make them more secure and private. Whether or not this is a good use of this technology is at the heart of the debate about how bitcoin and other cryptocurrencies will change human society.
what is bitcoin mining?
The mining process is fundamental to bitcoin and its underlying blockchain. bitcoin miners are the ones who verify the transactions made with bitcoin. by doing so, they add another “block” to the chain.
however, verifying transactions requires a lot of computing resources, so “miners”, those who take on the task of verifying transactions (mining), are rewarded for their work; after you have mined a certain number of transactions, you will earn 1 bitcoin.
mining is also responsible for the generation of new bitcoins; after adding a certain number of blocks to the chain, a new bitcoin is generated and awarded to the miner.
The details of how mining works are complicated, but essentially, miners must provide a hexadecimal number 64 (meaning there are 64 digits, and each digit can be one of 16 things, generating trillions of possibilities).
This number is associated with a transaction and can only be generated through a mathematical calculation involving the numbers already stored in the chain. massive computers try to figure out what this new number is, and the first to figure it out is the one credited to verify the transaction. in other words, they get credit for their next bitcoin.
If multiple miners reach the solution simultaneously, a vote is held to determine who gets the credit. it usually goes to the miner that has the most transactions already worked.
how does bitcoin mining work?
See also: Bitcoin – The Solution In Search Of A Problem | Seeking Alpha
If all of this sounds exciting and interesting to you, it’s probably the result of making the connection between how a bitcoin is earned and how much it’s worth (it’s like free money!). maybe you are considering becoming a bitcoin miner. yourself. if so, know that it’s easy in theory, but not really in practice.
A big reason for this is the hardware you’ll need to mine bitcoins. the large number of calculations your computer needs to be able to do in a short period of time requires an enormous amount of electricity and computing power, much more than you could ever hope to get out of a typical computer.
As a result, if you want to get into bitcoin, you’ll need to obtain the required hardware, including specialized chips and processors.
once you’ve assembled this, the next step is easy: just download the free bitcoin miner and you’re on your way.
However, if it’s just you, the odds of winning a bitcoin are stacked against you. mining companies use exponentially more computing power than you and are much more likely to find blocks than you are. since the first to verify a transaction gets the bitcoin, this could leave you with empty pockets for some time.
One thing you can do is join a mining pool, an arrangement where smaller miners work together to mine blocks and share the rewards when they arrive. wise to join one of these pools. otherwise you will spend a fortune and a lifetime mining blocks and you may never get a single bitcoin.
how much internet speed do you need to mine bitcoins?
A common question people have when considering getting into bitcoin mining is about internet requirements. with so much computing power needed, surely you would have to have a gigabit speed (1,000 mbps) or more connection? How else could you handle so much data?
however, this is actually not true. when mining bitcoin, you only need an internet connection for data synchronization, which requires very little in terms of connection strength and bandwidth.
There have been cases where systems have successfully mined bitcoins with as little as ~500 kbps, which is nothing – dial-up speeds. most probably need a bit more, but in reality, even high-end systems don’t need more than 15 mbps.
so while bitcoin technology inherently requires an internet connection, bitcoin’s challenge is not to satisfy its network but rather its hardware needs.
how much internet speed do you need?
It doesn’t matter if you plan on mining or not, all this talk about network and hardware requirements might make you think about your own internet connection. Perhaps you came to this article because you are constantly a victim of slow internet connection and wondering if his dream of becoming a bitcoin miner was within the realm of possibility. who can tell?
however, internet speed is something we all need but not all of us understand. you need to know what’s going on so you can be sure you’re getting the best bang for your buck.
The first thing you should know is that internet speed is measured in megabits per second, mbps. the more the better, but how much you need depends largely on how you use the internet. here’s a breakdown:
Some things to keep in mind include:
- advertised speed vs. actual speed. the connection performance quoted by an internet service provider represents the maximum the network can provide, but actual speeds are often considerably higher low.
- upload speed versus download speed. Download speeds refer to how fast data travels from servers on the web to your computer and is probably the most relevant to most people. upload speeds refer to the opposite: how fast data moves from your computer to servers on the internet, and they’re not that big of a priority for most people. ISPs tend to advertise much more prominent download speeds.
- Bandwidth. refers to the total amount of traffic that can pass on your network at any given time. if there are more users in your home, you will need more bandwidth. ISPs don’t always give you bandwidth specs, but they will tell you how many devices can run at full capacity at the same time, which should help you decide which connection is right for you.
time for mine?
Hopefully, you now understand the basics of bitcoin and bitcoin mining, or at least what you need to know to decide if you want to continue. maybe it’s time to set up your own mining operation and start chasing those precious bitcoins?
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