How does the Bitcoin Mining Works?

1years ago (2017-02-11) admin BTC Mining 2554℃

In traditional fiat money systems, governments simply print more money when they need to. But in bitcoin, money isn’t printed at all – it is discovered. Computers around the world ‘mine’ for coins by competing with each other.

How does mining take place?

People are sending bitcoins to each other over the bitcoin network all the time, but unless someone keeps a record of all these transactions, no-one would be able to keep track of who had paid what. The bitcoin network deals with this by collecting all of the transactions made during a set period into a list, called a block. It’s the miners’ job to confirm those transactions, and write them into a general ledger.

Making a hash of it

how bitcoin mining worksThis general ledger is a long list of blocks, known as the \'blockchain\'. It can be used to explore any transaction made between any bitcoin addresses, at any point on the network. Whenever a new block of transactions is created, it is added to the blockchain, creating an increasingly lengthy list of all the transactions that ever took place on the bitcoin network. A constantly updated copy of the block is given to everyone who participates, so that they know what is going on.

But a general ledger has to be trusted, and all of this is held digitally. How can we be sure that the blockchain stays intact, and is never tampered with? This is where the miners come in.

When a block of transactions is created, miners put it through a process. They take the information in the block, and apply a mathematical formula to it, turning it into something else. That something else is a far shorter, seemingly random sequence of letters and numbers known as a hash. This hash is stored along with the block, at the end of the blockchain at that point in time.

Hashes have some interesting properties. It’s easy to produce a hash from a collection of data like a bitcoin block, but it’s practically impossible to work out what the data was just by looking at the hash. And while it is very easy to produce a hash from a large amount of data, each hash is unique. If you change just one character in a bitcoin block, its hash will change completely.

Miners don’t just use the transactions in a block to generate a hash. Some other pieces of data are used too. One of these pieces of data is the hash of the last block stored in the blockchain.

Because each block’s hash is produced using the hash of the block before it, it becomes a digital version of a wax seal. It confirms that this block – and every block after it – is legitimate, because if you tampered with it, everyone would know.

If you tried to fake a transaction by changing a block that had already been stored in the blockchain, that block’s hash would change. If someone checked the block’s authenticity by running the hashing function on it, they’d find that the hash was different from the one already stored along with that block in the blockchain. The block would be instantly spotted as a fake.

Because each block’s hash is used to help produce the hash of the next block in the chain, tampering with a block would also make the subsequent block’s hash wrong too. That would continue all the way down the chain, throwing everything out of whack.

Competing for coins

Butterfly Labs Bitforce mining rigSo, that’s how miners ‘seal off’ a block. They all compete with each other to do this, using software written specifically to mine blocks. Every time someone successfully creates a hash, they get a reward of 25 bitcoins, the blockchain is updated, and everyone on the network hears about it. That’s the incentive to keep mining, and keep the transactions working.

The problem is that it’s very easy to produce a hash from a collection of data. Computers are really good at this. The bitcoin network has to make it more difficult, otherwise everyone would be hashing hundreds of transaction blocks each second, and all of the bitcoins would be mined in minutes. The bitcoin protocol deliberately makes it more difficult, by introducing something called ‘proof of work’.

The bitcoin protocol won’t just accept any old hash. It demands that a block’s hash has to look a certain way; it must have a certain number of zeroes at the start. There’s no way of telling what a hash is going to look like before you produce it, and as soon as you include a new piece of data in the mix, the hash will be totally different.

Miners aren’t supposed to meddle with the transaction data in a block, but they must change the data they’re using to create a different hash. They do this using another, random piece of data called a ‘nonce’. This is used with the transaction data to create a hash. If the hash doesn’t fit the required format, the nonce is changed, and the whole thing is hashed again. It can take many attempts to find a nonce that works, and all the miners in the network are trying to do it at the same time. That’s how miners earn their bitcoins.


Follow Us Here Thanks !

Recommended Articles :

55 comment

  1. avatar

    I carry on listening to the reports speak about getting boundless online grant applications so I have been looking around for the finest site to get one. Could you advise me please, where could i acquire some?

    corburt erilio at2017-04-01 00:29 Comment
  2. avatar

    This design is wicked! You definitely know how to keep a reader entertained.
    Between your wit and your videos, I was almost moved to start my own blog (well, almost…HaHa!) Excellent job.
    I really loved what you had to say, and more than that, how you
    presented it. Too cool!

    manicure at2017-04-08 00:51 Comment
  3. avatar

    I just want to mention I am new to blogging and site-building and certainly savored your blog. Very likely I’m likely to bookmark your blog post . You absolutely come with beneficial articles and reviews. Kudos for sharing with us your blog site.

    try this at2017-04-17 02:58 Comment
  4. avatar

    Hmm it seems like your website ate my first comment (it was super long) so I guess I’ll just sum it up what I submitted and say, I’m thoroughly enjoying your blog. I too am an aspiring blog blogger but I’m still new to the whole thing. Do you have any tips and hints for beginner blog writers? I’d really appreciate it.

    grapefruit essential oil at2017-04-22 12:42 Comment
  5. avatar

    I just desire to advise you that I am new to posting and very much valued your post. Very likely I am going to store your blog post . You certainly have extraordinary article materials. Acknowledge it for telling with us the best internet site information

    over at this website at2017-04-23 03:15 Comment
  6. avatar

    Highly alluring details that you have remarked, thank you so much for putting up.

    Check Out Your URL at2017-04-23 08:05 Comment
  7. avatar

    It happens to be the best time to construct some options for the long-run. I have looked over this piece of writing and if I can, I want to encourage you some useful advice.

    moved here at2017-04-23 15:23 Comment
  8. avatar

    All absolutely free clipart is created by an identical designer. Nowadays you know the best place to locate totally free clipart, you can save a good deal of Googling! AAA Clipart is a superb site on account of the substantial selection of completely free clipart images available there.

    Efrain Randa at2017-04-23 18:06 Comment
  9. avatar

    Good morning there, just turned out to be receptive to your website through Search engines like google, and realized that it’s truly useful. I will be grateful for should you decide continue on this post.

    important site at2017-04-24 00:29 Comment
  10. avatar

    These mattresses were the perfect selection for a daybed/king size mattress combination.

    mattresses ratings and reviews at2017-04-24 18:03 Comment
  11. avatar

    Wow! Thank you! I always needed to write on my site something like that. Can I implement a fragment of your post to my website?

    kitchen remodel at2017-04-25 03:01 Comment
  12. avatar

    Of course, what a magnificent website and informative posts, I definitely will bookmark your blog.Have an awsome day!

    vacation at2017-04-25 03:01 Comment
  13. avatar

    I precisely wanted to thank you very much yet again. I do not know the things I could possibly have carried out in the absence of the actual tips and hints contributed by you directly on that field. It actually was an absolute traumatic condition for me, but viewing the expert manner you treated that made me to cry with happiness. Now i am thankful for your assistance and trust you are aware of a great job your are doing training others via your webblog. More than likely you have never encountered any of us.

    contractions at2017-04-25 03:02 Comment
  14. avatar

    Hello, i think that i saw you visited my web site so i came to “return the favor”.I am trying to find things to improve my website!I suppose its ok to use some of your ideas!!

    womens health at2017-04-25 03:02 Comment
  15. avatar

    I really have to tell you that I am new to writing a blog and extremely admired your review. Very likely I am likely to save your blog post . You really have magnificent article content. Appreciate it for expressing with us your very own website page

    over at this website at2017-04-25 07:24 Comment
  16. avatar

    Definitely believe that which you said. Your favorite reason seemed to be on the web the simplest thing to be aware of. I say to you, I certainly get annoyed while people think about worries that they just do not know about. You managed to hit the nail upon the top and also defined out the whole thing without having side-effects , people can take a signal. Will probably be back to get more. Thanks

    Travel International at2017-04-25 18:33 Comment
  17. avatar

    I really desire to share it with you that I am new to wordpress blogging and clearly cherished your write-up. Probably I am probably to remember your blog post . You undoubtedly have extraordinary article blog posts. Be Grateful For it for giving out with us your main internet document

    visit this page at2017-04-26 07:05 Comment
  18. avatar

    It happens to be ideal opportunity to make some intentions for the long-term. I have read through this post and if I have the ability to, I desire to suggest you handful of useful recommendation.

    find out at2017-04-26 09:54 Comment
  19. avatar

    Great weblog here! Additionally your site so much up very fast! What host are you the usage of? Can I am getting your affiliate hyperlink on your host? I wish my web site loaded up as quickly as yours lol

    Insurance at2017-04-26 11:04 Comment
  20. avatar

    When put all together as a whole mattress, my better half and also I rested very properly on these cushions; incredibly comfy as well as king dimension.

    mattress buy at2017-04-26 11:20 Comment
  21. avatar

    I wanted to create you one tiny word to finally thank you as before on your spectacular solutions you’ve featured in this article. This has been certainly particularly generous with people like you to supply openly precisely what a lot of folks might have distributed as an ebook to help make some bucks for their own end, primarily since you might have tried it if you ever desired. These basics additionally served like a easy way to fully grasp someone else have a similar eagerness the same as my very own to figure out great deal more in terms of this matter. I am sure there are many more fun sessions up front for folks who read carefully your blog post.

    Automotive at2017-04-26 11:26 Comment
  22. avatar

    Incredibly insightful advice that you have stated, warm regards for adding.

    you can try here at2017-04-26 19:08 Comment
  23. avatar

    what i can say is that abortion is a sin and it should be deemed illegal by all means`

    John Deere Technical Manuals at2017-04-26 20:18 Comment
  24. avatar

    fantastic points altogether, you simply received a new reader. What could you recommend about your post that you made some days in the past? Any sure?

    Business Service at2017-04-26 20:53 Comment
  25. avatar

    Greetings here, just turned alert to your blog through Bing and yahoo, and discovered that it is pretty beneficial. I will truly appreciate in the event you keep up such.

    Recommended Reading at2017-04-26 21:22 Comment
  26. avatar

    Howdy there, just turned receptive to your webpage through Google, and have found that it’s truly good. I will appreciate if you decide to carry on this approach.

    check here at2017-04-27 01:51 Comment
  27. avatar

    I simply have to notify you that I am new to blogging and thoroughly adored your review. Very possible I am going to bookmark your blog post . You absolutely have impressive article information. Be Thankful For it for discussing with us your current website information

    websites at2017-04-27 03:39 Comment
  28. avatar

    Simply wish to say your article is as astonishing. The clearness in your post is simply excellent and i could assume you are an expert on this subject. Fine with your permission let me to grab your feed to keep up to date with forthcoming post. Thanks a million and please continue the rewarding work.

    Business at2017-04-27 18:26 Comment
  29. avatar

    Simply a smiling visitant here to share the love (:, btw great layout.

    Business at2017-04-27 19:00 Comment
  30. avatar

    Very stimulating advice you have stated, thanks a lot for setting up.

    use this link at2017-04-28 02:47 Comment
  31. avatar

    Keep working ,great job!

    Classic Car at2017-04-28 10:18 Comment
  32. avatar

    I really wanted to write down a small remark in order to say thanks to you for those splendid ideas you are showing at this site. My time intensive internet research has now been recognized with really good tips to write about with my neighbours. I ‘d repeat that many of us visitors actually are truly endowed to dwell in a useful place with so many brilliant people with insightful concepts. I feel somewhat blessed to have used the web page and look forward to so many more cool times reading here. Thanks a lot once again for a lot of things.

    Computer & Technology at2017-04-28 11:31 Comment
  33. avatar

    Thanks for the sensible critique. Me and my neighbor were just preparing to do a little research about this. We got a grab a book from our area library but I think I learned more clear from this post. I’m very glad to see such excellent info being shared freely out there.

    international business at2017-04-28 11:40 Comment
  34. avatar

    What i don’t understood is in fact how you are not actually much more neatly-preferred than you may be now. You’re so intelligent. You already know thus considerably in relation to this subject, produced me individually consider it from numerous varied angles. Its like women and men aren’t fascinated except it¡¦s something to do with Lady gaga! Your own stuffs nice. Always handle it up!

    health magazine at2017-04-28 11:42 Comment
  35. avatar

    I really appreciate this post. I have been looking all over for this! Thank goodness I found it on Bing. You’ve made my day! Thanks again

    Computer & Technology at2017-04-28 11:43 Comment
  36. avatar

    naturally like your web-site however you have to take a look at the spelling on quite a few of your posts. Several of them are rife with spelling issues and I find it very troublesome to tell the truth however I¡¦ll surely come back again.

    kitchen remodel cost at2017-04-28 11:45 Comment
  37. avatar

    Hiya very cool web site!! Man .. Beautiful .. Amazing .. I will bookmark your blog and take the feeds also¡KI’m happy to seek out a lot of useful information right here within the submit, we’d like work out more techniques on this regard, thanks for sharing. . . . . .

    Business & Finance at2017-04-28 11:47 Comment
  38. avatar

    Someone necessarily assist to make significantly articles I’d state. This is the very first time I frequented your website page and so far? I surprised with the research you made to make this particular publish amazing. Great job!

    travel at2017-04-28 11:59 Comment
  39. avatar

    Great write-up, I am regular visitor of one¡¦s website, maintain up the excellent operate, and It is going to be a regular visitor for a long time.

    Computer & Technology at2017-04-28 12:15 Comment
  40. avatar

    Whats Taking place i’m new to this, I stumbled upon this I’ve discovered It positively useful and it has aided me out loads. I’m hoping to give a contribution & aid other customers like its aided me. Good job.

    Travel World at2017-04-28 13:08 Comment
  41. avatar

    The Best place for HTV, Glitter HTV and Cricut Blades!

    Crystle Normington at2017-04-28 14:03 Comment
  42. avatar

    Fantastic beat ! I wish to apprentice while you amend your website, how can i subscribe for a blog site? The account helped me a acceptable deal. I had been a little bit acquainted of this your broadcast offered bright clear concept

    Business at2017-04-28 14:12 Comment
  43. avatar

    I’ve learn a few just right stuff here. Certainly worth bookmarking for revisiting. I surprise how much effort you set to make this type of wonderful informative web site.

    Business at2017-04-28 15:08 Comment
  44. avatar

    We’re a group of volunteers and opening a new scheme in our community. Your site offered us with valuable info to work on. You’ve done a formidable job and our entire community will be grateful to you.

    Toyota Supra at2017-04-28 15:23 Comment
  45. avatar

    Other customer reviews point out the sides are actually steep descending and also holds true. We have actually certainly not possessed any problems with spinning off because of this.

    best mattress for back pain at2017-04-28 18:21 Comment
  46. avatar

    Wow, incredible blog layout! How long have you been blogging for? you made blogging look easy. The overall look of your web site is excellent, as well as the content!

    Travel Guides at2017-04-28 18:51 Comment
  47. avatar

    Hi folks here, just started to be receptive to your weblog through Yahoo and bing, and found that it is very informational. I’ll value if you decide to maintain this.

    Portland SEO Expert (@Portland_Seo1) | Twitter at2017-04-28 20:09 Comment
  48. avatar

    You actually make it seem so easy with your presentation but I find this topic to be really something that I think I would never understand. It seems too complicated and very broad for me. I’m looking forward for your next post, I’ll try to get the hang of it!

    Discount Auto Parts at2017-04-28 21:33 Comment
  49. avatar

    whoah this blog is excellent i love studying your posts. Keep up the good work! You know, lots of individuals are looking round for this info, you could aid them greatly.

    Auto Price at2017-04-29 02:27 Comment
  50. avatar

    This is proper opportunity to prepare some schedules for the upcoming. I’ve read this write-up and if I can, I desire to suggest to you you couple intriguing tips.

    seo portland at2017-04-29 03:41 Comment
  51. avatar

    My only small problem is actually that the edges might be a bit “firmer”. If you obtain very near the upper hand, there is actually an odds you might roll off.

    continue reading this at2017-04-30 11:11 Comment
  52. avatar

    I think this is among the most vital information for me. And i’m glad reading your article. But wanna remark on few general things, The site style is great, the articles is really nice : D. Good job, cheers

    Auto Repair Advice at2017-04-30 20:13 Comment
  53. avatar

    I don’t even know how I ended up here, but I thought this post was great. I do not know who you are but definitely you’re going to a famous blogger if you are not already ;) Cheers!

    Top Professional Careers at2017-04-30 21:43 Comment
  54. avatar

    Hello.This post was really interesting, particularly because I was searching for thoughts on this issue last couple of days.

    Business Information Data Financial at2017-05-01 04:30 Comment
  55. avatar

    Very interesting subject, thanks for putting up.

    Autos Europe at2017-05-01 07:27 Comment