With the Increasing popularity of Bitcoin and being pretty hard to Mine, Users are adopting unethical ways to mine them and hackers are continuously targeting the network to hack the Mining pools. Let us see how Bitcoin Works and the legitmet ways to Mine(earn) Bitcoins.
How Bitcoin Work?
The Math behind Bitcoin says that to transfer Bitcoins you just need a payer and a payee. It eliminates a trusted third party, such as a government, a bank, or credit card company. i.e. there is No Central Authority or Server. The Transfer Only needs network of computers running Bitcoin software.
Each Bitcoin is made up of Digital signatures. Digital signatures are ‘math operations’ that you can perform on data that you send to and that prove the following:
Authenticity: the data was created by a specific sender.
Non-reputation: the data is confirmed to have been sent by a specific sender in such a way that the sender cannot deny having sent the data.
Integrity: the data was not manipulated in transit.
Each Bitcoin user has his own wallet and a Software that does the transfer work on behalf of the user. When you send a Bitcoin to someone else, you sign the Bitcoin with the digital signature of your Bitcoin wallet, which is software designed to hold Bitcoins and make Bitcoin transactions possible. As a result, each Bitcoin carries
within it a little ledger listing its transaction history.
As Bitcoin transactions take place, they are broadcast to the network made up of computers running Bitcoin software — whose job is to maintain the “block chain”, the digital ledger containing the record of all confirmed Bitcoin transactions.
How People earn/mine Bitcoins?
Since there is No Central Server that can process payments, the users(peers) needs to do payment processing work with their own personal computing power(as an option) or leave it on the group users offering their computing power to verify and record payments into the public ledger for a faster transaction. Bitcoins are created as a reward for payment processing work in which users offer their computing power and each peer involved with transaction processing work gets his small share of Bitcoin.
How Bitcoin Mining Works
The Processing involves some serious number-crunching(enough to max out the processors on a computer), So it needs lot of computing power which the sender or receiver cannot accommodate with their personal computer resources. for a faster transaction the process is done by the group of users offering their computing power in exchange for their share of Bitcoin.
The above activity of sharing Computer resources for payment processing is called as Bitcoin Mining. Individuals or companies engage in this activity in exchange for transaction fees in the form of newly created bitcoins.
How much Bitcoins can you make?
If you are Trying to Mine Bitcoins with your Personal computing power, I think you should just stay away from Mining. Its better to use your computer resources on other productive work rather than wasting your electricity on Bitcoin Mining just to know that your in loss at the end. You can watch the Bitcoin Beginners video below. The video just shows how much a user with a personal computer that too with a Graphics card can mine in a year.
Miners in the Bitcoin network all work on trying to be the first one to complete the number-crunching process required for the payment processing. As I said there is very very little profit with your personal computing power, then there are specialized Mining Rigs which are being used by Individuals or companies which can yield considerable profit.
Special bitcoin mining rigs
Also it will become harder and harder to make Bitcoins as time goes by since every 4 years, the reward paid to a miner for creating a block(number-crunching process) is halved. When the network started, the reward for creating a block was 50 Bitcoins; it was reduced to 25 in November 2012, and in four years, it will be reduced to 12.5. Eventually, the reward will be removed entirely when an arbitrary limit of 21 million bitcoins is reached (2140).
I believe by now you have a rough Idea about how much Bitcoins you can Mine/Earn depending on your Computing power.
credit: Tochukwu M., Ashwin S.
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