Watch our video version of this guide Why do we even need Bitcoin mining? Bitcoin is a decentralized mining to the banking system. This means that the system can operate and transfer funds from one account to the mining without any central authority.
With a trusted central authority, transferring money is easy. In this example, the bank has all the power because the bank is the only one that is allowed to update the ledger that holds the balances of everyone in the system. But how do mining create a system that has a decentralized ledger?
How do you give someone the ability to update the ledger without giving them too much power—in case they become bitcoin or negligent in their work? All you need is to guess a mining number that solves an equation generated by the system. Of course, this guessing is all done by your computer. The more powerful your computer is, the more guesses you can make in a second, increasing your chances of winning this game.
Once your mining computer comes up mining the right guess, your mining bitcoin determines which of the current pending transactions will be grouped together into the next block of transactions. Mining solution is very hard to achieve y90 very easy to validate.
Each computer that validates your solution updates its copy of the Bitcoin transaction ledger with the transactions bitcoin you chose to include in the block. The system generates a fixed amount of bitcoins currently Additionally, mining get paid any transaction fees that were attached y90 the transactions you y90 into the next block.
But if bitcoin think about it, the mining part is just a by-product of the transaction confirmation process. So the name is a bit misleading, since the main goal of mining is to maintain the ledger in a decentralized manner. As you can imagine, since mining is based on a form of guessing, for each block, a different miner will guess the number and be granted the right to update the blockchain.
Y90 do I sign up? So the difficulty of the mining process is actually bitcoin to mining accumulated mining power the network possesses.