What is Bitcoin Mining
What is Bitcoin MiningOleh: Muh. Sabri Rahman Pada 2015-12-28 20:53:57
Bitcoin mining (Bitcoin Mining) is one way to get Bitcoin. As mentioned earlier, we can see Bitcoin as a large global cash system that stores transaction history (or 'money movements') from one person to another. When a Bitcoin transaction is processed on a Bitcoin network - meaning Bitcoin is being moved from one person to another - someone needs to ensure that all transactions are properly recorded and the cash system has been synchronized throughout the world.
In terms of Bitcoin, this process is not carried out by individuals or companies, but by thousands of computers around the world that are connected to the internet. This computer is known as miners or 'miners'. Simply put, they are 'computers that process transactions'.
To do this processing in a safe manner, computers need to carry out complex calculations that take up enormous computing effort, so that a large amount of energy is needed as well as sophisticated special tools. Someone - the owners of these computers - need to pay for the equipment and electricity, so they have to get compensation for all the effort and money they spend supporting this network. They get compensation through newly mined Bitcoin. The new Bitcoin mined acts as an award and an incentive for those who contribute to the system that supports the transaction process.
Another way to understand this is to imagine what would happen if large banks built the largest global transaction processing system: they would spend billions of dollars then charge small transaction fees to users to cover the cost of building the system.
With Bitcoin mining, the costs for this global system are divided into thousands of computers, and they cover their costs with newly mined Bitcoin. Long story short, this is the democratization of financial infrastructure.
Transfer or move Bitcoin is very easy, but on the back screen, the movement and storage of Bitcoin is actually done with something called 'private key'. The easiest way to fully understand this, is to imagine a traditional post box system:
Imagine if Mary wanted to send a letter to Peter. First of all, he needs to know Peter's address or post number. Vice versa, if Maria wants to send a Bitcoin to Peter, she must know Peter's Bitcoin address, which is a number that specifically indicates that the postbox belongs to Peter. This number is called the wallet address (wallet address), or public key (public key). This number is very long and complicated because of the many Bitcoin postboxes in the world, but fortunately you don't need to memorize it, you can see it on the internet.
So now Maria sends Bitcoin to Peter's post box. Let's suppose that Peter's mailbox number is 2034. Maria can look into this postbox and see Bitcoin in it, even everyone who passes can see the 2034 postbox containing one Bitcoin. This is an interesting part about Bitcoin - where everyone can see all transactions without knowing the identity of the owner. One can see there is one Bitcoin in 2034, but nobody, except Maria and Peter, knows that the post office box belongs to Peter.
Now let's see how Peter took the Bitcoin - he can see it there, so he doesn't need to do anything. But if he wants to move it, he needs to make the box to send it to someone else. To open this postbox he needs a key - and this is his unique private key, also called the private key. Only Peter can use this private key to open his post office box. When he opens it, he can move the Bitcoin and place it in someone else's mailbox. Suppose he bought an online game at Microsoft, he could enter Bitcoin into Microsoft's box and if Microsoft saw the Bitcoin they received, they would send the online game to Peter.
If Maria sends a Bitcoin to the wrong postbox, she can't take it back. This is the same as cash - if you have paid to someone, you cannot take it back easily. No one can move the Bitcoin, except Peter, who has the key to the post office box. If Peter loses the key? Then there won't be anyone who can access the post office box forever! Peter must make sure that no one steals the key, because if so, that person can open Peter's box and steal the Bitcoin. So it's important to keep the key as safe as possible, or entrust the key to someone who can do it.