What is Bitcoin Mining?

Bitcoin mining process aims at two purposes. One is of adding new transactions to an existing block chain confirming that the transaction is genuine and done in a trustful manner. The second purpose is it also creates and releases a new bitcoin in each block. It requires collecting and compiling of new transactions into blocks and to solve the proof of work problem. Once the solution is found a new block is added to the blockchain and circulated across the network.

Proof of work is a method adopted to find out the time, money and effort spent on finding the information. It includes the investment and maintenance of hardware, power consumption and time you spent to solve the puzzle. The first miner who solves the puzzle earns himself a place in the next block in the block chain and can claim the rewards which come in the form of incentive mining and transaction fees in addition to the newly released bitcoins.

Bitcoin mining gets its name because it is like the other commodity mining which requires effort and brings new currency available in a manner similar to gold or other commodities being mined from underground.

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