Bitcoin mining is the process of determining the cryptographic signature of operations block. The block of operations writes down the information about transactions entered into the network after the generation of the previous group of transactions (about 10 minutes). The main cryptocurrency network uses the SHA-256 Hash Algorithm. The miner is rewarded for his actions in digital coins.
Initially, the decoding of blocks did not require large capacities, therefore, the CPU handled the task. So, during the first two years, the complexity of the tasks grew slowly. At the cost of tokens of a few cents, the competition was low, because no one was counting on super profits. Since 2011, a program for video cards has appeared. Its performance was significantly higher, so the arms race in the field of mining began from that time. Today, ASIC devices dominate the digital coin mining market, surpassing their analogs in power.
Bitcoin Mining Algorithm
The use of the Mathematical Theorem “Proof of Work” in the field of cryptography (PoW) implies a change in complexity during 2016 blocks. If it takes 10 minutes to open a block, this procedure takes about 2 weeks. Approximately every 4 years, the remuneration of users is reduced to two times. Initially, 50 digital coins were supposed to be a successful earner for disclosing a block, and now this amount has decreased fourfold.
Why Do It Need Bitcoin Mining?
Thanks to the work of miners the high security operations is guaranteed in the cryptocurrency network. The following functions of the payment system are supported:
• Protection against entering fake data;
• Decentralization and independence;
• Confirmation of transactions;
• Elimination of hacker attacks.
To complete the operation between two members of the Bitcoin network it requires the approval of the entire unit. If the miner has confirmed the transaction by including it in the transaction group, the coins are moved to the specified address. To fake a block, you need to get a signature, formed based on previous transactions. To do this, it is necessary to carry out calculations performed from January 3, 2009. That is why, hacking the network becomes unreal. It is also unrealistic to have 51% of capacity, because it will take hundreds of billions of dollars to buy equipment.
The Future of Bitcoin Mining
The development of electronics will bring new technologies (quantum computing, оptoelectronics, superconductors). Network power will gradually increase. The possibilities of single-miners are declining, and only large players will remain on the market. The cooling of specialized equipment requires serious costs, so we should expect the appearance of farms in Iceland, Antarctica and the Arctic Ocean.