How Computers can mine Cyrpto Currency

Source: http://media.coindesk.com

Imagine a machine that can continuously generate you money. Bitcoin miners essentially do just that.  The article is written on bitcoinmining.com, a website often referred to when there are questions about bitcoin talks about how it works. If done correctly bitcoin mining is the easiest way there is to bitcoin which can then be traded in for money.

Bitcoin is a very complex form of an online currency, and it used to be able to be mined by a normal computer. But now that the mining difficulty has gone up you need to buy a machine built specifically to mine bitcoins these machines are called miners. The following information was found at Basics of mining  which is a very reliable and is often referred to when people want to learn about mining.  The technical explanation of mining is, “Bitcoin mining is the process of adding transaction records to Bitcoin's public ledger of past transactions or blockchain. This ledger of past transactions is called the blockchain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place.” That definition makes it sound much harder than it really is, if you choose to buy a bitcoin miner, all you have to do to start mining is plug in the machine and connect it to the internet. These miners basically just,  “use special software to solve math problems and are issued a certain number of bitcoins in exchange.” Different types of miners acquire bitcoins at different rates this is called the Hashing rate. The most common miner sold gets you on average about .7 percent of a bitcoin every day. Now that doesn’t seem like much but keep in mind that 1 whole bitcoin is currently worth $594 so essentially you’d be getting $4.16 every day which adds up quickly. Although mining is complex, it is still the easiest way to make money because all you need to do is buy a machine and plug it in.

Publicity is often thought of as a good thing, but when it comes to mining Bitcoins it actually has a negative impact. “As more miners join, the rate of block creation will go up. As the rate of block generation goes up, the difficulty rises to compensate which will push the rate of block creation back down.” The quote makes it sound like you’ll always be getting around the same payout, but actually when more people join they have to pay everyone equally so the difficulty goes up. This means the miners take more time to unlock a block. Many people join a pool which is a large group of miners who work on the same server together to unlock blocks faster, for example I have a miner that is in a pool called Slush Pool with about 13000 other miners working 24/7. If you don’t join a pool you need to write your own code for the miner to work off of, and you a smaller chance of unlocking a block, but if you do mine a full block on your own you get to keep all the reward which is huge,  “Currently this bounty is 25 bitcoins; this value will halve every 210,000 blocks. See Controlled Currency Supply.” That’s right around $15,000 dollars. But this article is a few months old and in the past few months a lot has changed. Now for every block that is unlocked you only receive 12.5 bitcoins. Every 4 years bitcoin mining halves because there are only 21 million that will ever be mined and if it didn’t halve they would run out much faster. But still for each block your pool unlocks you get your share. So now that 12.5 bitcoins is the reward me and everyone in my pool would split that up equally.