What is mining? ⛏️ How Bitcoin is mined and why is it necessary?

When you hear 'mining', you might envision people 'extracting' coins. In reality, that's not the case. Mining is a complex yet very important process that ensures the security and viability of Bitcoin and other cryptocurrencies.

What is mining?

Mining is the use of powerful computers to solve complex mathematical problems. This process is called Proof of Work. It allows for the verification of transactions and the addition of new blocks to the blockchain.

How does it work?

1. Competition. Miners around the world compete to be the first to solve a complex mathematical problem.

2. Transaction verification. The first person to find a solution gets the right to add a new block, consisting of verified transactions, to the blockchain.

3. Reward. For their work, a successful miner receives a reward in the form of new Bitcoins and transaction fees.

Why is mining necessary?

Security. Mining makes the Bitcoin network incredibly secure. To launch an attack on the network, an attacker would need to control more than 50% of its computing power, which is practically impossible.

Issuance of new coins. Mining is the only way new Bitcoins enter circulation. This process is strictly regulated by code, ensuring a predictable and deflationary issuance.

In summary: Mining is not just a way to earn money. It is a key mechanism that ensures the security, decentralization, and issuance of Bitcoin.

What do you think is more important: the security of PoW or the energy efficiency of PoS? Share your opinions in the comments 👇