Many investors are attracted to cryptocurrency mining despite the fact that cryptocurrency mining is costly and conscientious. The fact that attracts the investors is the rewards that miners get for the hard work and efforts. The miners are rewarded with a crypto token for doing the mining process. But it would be best if you only were not attracted to it by knowing the rewards and knowing about the hardware required. Before you learn about the equipment required and invest your time, it is important to know the process of mining and to learn more about bitcoin check Crypto Genius App.
Unlike traditional currencies printed by the government whenever required, digital currencies like bitcoin are not created or printed but are mined. The main benefit of bitcoin mining is that miners are rewarded for putting in their efforts. But in order to gain bitcoin or other crypto tokens, it is not important to be a miner. The users can also buy cryptocurrencies by exchanging fiat currencies.
The miners are provided a reward as an incentive to motivate the miners to do the most important activity of the bitcoin network. Bitcoin miners fulfill the main purposes of the mining process, which include ensuring the validity of transactions, monitoring the transactions, and making them legitimate. In the Bitcoin network, the responsibility to have control over funds and protect the funds is in users’ hands, which makes bitcoin a decentralized currency. Let us move forward and understand how bitcoins are mined.
How are bitcoins mined?
Similar to auditors, miners are paid for putting their efforts and getting work done. The miners do the work of verifying the bitcoin transactions and making them legitimate. This process was made to keep the users honest, and this method was envisaged by Satoshi Nakamoto, the founder of bitcoin. The mining method was invented to verify the transactions and prevent the common problem of “double-spending.”
Unlike traditional currencies in which the currencies once have gone is no longer yours, in the bitcoin network, most people tend to pay the amount the bitcoins twice. This is the scenario of double-spending, and some users do it intentionally; and to avoid this issue, bitcoin mining was introduced.
All the miners compete to verify the 1 MB of bitcoin transactions; the 1MB of transactions makes a block. The process of verifying a block of transactions makes miners eligible to earn a crypto token reward. The limit of 1MB was set by bitcoin, Satoshi Nakamoto, but there is a controversy, and miner believes that the size of the block must be increased to have room for data. A miner who solves the 1MB of transactions fast gets eligible for a reward, and not all the miners who verify the transactions are paid out.
Mining and Circulation of Bitcoin
The miners are not only helpful in verifying the bitcoin transactions but also help by supporting the bitcoin community. It is one of the most popular ways of releasing new currency and circulating it into the market. In simple words, miners do the work of mining currency. There are 21 million bitcoins that exist, and from 21 million, there are 18.5 million bitcoins currently in circulation.
The bitcoins came into existence because of the hard work and efforts of miners. Rewards are provided to miners as an incentive, but the mining process will end once all 21 million bitcoins are discovered. With more and more bitcoins being discovered, the rate of mining tends to decrease with time. It is estimated that the final bitcoin will be circulated till the year 2140. After that, the miners will also verify the transactions, but the reward to them will be given in the form of fees to circulate the bitcoin and maintain the integrity of the entire network.
The rewards for the mining process are set to get reduced every four years. The bitcoins will be halved every four years. Since the invention of bitcoin, the bitcoin reward was 50 bitcoins, and in 2020 its reward is 6.25 bitcoins. This is quite an attractive incentive for miners that work hard to earn bitcoins by investing in equipment and time.