Bitcoin mining is the process of discovering new blocks, verifying transactions and adding them to the bitcoin blockchain. Here's what it means, how it works, and why it's important.
In the traditional sense, bitcoin mining encompasses the same steps involved in locating mineral resources; That is, uncovering something before others requires an enormous amount of energy, time and money. Where gold miners use heavy machinery to find gold, bitcoin miners use powerful computers to "discover" new blocks to add to the bitcoin blockchain.
Each time a new block is discovered, the successful miner is given the right to fill that block with new transaction data. In exchange for dedicating the time and resources to performing this task, the winning miners receive a free amount of newly mined bitcoin known as a "block reward", as well as any fees associated with the transactions stored in the new block. .
The mining process is how new transaction data is added to the bitcoin blockchain and controls how new bitcoins go into circulation.
How do bitcoin miners find new blocks?
To validate and add new transactions to the blockchain, miners must compete with each other using specialized computing equipment. They use their tools to generate fixed-length codes known as "hashes" (see below). In order to discover the next block, miners must generate a hash that has an equal or greater number of zeros in front of it than the "target". Hash."
The target hash is a 64-digit hexadecimal code (consisting of the numbers 0-9 and the letters a-f) all miners are trying to go down to find the next block.
As a starting point, all miners take data from the previous block, known as a "block header"—which contains the timestamp of the block, the hash of the previous block data, and a blank known as "cryptographic" There is a place. Nonce." Most of the data in the block header is fixed, meaning it cannot be changed other than the nonce. A nonce means "one-time-use only" and is the part of the previous block header that miners need to know. Tweaking is allowed. Remember, changing just one bit of input produces a completely different hash.
The tricky part is that hashes are generated completely randomly, which means it is impossible for miners to know what the hash will be before generating them. So it's just a matter of trial and error until one finds the true nonce - known as the "golden nonce".
This is why miners have to invest in energy-intensive computers, especially application-specific integrated circuit (ASIC) miners, which can generate trillions of hashes per second.
A simple way to think of bitcoin mining is to imagine a treasure chest with a combination lock on each new block. To get the free bitcoin block reward and win the right to add new transaction data to it (and collect the associated fee) you have to keep turning one of the number wheels on the lock (non) until you crack the combination. (Target hash.)
Here's an example of what the target hash might look like:
0000000000000000057fcc708cf0130d95e27c5819203e9f967ac56e4df598ee
Try creating a winning hash yourself with this free online hash generator to see how difficult it is to generate a hash with more zeros than the target hash above. Just type whatever you want in the text box provided and see if it generates a hash with more than 17 zeros in front!
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