What Does Bitcoin Mining Mean?
Bitcoin mining is the process of creating, or rather discovering, bitcoin currency. Unlike real-world money that is printed when more is needed, bitcoin cannot simply be willed into existence, but has to be mined through mathematical processes. Bitcoin maintains a public ledger that contains past transactions, and mining is the process of adding new transactions to this ledger.
Techopedia Explains Bitcoin Mining
Bitcoin mining is essentially the acquisition and creation of bitcoins as a way to introduce more coins into the system, as rewards for doing computational work. The bitcoin network contains a public ledger of all transactions called the block chain, which serves to confirm all past transactions to the rest of the network that these were all legitimate, so that already spent coins have been transferred accordingly.
The primary role of mining is to allow bitcoin nodes to become secure and tamper-resistant, and it is designed to be resource-intensive and difficult so that the number of blocks discovered by miners each day are kept steady, in order to avoid rapid inflation. Each block in the public ledger block chain must have a proof of work in order to be considered as valid. This proof of work is then verified by all other bitcoin nodes in the network each time they receive a block, and this is called the hashcash proof-of-work-function. Miners are awarded with a number of bitcoins, which is agreed upon by everyone in the network. It started with 25 coins and then halves after every 210,000 blocks are discovered. Sometimes, individual miners can link in a network farm that shares the computing power of all participants, who then get a share of for each discovered block depending on the resource contribution.
Bitcoin mining is called that because it largely resembles the actual mining of other material resources; it requires great effort, and as that effort is accumulated, it slowly creates new currency available at rates that are comparable to mining resources such as gold and silver from the ground.