Whilst you probably already heard of Bitcoin you might be unsure of how coins come to exist. This guide will explain the concept of mining, and what you can do with digital tokens you make.
With fiat currency, each individual government decides when and how much money should be printed. Bitcoin, on the other hand, is created every time special software is used to solve math problems. In this manner, the currency is created as a result of a real need, whilst it is, in itself, its own reward. You can find a detailed description of what is Bitcoin in a previous guide.
The term mining is the name given to the process of adding transactions to a blockchain. Bitcoin nodes use this blockchain to determine whether a particular transaction is legitimate or whether the coins being used have already been used in the past.
So as not to flood the users with Bitcoin and make the currency worthless, mining is specifically designed to be resource-intensive. Blocks made by miners need to be verified and contain what is known as a proof-of-work. For all of their work, miners are rewarded with Bitcoin or other cryptocurrencies.
Whilst it was once enough to run the mining software on a PC, today the only feasible way to do it is to use dedicated mining rigs. On average, a block of Bitcoin gets mined every 10 minutes and creates 12.5 coins. These coins are distributed between all the peers which contributed to the solving of the function. Normally, these peers number in the thousands, so it takes a long time for any one single peer to build amass a Bitcoin fortune.
Whilst mining might seem complicated at first, there are many resources to help get you on your way. Once you own some Bitcoin, you need to decide what you plan to do with it.
At the very least, you can store it in a crypto wallet. These wallets come in various forms and security functions and you should pick one which best suits your needs. Whilst the currency is in your wallet you might be getting richer without doing anything. This is because as Bitcoin becomes even more popular, investors are willing to simply purchase it off other people without going through the mining process.
Similarly to a stock market, the price of this digital coin varies depending on speculation, demand, and supply. Open an account with a major cryptocurrency exchange such as Binance or Kraken and follow these instructions on how to sell Bitcoin. The process is very simple and allows you to receive fiat currency or another cryptocurrency in exchange for your Bitcoin.
The success of a growing number of digital tokens, together with the development of the virtual infrastructure needed to have a safe and stable trading environment is leading to the rise of Bitcoin and other currencies.
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Whilst you probably already heard of Bitcoin you might be unsure of how coins come to exist. This guide will explain the concept of mining, and what you can do with digital tokens you make. With fiat currency, each individual government decides when and how much money should be printed. Bitcoin, on the other hand, […]
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