Over a few years now, the cryptocurrency market has become more popular. It all started back in 2009 when the financial world was revolutionized, with the creation of a unique and novel virtual currency then; it was Bitcoin.
Currently, this digital currency is still the highest representative in this virtual market and, although similar ones have been born over the years, the vast majority of users prefer to continue working with it. However, in this context, we have come to ask how Bitcoins are generated, since they are digital currencies that only exist on the network
How will they do so that they continue to be created?
Bitcoins are generated from a process known as mining. We will see in detail what it consists of and what needs to be done to be Bitcoins miners.
We are clear that when different governments need more cash, what they do is give the order to print a more significant number of paper-money. So far, we agree, but it is not very complicated to understand, considering that it is traditional money.
However, the question arises when we start talking about Bitcoins since they are virtual currencies that cannot be printed. It is in this sense that the concept of mining becomes essential. So that we understand well what we mean by this, if traditional money is created, meanwhile, virtual currencies are discovered.
Yes, as if it were a mine that we are biting until we find some precious stone because something quite similar is what happens with the Bitcoins, but logically within the network.
What is mining?
Mining consists of the following, a large number of computers scattered around the world (called miners), compete with each other to find the solution to a mathematical problem. The winning miner takes a reward, which in this case is a Bitcoins consignment. The amount of coins that can be taken will depend on the difficulty that this problem has to solve it, and also, as time passes, the system decreases that figure.
In the beginning, the reward was 50 Bitcoins for each block, while now it is only 25. It is because there is a fixed number of Bitcoins that can be in circulation; in particular, the figure may not exceed 21 million coins.
There are currently around 13,000, but as the years go by this number will increase, while the rewards will decrease until they reach zero. The idea of having to solve a mathematical problem before anyone else has made the miners increasingly competitive.
In fact, it is no longer worth mining Bitcoins from the home computer, because there are now much more prepared and connected machines that seek not only the reward but also the efficiency of the system. There are many types of software for Bitcoin mining. The best bitcoin mining software can be an integral part of the mining process, as it is responsible for delivering the work of the mining hardware to the rest of the Bitcoin network.
How are Bitcoins generated?
In the previous segment, we have talked about the concept of mining because it will be closely related to the generation of Bitcoins. If we do a little memory, we have previously commented that the miners are thousands of computers competing at the same time for a reward.
How is that competition? What do they have to do?
Yes, the objective is to solve a mathematical problem that arises but, to reach the end, they must carry out a series of steps. If the solution they give is a success, then one of them will receive the reward, a stipulated amount of Bitcoins, which favors the generation of more virtual currencies of this type.
Well, the process is as follows. All the miners receive the signals of the multiple transactions that users have been carrying out. Here is the process that must be carried out in the mining of Bitcoins:
- Collection of all transactions
- Check the digital signature of those movements
- Building blocks with their respective mathematical formula
However, there is no trick to do it; the process is always the same; the only thing that changes are the variables. So to get to the solution, you have to try random numbers, logically whoever arrives before it will take the reward.
The difficulty lies when new information is included in the blocks so the nance changes immediately and we will have to go in search of another formula. Remember that the validation of blocks in Bitcoins occurs every 10 minutes approximately, so that is the time we have to get to solve the problem. The new information that is included in the blocks is called “hash.”
The hash is the most critical element to generate Bitcoins since at the moment we create one successfully, the system detects it right away, and the Bitcoins reward is granted, also being responsible for sealing the blocks with all the valid transactions that have been introduced in them.
The world of bitcoins
The first thing to know is that miners play a significant role in generating Bitcoins since they are responsible for creating the transaction blocks and solving the correct mathematical formula. Whenever you want to create a block, you must first validate the corresponding transactions, taking into account that this process usually takes about 10 minutes for each block and then, a new formula is applied to that block by entering more information, known as hash.