Mining for Bitcoin

I think google is best to answer this.

The mining is a decentralized method for verification of the network.




In a nutshell

A way to make it valuable. Need energy to create bitcoin.

(no message)

quote:

---

It’s expensive to run the power supplies for them, but more expensive to keep them from overheating with air conditioning

---

Which is why you hear about people mining in Iceland. Cheap electricity for the computers and cooler ambient air to pump through the buildings.

quote:

---

The long and short of it is the mining makes it financially prohibitive to attempt to defraud the Bitcoin network.

---

Much easier to just hack the exchanges.

quote:

---

Why does Bitcoin have to be "mined"? Why are these supercomputers necessary to do it? What does it truly accomplish?

I thought Bitcoin was just some unregulated currency. So now with this whole mining process for it, I'm really confused.

---

There is much more to it, but think of it like your every day VISA use.

When you swipe your Visa, Visa is actually covering the funds, validating, processing, securing, and charging a fee.

One part of the Bitcoin Network operates much like this. However, instead of centrally owned datacenters from Visa, Mastercard, AMEX, Amazon, your bank, etc, BTC miners verify all of these transactions by supplying hashing power to the network.

So say Visa can handle 10,000 transactions a second. Think of that like a block. People around the US swipe and fill a block up. You could imagine that in many cases, more than 10,000 transactions get sent in per-second. They can get in line and transactions get processed in sort of a backlog. That is why your bank might show pending for a few days.

With Bitcoin mining, it is much like this. Blocks get filled with transactions and all the "miners" verify these transactions via SHA-256 and report this to a public ledger. These prevents double spend, fraud etc. For their efforts, they are rewarded a fee, Bitcoin. This is the incentive mechanism.

How is it secure? Because the hashing power was built on decentralization and rewards (fees). As hashing power comes on (more miners working) security increases as it would take a miner controlling 51% of the hash power on the network to cause a security incident. However, an additional layer to the network is the SHA-256 itself. It would need quantum computing not yet present to break the actual blocks of transactions. (im off in the weeds now).

So anyway, the very basics of the Bitcoin network puts the financial system in the open public and miners are incentivized to participate via rewards (fees). So instead of a centralized policy authority, the network runs based on an open source decentralized mesh-network principle. Border-less and trustless. The code is open, secure, and all transactions are public knowledge.

Not a perfect explanation, but this is how I would explain it to you if we were at a bar having a drink.

You and your fellow fishing buddies are standing on the bank of a river with fish (Bitcoin transactions) flowing by and every once in a while, you catch one (with your miner), confirm it's a fish (a real transaction), and get paid by the Dept. of Genuine Fish (Bitcoin) for that service.

quote:

---

Can someone please explain this to me like I'm 5?

---

The pod contains dozens of seeds, which are planted in a spot that enjoys cool, sunny summers and dry winters. Seedlings grow in the same spot for a couple of summers until they form a bulb large enough to produce a flower. Once flowering finishes, the original bulb forms small bulblets at the base.