Bitcoin is no doubt one of the most revolutionary technological advancement in the 21st century, and its primary role is to facilitate peer-to-peer fund transfers. Due to its decentralized and open source nature, it has gained massive popularity over the years. Bitcoin stands out from other currencies since unlike fiat currencies, Bitcoin does not have any governing body or central authority like a federal bank or government/ private institution.
The bitcoin’s blockchain comprises of a massive number of people facilitating digital transactions by sharing processing power. This process is also referred to as bitcoin mining, while the group of people referred to as miners. Bitcoin mining is the backbone of the Bitcoin network and without miners, this network ceases to exist.
Bitcoin has been in existence since 2009, and this was after Satoshi Nakamoto published a journal concerning the virtual currency. Only nine years have passed, and bitcoin has a vast and rich history which is worth understanding. For you to have an in-depth knowledge of bitcoins history, it is requisite to know what bitcoin mining is and its evolution throughout the years.
What is Bitcoin Mining?
According to bitcoins official website, bitcoin mining is termed as the process of adding new transactions to the bitcoins pubic ledger, also known as blockchain. The blockchain is a shared ledger that contains all records of transactions made over the network. Every time a transaction is made, the miners verify it against existing records to confirm its validity. The reason why miners double check the validity of the transactions is to ensure a bitcoin is not spent more than once.
The blockchain is securely encrypted to prevent anyone from changing or tampering with the records. Miners use powerful processing power to decrypt transaction records and the blocks to approve its status. The processing power is contributed by a mining hardware, which solves complex cryptographic equations. These equations identify and add new blocks to the blockchain, and new transaction data gets stored in these blocks. For every new block discovered, the miners get rewarded in the form of newly created bitcoins, and this acts as an incentive for contributing to the network.
The Evolution of Bitcoin Mining
Now with some general knowledge of bitcoin mining, we can now delve into the evolution of bitcoin mining in the past eight years. In the earlier days, the cryptographic equations used in bitcoin mining were less sophisticated and could be easily handled by the CPU of a regular P.C. However, as the number of transactions and people increased, the necessary processing power required also increased. Miners had to upgrade from using CPUs to mining with GPUs, which are more powerful compared to the former.
The bitcoin network was developed in a manner which the cryptographic problems increase in difficulty at regular intervals. Once the system detects an upsurge in the networks processing capacity, the block generation is continuously increased at a rate of 1 block every 10 minutes. According to Moore’s law, the efficiency of processors is always steadily improving over time, and true to this theory, devices dedicated to bitcoin mining have been developed. These devices are known as Bitcoin Miners
Cryptographic problems became more and more complex, leading to the introduction of Field Programmable Gate Array miners, in short FPGA Miners. FPGA miners were equipped with integrated circuits, specially programmed to mine bitcoins. The advent of FPGA miners outmoded CPU and GPU mining since they couldn’t compete with FPGA miners. Sadly, the reign of FPGA miners was brief, and Application Specific Integrated Circuits (ASICs) became the preferable method of bitcoin mining. ASIC miners had customer chipsets which performed only one task- Bitcoin mining. ASIC Miners provided a much more superior performance, and since their introduction, they have overshadowed every other mining hardware available to date. ASIC miners have experienced a ton of upgrades throughout the years, and newer versions have been released with more processing power, reduced power consumption and improved efficiency to increase the profitability. Most ASIC users are individuals; however, there are big corporations that have set up huge data centers with hundreds of high-end ASIC miners. People can invest in these companies and purchase processing power. Investors then receive their share of profits depending on their initial investment.
From experience mining bitcoins is an ever-evolving process and we can’t guarantee that ASICs will last forever. There is a massive likelihood that a more fast, efficient and powerful mining hardware will supersede ASIC miners.
Note: If you are wondering on where to get bitcoins for your day to day use such as bitcoin gambling, but don’t know how to mine Bitcoins, worry not, Bitcoin mining is not the only method of acquiring Bitcoins. You can purchase bitcoins on cryptocurrency exchanges or even directly from other people who own Bitcoin via marketplaces. You can purchase them through a variety of ways, either by using regular fiat money, credit cards, wire transfers, or also using altcoins depending on your location.
The technology behind Bitcoin mining is revolutionizing the whole financial industry- and this is just the beginning. The goal of being an entirely cashless society is slowly being realized; however, there are still some obstacles along the way. Without the backing, of governments and other investors, Bitcoin’s potential won’t be fully realized. However, with the innovative nature of Human Beings, more effort will be put into ensuring Bitcoins are mined more efficiently and in circulation.