How does bitcoin work?
We hear about cryptocurrency every day Ethereum, Dogecoin, there are various kinds of cryptocurrencies. we understand the trading that we purchase at a low price and then sell at a high price but how all these cryptocurrencies are made and who is making them?
If I talk about Bitcoin, Bitcoin is also a Cryptocurrency. And because it’s quite famous and old, so will take bitcoin as an example of how is bitcoin made?
The way our normal currency prints such as notes of 100 and 50 rupees. Bitcoins are not printed that way, bitcoin generates through bitcoin mining. And it’s being called mining because of the way our national resources are finite in numbers and we mine them. In the same way, bitcoin is also a finite number and we mine them.
There are 21 million Bitcoins out of which we have generated more than 18 million Bitcoin. And every day we are generating around 900 bitcoins, this is a rough idea because It depends on how many miners will participate.
Satoshi Nakamoto created it as an alternative to our current banking system. In our current banking system, suppose if you want to give money to someone, your bank will deduct the money from your account and add it to the account of the person you want to pay. And the bank also charges you some amount for maintaining this record. And the money that is in your account, the bank invests it in different places. And generates money and suppose if the investment goes into loss, your money is at risk. As we saw in the case of PMC bank because few selected institutions are controlling this whole structure the power is also in the hands of some selected people.
How is bitcoin different from that?
Bitcoin has given us an alternative to this current banking system. We can also transact in bitcoins just like we do transactions in banks. But in the bank, there is a centralized system to maintain records. but we cannot use that centralized system in bitcoin. Because then everything would have become like the banking system, all the power would have gone to some selective institutions. Instead of centralizing the records of transactions, Satoshi Nakamoto gave it in the hands of millions of people through blockchain.
The person who has the system can participate in it and after a successful entry and he will get 1 bitcoin as a reward, So in this, you don’t have to do the calculations
How to mine cryptocurrency on your PC
Crypto mining meaning
You just have to install your system and leave it, it has an automatic algorithm that will run itself, So this is how bitcoins are generated. And the people who run automatic algorithms by installing their systems are called miners. And this whole process is called bitcoin mining.
So if this process is so simple Then everyone should start generating these 45 lakh and 50 lakh bitcoins with their computers it is not that easy either. Satoshi Nakamoto also did what our government used to do. If our government wants, they can print more notes, but they do not do so because they know that if they print notes, then it will only increase inflation, there will be no solution suppose there is only one bottle of water Rs 10/- left in an area and all the people who want to purchase it have one lakh rupees, then the cost of that bottle will be 1 lakh rupees. So printing more currency will only increase inflation, there will be no real solution.
The real solution will be when the resources will increase.
It’s the same thing Satoshi Nakamoto did in bitcoin. Satoshi Nakamoto made a rule that only 21 million bitcoins will be generated. And the more people who do bitcoin mining, the less reward will be given as a bitcoin. In 2009 you could generate 200 Bitcoins in 2 to 3 days but today If you want to generate one bitcoin then it will take you more than 150 to 200 years. And it could be even less if bitcoin miners go down.
But the number of miners is not decreasing, They are increasing day by day. The faster your computer works, the faster you can generate bitcoin.
Earlier people used normal computers. but to generate bitcoin faster people use GPU and then when all people started using GPU for bitcoin people started using FPGA and today only to generate bitcoin ASIC hardware has come and their job is mining bitcoins and they are very fast.
The bitcoin mining craze has become much less competitive than it used to be. because the competition is very high so the configuration of hardware is also. So its cost has increased a lot. And it is taking too long to generate Bitcoin If you look at electricity, it is not as feasible as it was before and its price fluctuates a lot, so many things depend on it too.
Bitcoin calculator mining
How bitcoin calculators work
If you want to check for yourself whether bitcoin mining is profitable or not, then there is a lot of software, you can put all your details in it, you will know. If you are interested in bitcoin, then you can do 3 things in it, First, you can make transactions in it. Second, you can generate bitcoin in this which we have already discussed. Third, you can also trade in bitcoin, which is like normal trading bitcoin is also traded in the same way as in the stock market, people buy at less and try to sell it at a high price.
(The mining stats are based on a network hash rate of 197,562,509,028 GH/s and a BTC-USD exchange rate of 1 BTC = $ 38,332.53. The entire network hash rate and the BTC to USD conversion rate affect these values. 6.25 BTC is the fixed block reward. Changes in block reward and hash rate are not taken into account in the future. The calculation used a 609-second average block time. The cost of power utilized to generate these figures is $ 0.12 per kWh. The hash rate of the network changes over time; this is only a guess based on current statistics.)
The most important thing is if you are daydreaming of becoming rich overnight then you will surely endure loss. But yes, if you invest smartly, you can earn from it.