March 10, 2022

Bitcoin Mining and its Benefits

Bitcoin mining has been a very profitable venture for many miners recently. In this article, I will list some of the benefits of Bitcoin mining and why it is profitable.

1) Mining promotes security

In order to have a successful currency people must be able to trust it. Bitcoin in particular was developed in a way that allows for a large amount of security when transferring funds in bitcoin or when handling them in general. The online currency transfers much like physical currency could be subject to theft if not handled properly which is where Bitcoin mining comes into play. You can check the Quantum AI review if you want to make a profit from bitcoin.

Since Bitcoin transactions occur frequently, however, these transactions are verified by multiple computers all over the world each time they occur, it makes it much harder for hackers to capture Bitcoins which further encourages the use of Bitcoins as a currency. This also makes Bitcoin mining a very profitable venture since it requires minimal effort to run your computer yet provides a lot of security for the Bitcoin network.

The bitcoin network is secured by individuals called miners. Miners secure the network by writing transactions to the public ledger and confirming transactions that have been sent out. Whenever a new transaction occurs, or a transfer is made, it must be written into an ongoing ledger at the end of the blockchain in order for it to be recognized as a valid transaction. Transactions are relayed through nodes (I will explain this later) which do the work of verifying that transactions coming from different users are legitimate before propagating them further across the network. Once broadcasted on any node within this decentralized system, every other node validates the transaction and ensures that it follows all the rules of the network. Once validated, miners collect these transactions into blocks which are then attached to the blockchain. Therefore, this process enables Bitcoin users to only have to trust one ledger rather than having to trust every single individual who issues their own version of a ledger (this is what people mean when they say bitcoin users don’t need to trust third party services such as bankers).

The more miners there are mining on a network, the harder it becomes for hackers or any other unauthorized actor to change anything on the public ledger. Since attackers must re-write large portions of another miner’s block in order to make their desired changes, this would require tremendous computing power and time (blocks can hold up to 1 MB of transactions).

2) Bitcoins are finite

By using Bitcoin’s mining process, they can confirm that there are not more than 21 million bitcoins. Each time a new block is completed, 25 bitcoins are generated which go to the miner who helped with this process. This makes it difficult for people or companies to flood the market with an infinite amount of bitcoins and devalue the currency. The entire process is designed in such a way that there is no way for users to produce more than 21 million bitcoins (the cap at which point miners will receive 0 compensation). Also, the cost of running hardware required for bitcoin mining increases as more miners join in on generating blocks, therefore, making it even harder for any person or entity to flood the market with infinite bitcoins.

3) Bitcoins are difficult to trace

While Bitcoin mining can reveal who has what bitcoin, it does not tie those bitcoins to a person or entity specifically. Each transaction is attached to an address which is nothing more than a randomly generated series of numbers and letters; however, the identity of each user cannot be linked unless they themselves publicly disclose their real name and attach that information to that specific Bitcoin address (the same as you would with your bank account). This makes Bitcoin much easier for people who wish to remain anonymous while buying and selling goods online since there is no need for one to have an account at any of the major services linked directly to your name. Additionally, transactions are verified by miners all over the world before being written into the ledger, so you cannot fake a transaction. This means the person sending or receiving bitcoins must know their public key (bitcoin address) and private key for this address to move funds.

4) Bitcoins are fast

The Bitcoin network processes one block every ten minutes on average which is much faster than most major credit card companies that can take days or weeks before transactions are finalized. There are some services that provide faster transactions but they cost more in transaction fees since miners prioritize people who pay higher fees. If there is not enough time between each block for your transaction, then it will simply be returned back to you as an “unconfirmed” transaction until there is at least one new block added to the blockchain after yours (10 minutes). Once confirmed by a miner in the blockchain, the money is sent and received normally.


About the author 

Elle Gellrich

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