A cryptocurrency is a digital asset designed to work as a medium of exchange ( currency ) that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. Bitcoin started in 2009 is one of the largest and was the first decentralized cryptocurrency meaning it has no single server location but rather many locations.
Bitcoin mining is the term given to using computer power to solve complex mathematics problems basically solving a puzzle that is almost impossible to solve. The problem you are given to solve is the decoding of a random number known as a hash. Hashes are large numbers, and are usually written as hexadecimal. BitCoin uses the SHA-256 hash algorithm to generate verifiable random numbers in a way that requires a predictable amount of computer time.
Once solved you get a credit for it and you can add these credits in what is called a block chain that is protected by more cryptography algorithms.
Bitcoin mining is part of the way this cryptocurrency works and is accomplished by running SHA256 double round hash verification processes in order to validate Bitcoin transactions and provide the requisite security for the public ledger of the Bitcoin network. The speed at which you mine Bitcoins is measured in hashes per second.
Bitcoin miners are rewarded for their effort ( by the Bitcoin Network ) in newly issued bitcoin that is released to those who contribute the needed computational power.
The more computing power you contribute then the greater your share of the reward.
To mine bitcoin yourself, you’ll need to purchase bitcoin mining hardware which are basically super fast processors and believe it or not you can get from Amazon.
Next you will need will need to download a special program used for Bitcoin mining. There are many programs out there that can be used for Bitcoin mining, but the two most popular are CGminer and BFGminer which are command line programs.
If you prefer the ease of use that comes with a nice graphical interface instead of a command line there is a program called, EasyMiner which is way easier to use.
For sure it is an interesting idea that you can make money simply by putting computer power to work solving useless puzzles. It would be better to point all this computing power at solving some of the worlds real problems like cyber security and climate change.
We will explore this more in later articles but if you consider what is happening with the ongoing cyber war and the development of super quantum computers as the basis or infrastructure for advanced artificial intelligence you have to wonder if Bitcoin it not a fools folly. Quantum computers can solve problems 100 million times faster than current processors. If these come on-line as Bitcoin mining programs will not the currency need to be devalued by the same ratio?
Already this week there was news ( that was not reported very widely because people do not understand Bitcoin math) where some mysterious entity hacked Bitcoin for 60 million very real US dollars worth of Bitcoin. How can this happen except that someone is turning a very fast sophisticated program to the cracking the code of Bitcoin instead of earning new Bitcoins. What is the world will happen when a quantum computer using advanced A.I. is turned loose on the Bitcoin currency. We already know that we can only protect ourselves for so long until the hacker technology figures out how to best the security technology.
This currency is going crazy right now with unbelievable increases in real currency values. If we start to base our economy on Bitcoin are we not asking for a major crash along the way? What goes up comes down really quickly when faced with quantum physics and artificial intelligence.