Many people don’t know how cryptocurrencies came into existence. Yes, they know who came up with them, but they don’t know anything about details that led to their creation. Satoshi Nakamoto is an individual (or possibly a group) that looked for a way to create a peer-to-peer electronic cash system to replace existing systems that are not 100% secure.
Nakamoto invented a decentralized cash system that allowed people to make direct transfers, unlike traditional systems that require an intermediary. Having a third party means that the security can be compromised in many ways.
The rise of Bitcoin
The creation of digital cash has always been an issue as it led to double spending. The problem occurred due to lack of central server that has to record requests. Problems arise even in cases where there is a middleman, as the complexity and the security aren’t suitable for digital cash system. So, in the end, the need for digital cash system was high, and the introduction of blockchain was something everyone wanted.
So, bitcoin is just a side-product of the peer-to-peer cash system. Bitcoin represents limited entries that are unchangeable until all conditions are met. This, in a way, is the same definition you can apply to a standard currency. This, of course, relates to cash you have on your bank account and other virtual accounts. All types of money and anything else of value is just data that is recorded in one way or another.
Bitcoin is just that, except its value depends on things that do not affect other currencies. Everyone knows how variable the value of cryptocurrencies is. The reason for that is the discrepancy between supply and demand. Anyone can buy a computer rig for bitcoin mining, and thus make a profit while completing tasks.
The need for power that comes from bitcoin mining is always increasing, and thus the demand goes up on the constant basis. The number of miners varies, but it’s safe to say that their numbers increase as well. The lack of consistency with the rise of both demand and supply is one of the elements that determine the value of bitcoin and other cryptocurrencies.
How does bitcoin mining works?
So, we come to the part of the article everyone wants to read, and that is how one can profit by mining and how does that mining works. Well, you can mine bitcoin as long as you buy a computer with several powerful graphics cards. You can find those hardware rigs at any reputable online shop. You will notice that those rigs cost a lot of money and that is due to the number of powerful graphics cards they use.
Now, mining bitcoins is also expensive in another way, as it uses a lot of electricity. The reason for this increased electricity spending is due to tasks you run with the setup. Bitcoin mining refers to completing complex mathematics tasks. In other words, you are providing power to maintain digital networks by solving those tasks. This blockchain activity can be used for other things aside from peer-to-peer systems that include everything from simple activities to 3D graphics rendering and sharing.