Bitcoin mining difficulty explained take over 94,000 students, learn all you need to know about Bitcoin. One Email a Day, 7 Days in a Row. Bitcoins aren’t printed out like traditional money, they are mined out of the system.
A miner is just a person with a computer that runs a mining program on it. Just like any other natural resource, there is a finite amount of Bitcoins. So the maximum amount of Bitcoins that can be generated is 21 million. Until today over 12 million Bitcoins were mined. Just like real world mining, you need to invest energy in order to extract these Bitcoins. Bitcoins are generated and awarded to him.
But miners don’t just generate new Bitcoins. They also use their computers to verify transactions and prevent fraud. So more miners means faster transaction verifications and less fraud. That’s why we want to compensate miners for their hard work.
When verifying a transaction the miner gets a small fee out of that transaction for his work. Satoshi, the guy who invented Bitcoin, wanted the number of Bitcoins that were mined each time to remain constant, no matter how many miners come aboard. That’s why the difficulty of mining increases as more miners join the network. So if in 2009 you could mine 200 Bitcoins with your personal computer at home. That’s why ASIC miners were invented. Super powerful computers designed just for mining Bitcoins. But since so many miners have joined in the past few years it’s still almost impossible to mine alone.
To solve this problem mining pools were invented. Groups of miners formed together to deal with the growing difficulty of Bitcoin mining. Bitcoin Video Crash Course Join over 94,000 students and know all you need to know about Bitcoin. One email a day for 7 days, short and educational, guaranteed. We hate spam as much as you do. You can unsubscribe with one click.