Bitcoin mining is the process by which new bitcoins are created and transactions are verified on the Bitcoin network. It involves solving complex mathematical problems using computers. Miners compete to validate transactions and add them to the blockchain, earning rewards in the form of new bitcoins and transaction fees.
Key Points:
Decentralized validation: Mining helps keep the Bitcoin network secure and decentralized.
Proof of Work: Miners solve computational puzzles (Proof of Work) to validate transactions.
Rewards: Successful miners earn new bitcoins and transaction fees.
Equipment: Mining can be done with powerful computers called ASICs or GPUs.
Energy usage: Mining consumes a lot of electricity due to the computational power required.
Simplified Example:
Think of mining as a digital lottery where computers compete to solve a puzzle. The winner gets a reward (bitcoins) and helps maintain the Bitcoin ledger.
