Bitcoin is the world first decentralized currency introduced in 2009. Bitcoin can also be recognized as electronic money or virtual money, which further means that the currency physically does not exist.
In 2009, version 0.1 of Bitcoin was released by a person using a fake name as Satoshi Nakamoto. The program included the issuance of maximum 21 million bitcoin till year 2040. The first real Bitcoin transaction occurred in May 2011, when a computer programmer paid 10,000 Bitcoin for a pizza.
In case of Bitcoin, mining can be defined as a process to figure out new bitcoin.To further simplify, the principal task takes place in mining is the verification of transactions where bitcoin are consumed. In order to make sure that the transaction occurred with valid bitcoin, miners initiate the transaction verification. There are a number of transactions that needs to be verified, collected in virtual locked boxes, usually acknowledged as “blockchains”. These blockchains carrying all unverified transactions, are usually locked with a key, and miners operate various mining softwares (example: GUIMiner) on their computers to unlock these keys. According to blockchain.info, it takes more than 6 billion attempts to unlock a key. For unlocking the blockchain, a miner gets 25 newly generated bitcoin. Mining was started with CPU but as the difficulty increased special GPUs have been introduced just for mining purpose.
Another important part of mining is Bitcoin Wallet, where the Bitcoin earning resides. However, many wallet sites are highly exposed to hackers. Last year, hackers robbed a busy Bitcoin Wallet site Inputs.io, of worth $1.2 million. There is no way to track the stolen bitcoin, since there are no central banks or any other financial institutions involved.
When a mining program is launched, it starts matching various combinations for a blockchain key carrying unverified transactions. The speed of attempts entirely depends on your computer hardware. If a miner’s PC is faster and powerful, chances are bright for faster bitcoin generation. With the difficulty level rising, new and faster hardware is also being introduced in the tech markets for mining purposes that may cost around $10,000.
An economical way to mine is to join Pools, which are the collection of bitcoin miners from all over the world. Many pool sites allow miners to contribute their computer power, and in return miners receive certain percentage of a bitcoin. A computer that mines faster means it contributes more power, which further means that the user would receive a better percentage.
As of today, the current market price of one bitcoin is $447.43. The average number of transactions per day is roughly around 70,000 over the last few months, and the estimated transaction volume is $37,021,198. The total of 146 blocks mined with approximately 3,650 BTC generated in a day.
Many governments are hesitant to introduce bitcoin despite its popularity. Bitcoin price dropped by 50% when China banned virtual currency from all transactions and trading through banks and exchanges. Thailand and Indian governments have also closed down several Bitcoin exchanges. Few countries have not banned Bitcoin, however, they have issued warnings related to losing money to their investors, such as Germany.