Bitcoin Technology

Bitcoin Mining Technology – A Biocongroup research article submitted by Marcus on the topic of Bitcoin Technology.

Bitcoin has been developed in 2009 as an experimental system. Since then, it has become a very popular digital currency. This means it can be helpful for buying and selling stuff. One of the challenges that people have to face when they decide to join the Bitcoin mining adventure is the lack of clear information for beginners. Before starting to make a profit from this activity, people must clearly understand how it really works.

Bitcoin Biocongroup

The first thing you need is a Bitcoin Wallet for placing your Bitcoins. A wallet is a piece of software that can store coins individually by assigning a specific address to each of them. There are different wallets available, according to each operating system that is used. This software is open source, so there are variations of it as well. Some wallets require the user to perform backups regularly in order to avoid loss of currency. Others can store information online and backup is not needed in this case.

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The classical currency system involves printed papers called money. Bitcoin is completely different, because money is not printed, but discovered. Just as money is secured by banks, digital currency can be secured by cryptography. The process of discovering the currency is called Bitcoin mining and has been performed using computer processors in the beginning. This type of mining has proven not to be very effective and graphical processors started to be used instead of CPU’s.

The majority of Bitcoin users prefer to buy the currency exchanging money for it, because mining is a challenging process. Despite this, mining can be extremely rewarding once people learn how to do it. The currency is unique and involves peer to peer communication between different computers, in a similar way torrents work. Due to the huge amount of data that has to be processed for all the transactions that are made between users, there is a lot of computing power needed.

The Bitcoin system is completely managed by software, so there is no human controlling it. In order to be able to mine the currency, there is a need for more complex software than the one needed for transactions. A lot of calculations are made for mining, because cryptography problems must be solved and the security of the currency system has to be improved. When someone starts to mine for Bitcoin, the person has to use a computer program that will be able to solve cryptography problems and to compete with other similar programs from other users.

All the transactions are recorded on a log for all users and this also requires a huge computing power. Because of this, mining is often performed by mining pools, which are networks of multiple computers that are connected to solve cryptography problems easier. Every ten minutes, 25 Bitcoins are awarded to one of the users. There are only 21 billion units of Bitcoin and many people think the value of one unit will increase a lot in the future. This is one of the reasons for which people choose Bitcoin mining to accumulate as much Bitcoin as possible until it runs out. They see these units like they would be the shares of a rising company.