The system today is largely dematerialized and is mainly based on one thing: trust. You trust your bank to keep this register well and so that it does not steal a few cents from you for each transaction, for example. You also have confidence in the States which regulate the quantity of money in circulation and therefore the value of a currency.
But who says centralization, says power, sometimes says… abuse of power. This trust that you have in banks and States may very well be betrayed. And that’s exactly what happened several times in history, such as in 2007-2008 during the subprime financial crisis.
It is precisely in this context that, on October 31, 2008, a certain Satoshi Nakamoto published an article in which he announced the creation of an electronic payment system in peer to peer: bitcoin. The main objective of this system is to get rid of any central organism. Anyone is free to do what they want with their capital without going through a bank or a State.
It is a real revolution, if only for the approximately three billion people on Earth who do not have access to the banking system. Since Bitcoin, dozens of other cryptocurrency projects have emerged, the best known of which is Ethereum.
Kind of like Wikipedia. It is not a person or an institution that writes the best known online encyclopedia. Anyone can write, complete or correct an article. Similarly, in the cryptomonetary system, it is no longer the bank that keeps the register of transactions, but a large number of users.
The system is based on so-called blockchain technology, i.e. a chain of blocks:
Each block contains a number of transactions as well as a fingerprint of all previous transactions.
Users are responsible for verifying these transactions through their computers.
Once done, the block is validated and added to a chain of blocks describing previous transactions.
And so on: this chain of blocks is the equivalent of a bank ledger.
Crypto what? Verifications are made using cryptographic keys, hence their name of cryptocurrencies. To encourage people to participate in the validation of transactions, by making the computing power of their computers available, there is a kind of reward system. With each new block created, a certain number of bitcoins are put into circulation. They are said to be mined.
The rules of the game are as follows: to prove that they have dedicated significant computing power to the system, users must solve complex mathematical puzzles with their computers.
For each validated block, the one who solves the puzzle the fastest wins bitcoins and the transaction fees associated with the block.
But it is not that simple. First, there is a limited number of bitcoins to put into circulation: 21 million exactly. On April 4, the 19 million threshold was crossed. So there’s not much left to mine. And know that the more miners there are, the more the difficulty of the puzzles to solve increases.
In the early years, when bitcoin was hardly used for transactions and was only worth a few cents, there was hardly anyone around and mining was very easy, even with a vulgar Office PC. Between 2013 and 2017, it got a little harder, but bitcoin’s value skyrocketed from $350 to almost $20,000.
Bitcoin is very greedy. Today, there are a lot of people on the job, it has become a real industry. Bitcoin mining requires totally dedicated processors. We already know that we should reach the threshold of 21 million bitcoins in 2144. But before starting, it is necessary to properly calculate its profitability, mining is extremely greedy in computing power, therefore in electricity.
We would love to thank the author of this write-up for this awesome web content
VIDEO – What does “mining cryptocurrency” mean? – Heidi.news
Take a look at our social media accounts along with other pages related to themhttps://metfabtech.com/related-pages/