Blockchain Technology | How It Helps Mine Cryptocurrency

If you’re interested in mining Cryptocurrencies such as Bitcoin, you’ll get across a term like Blockchain Technology. Blockchain is decentralized, which means it’s not controlled by any one organization. It’s like a Google Doc that anyone can work on.

In addition, nobody really owns it. But, anyone who has a link can contribute to it. And as different people update it, your copy also gets updated. While the idea that anyone can edit the blockchain might sound risky, it’s actually what makes Bitcoin trustworthy and secure.

What Is Blockchain Technology?

In order for a transaction block to be added to the Bitcoin blockchain, it must be verified by the majority of all Bitcoin holders. And then, thereafter, the unique codes are used to recognize users’ wallets and transactions.

Related Topic: Cryptocurrency | Types of Cryptos, Mining & Trading Tools

As a result, they must all conform to the right encryption pattern. These codes are long, random numbers, making them incredibly difficult to fraudulently produce.

In fact, a fraudster guessing the key code to your Bitcoin wallet has roughly very less chances. Since they are the same odds as someone winning a Powerball lottery nine times in a row. It’s this level of statistical randomness for blockchain verification codes that are needed for every transaction.

Whilst, greatly reducing the risk anyone can make fraudulent Crypto transactions. You can read and learn more about how Cryptocurrency works in detail.

What Is Blockchain Technology?

To enumerate, Blockchain Technology is a decentralized ledger of all transactions across a peer-to-peer network. Using this technology, participants can confirm transactions without a need for a central clearing authority. Potential applications can include fund transfers, settling trades, voting, and many other issues.

At times, Blockchain Technology seems so complicated. And definitely, it can be, but its core concept is really quite simple since it’s just a type of Database. That said, to be able to understand the role of a Blockchain, we must first understand what a Database actually is.

A Database is a collection of information that is stored electronically on a computer system. Spreadsheets are designed for one person, or a small group of people, to store and access limited amounts of information.

Learn More: The Key Types of Databases

 In contrast, a database is designed to house significantly larger amounts of information. Especially, information that can be accessed, filtered and manipulated quickly and easily by any number of users at once.

Large databases achieve this by housing data on Web servers that are made of powerful computers. These servers can sometimes be built using hundreds or thousands of computers. In order to have the greatest computational power and storage capacity.

And all this is necessary for many users to access the database simultaneously. While a spreadsheet or database may be accessible to any number of people, it is often owned by a business and managed by an appointed individual that has complete control over how it works and the data within it.

How Blockchain Distributed Ledger Technology (DLT) Works

As I mentioned, Blockchain is a system technology of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. Essentially, it’s a digital ledger of transactions.

And as such, it’s duplicated and distributed across the entire network of computer systems on the Blockchain. Each block in the chain contains a number of transactions. And every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger.

How Blockchain Distributed Ledger Technology (DLT) Works

Fig: The Properties of Distributed Ledger Technology (DLT) | Blockchain Explained | Euromoney Learning

As illustrated above, the decentralized database managed by multiple participants is known as Distributed Ledger Technology (DLT).

In other words, Blockchain is a type of DLT in which transactions are recorded with an immutable cryptographic signature called a hash.

Learn More: What is a Decentralized Database?

This means a change of one block would be immediately apparent for temperament. Meaning, if hackers wanted to corrupt a blockchain system, they would have to change every block in the chain. More so, across all of the distributed versions of the chain.

Technically, Blockchains such as Bitcoin and Ethereum are constantly and continually growing. But, why such a case? Simply, because there is a constant addition of blockchains. While significantly adding to the security of the ledger.

How Blockchain Helps Mine Bitcoins 

For those interested or still new in Crypto Mining, before you start to Mine Bitcoins, it’s important to first understand something first. And that’s the Cryptocurrency mining process. Forthwith, as an example, we’ll consider Bitcoin mining.

We define Bitcoin mining as the process of adding new transactions to a Crypto Blockchain. Crypto Mining is a tough job though. And now, with that in mind, people who choose to Mine Bitcoins use a process called Proof of Work.

Learn More: Proof of Work vs Proof of Stake: What’s The Difference?

To enumerate, by Proof of Work (PoW), it means deploying computers in a race to solve mathematical puzzles that verify transactions. And as a result, the Bitcoin code rewards miners with new Bitcoins.

This is so benefactor as it helps entice miners to keep racing. As they try to solve the puzzles and support the overall system. Each time, the Bitcoin mining code will release no new coins. Instead, miners may have to rely on transaction fees.

Learn More: What’s the difference between Blockchain and Bitcoin?

Blockchain is the technology that underpins Cryptocurrency Bitcoin. But, there’re several other Cryptocurrencies with their own blockchain and distributed ledger architectures.

Meanwhile, the decentralization of the technology has also led to several schisms or forks within the Bitcoin network. Creating offshoots of the ledger where some miners use a Blockchain with one set of rules. While others it with another set of rules.

Useful Tools to Mine Bitcoins and other Cryptos

In the early days, it was so easy and possible for the average person to mine Bitcoins. But, that’s no longer the case anymore. Technically, because of its constant coding. Making solving its puzzles more and more challenging over time.

For this reason, that’s why it requires more and more computing power and resources. So, as of today, if you want to mine Bitcoins, you’ll require an autonomous and powerful computer. In addition to access of massive amounts of cheap electricity to be successful.

Learn More: Cryptocurrency | Types of Cryptos, Mining & Trading Tools

On the contrary, the mining process pays less than it used to. Making it even harder to recoup the rising computational and electrical costs.

Back in 2009 — when this technology first came out — every time you got a Bitcoin stamp, you’d get a much larger amount of coins than you do today. Meaning, there’re more and more transactions now. So the amount you get paid for each stamp is less and less by day.

Why is there so much Hype around Blockchain Technology?

At the moment, Blockchain is the Holy Grail for many Cryptos like Bitcoin and Ethereum. Thus, it matters more than you think — even the likes of Jack Ma, Bill Gates, Elon Musk, Vitalik|Simplilearn attests that (watch video).

Bearing in mind, there have been many attempts to create digital money in the past. But, unfortunately, they’ve always failed. The prevailing issue is trust. Furthermore, let’s say someone creates a new currency called the X dollar. How can we trust that they won’t give themselves a million X dollars, or steal your X dollars for themselves?

Related Topic: What are the risks with public Blockchains?

Luckily, Bitcoin solves this problem. By using a specific type of database we all know as Blockchain. Most normal databases, such as an SQL database, have someone in charge. Whereby, they can change the entries (e.g. giving themselves a million X dollars).

Blockchain is different because nobody is in charge; since its users run it. What’s more, it’s not practically not possible to fake, hack, or double-spend it. So, people that own this money can trust that it has some value.

Final Thoughts,

In a real sense, Blockchain Technology has potential applications far beyond any given Cryptocurrency like Bitcoin. But, why? Well, from a business perspective, it’s helpful to think of Blockchain Technology as a type of next-generation business process improvement software.

On one side, the Collaborative Power in Blockchain Technology promises the ability to improve the business processes that occur between companies. Whilst, radically lowering the “cost of trust.”

For this reason, it may offer significantly higher returns for each investment dollar spent. Of course, than most traditional internal investments.

Related Topic: CryptoTab Browser | Earn Free Bitcoins While Web Surfing!

On the other side, Financial Institutions are also exploring how they could also use this technology to upend everything digitally. From online orders clearing and revenue settlement to business insurance.

In other news, Blockstack PBC is now officially Hiro Systems PBC. The change to Hiro will mark a renewed focus on developer tools for the user-owned internet on Bitcoin, While more clearly delineating the company and ecosystem.

Here is the Link: Blockstack Browser | The #1 Stacking Tool to Mine Bitcoins

Hiro builds developer tools for Stacks, the network that enables apps and smart contracts on Bitcoin. For newbies, we already discussed how Blockstack Browser works in detail.

Blockstack Browser is yet another great alternative to CryptoTab Browser if you’re still interested in Bitcoin Mining that is. Powered by Stacks (more details later), it provides you with better internet, built on Bitcoin.

Learn More: Bitcoin Mining Energy Consumption

Now that Stacks makes Bitcoin so programmable. While enabling decentralized apps and smart contracts that inherit all of Bitcoin’s powers. So, with that in mind, do you think there is something else we can add.

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