What is Bitcoin mining (Bitcoin mining)?

What is Bitcoin mining (Bitcoin mining)?

Bitcoin mining (Bitcoin Mining) is one way to earn Bitcoin. As mentioned earlier, we can view Bitcoin as a large global cash system that keeps the history of transactions (or 'money movements') from one person to another. When Bitcoin transactions are processed on the Bitcoin network -- meaning Bitcoins are being transferred from one person to another -- one needs to ensure that all transactions are properly recorded and that the cash system is synchronized worldwide.

In the case of Bitcoin, this process is not carried out by individuals or companies, but by thousands of computers around the world that are connected to the internet. These computers are known as miners or 'miners'. In simple terms, they are 'computers that process transactions'.

To do this processing in a secure way, computers need to perform complex calculations that take up a lot of computing effort, so a lot of energy and sophisticated special tools are also required. Someone -- the owner of these computers -- needs to pay for the tools and electricity, so they have to be compensated for all the effort and money they put into supporting this network. They get compensated through newly mined Bitcoins. Newly mined Bitcoins act as rewards and incentives for those who contribute to the system that supports transaction processing.

Another way to understand this is to imagine what would happen if a large bank built the world's largest global transaction processing system: they would spend billions of dollars and then charge users a small transaction fee to cover the cost of building the system.

With Bitcoin mining, the fees for this global system are split across thousands of computers, and they recoup their costs with newly mined Bitcoins. Long story short, this is a democratization of financial infrastructure.