All you need is to guess a random number that solves an equation generated by the system. Of course, this guessing is all done by your computer. The more powerful your computer is, the more guesses you can make in a second, increasing your chances of winning this game.
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Once your mining computer comes up with the right guess, your mining program determines which of the current pending transactions will be grouped together into the next block of transactions. The solution is very hard to achieve but very easy to validate.
Each computer that validates your solution updates its copy of the Bitcoin transaction ledger with the transactions that you chose to include in the block. The system generates a fixed amount of bitcoins currently Additionally, you get paid any transaction fees that were attached to the transactions you inserted into the next block.
But if you think about it, the mining part is just a by-product of the transaction confirmation process.
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So the name is a bit misleading, since the main goal of mining is to maintain the ledger in a decentralized manner. As you can imagine, since mining is based on a form of guessing, for each block, a different miner will guess the number and be granted the right to update the blockchain. Where do I sign up? So the difficulty of the mining process is actually self-adjusting to the accumulated mining power the network possesses.
If more miners join, it will get harder to solve the problem; if many of them drop off, it will get easier. This is known as mining difficulty. Why on earth did Satoshi do this? Well, he wanted to create a steady flow of new bitcoins into the system. In a sense, this was done to keep inflation in check.
Mining difficulty is set so that, on average, a new block will be added every ten minutes i. Now, remember, this is on average. We can have two blocks being added minute after minute and then wait an hour for the next block. In July it will drop to Mining fees are paid each time a user sends a transaction on the network. In the example below, a user sent 0.