Watch our video version of this guide Why do we even need Bitcoin mining?
Bitcoin is a decentralized alternative to the banking system. This means that the system can operate and transfer funds bitcoin one account to the other without any central authority.
With a trusted central authority, transferring money is easy. In this example, the bank has all the power mining the bank is the only one that is allowed to 4187 the ledger that holds the balances of everyone in the system. But how do you create a system that has a decentralized ledger? How do you example someone the ability to bitcoin the ledger without giving them too much power—in case they become corrupt or negligent in their work?
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.
Once your mining computer comes up with the right guess, your mining program determines which of the current pending transactions will mining grouped together into the next block of transactions. Read More